Refer to Figure 4. The movement of the return on euro deposit schedule from EER1to EER2 is due toFigure 4Foreign Exchange MarketExchange rate E(S/Euro)R.AEER'EER2Rates of Retum (in dollar terms)O 11 a decrease in the European money supply which decreases the return oneuro deposits, so dollar appreciates.O 21 an increase in the European money supply which decreases the return oneuro deposits, so theollar appreciates.3)an increase in the European money supply which decreases the return oneuro deposits, so the dollar depreciates.EER'EER2Rates of Retum (in dollar terms)O 1)a decrease in the European money supply which decreases the return oneuro deposits, so dollar appreciates.2)an increase in the European money supply which decreases the return oneuro deposits, so the dollar appreciates.an increase in the European money supply which decreases the return on3)euro deposits, so the dollar depreciates.4)an increase in the European money supply which decreases the return oneuro deposits, so the euro appreciates.

In the international market, the return on investment depends upon its value in the market, which is…

R,' EER' EER2 Rates of Retum (in dollar terms) O 1) a decrease in the European money supply which decreases the return on 1) euro deposits, so dollar appreciates. 2) an increase in the European money supply which decreases the return on euro deposits, so the dollar appreciates. an increase in the European money supply which decreases the return on 3) euro deposits, so the dollar depreciates. an increase in the European money supply which decreases the return on 4) euro deposits, so the euro appreciates.

R,' EER' EER2 Rates of Retum (in dollar terms) O 1) a decrease in the European money supply which decreases the return on 1) euro deposits, so dollar appreciates. 2) an increase in the European money supply which decreases the return on euro deposits, so the dollar appreciates. an increase in the European money supply which decreases the return on 3) euro deposits, so the dollar depreciates. an increase in the European money supply which decreases the return on 4) euro deposits, so the euro appreciates.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter18: International Finance

Section: Chapter Questions

Problem 4.7P

See similar textbooks

Similar questions

Fast pls solve this question correctly in 5 min pls I will give u like for sure
41 Suppose the Euro substantially depreciates against the Jopanese yen. The change in the exchange rate sut of Select one: O a will tend to weaken the competitive position of import-competing European car makers. O b. None of them. O c. will tend to strengthen the competitive position of import-competing European car makers, O d will tend to strengthen the competitive position of Japanese cor makers at the expense of European car makers.
If one Canadian dollar buys US$0.85, and one Euro buys US$1.20, then one Euro should buy O a. C$1.02 O b. C$1.41 O c. C$2 O d. C$1.64
Under a fixed exchange rate system (A). would be an exogenous monetary policy instrument, whereas under a flexible exchange rate system (B) endogenous monetary policy instrument. would be an O a. (A) the interest rate; (B) the exchange rate O b. (A) the exchange rate; (B) the interest rate O c. (A) the interest rate; (B) the interest rate O d. (A) the exchange rate; (B) the exchange rate
The demand for Australian dollars in the foreign exchange market equals 14000 – 3000e and thesupply of Australian dollars in the foreign exchange market equals 2000 + 2000e, where e is thenominal exchange rate expressed in euros per Australian dollar. If the Australian dollar is fixed at 2euros per Australian dollar, then to maintain this fixed rate, what is the required change in theReserve Bank of Australia’s holdings of euros? 1increase by 4000 euros 2decrease by 2000 euros 3decrease by 4000 euros 4increase by 2000 euros
Using the table shown, what is the most current 6-month forward exchange rate shown for British pounds? Use a direct quote from a U.S. perspective and assume today is Tuesday. Country Britain (Pound) £ 1 Month Forward 3 Months Forward 6 Months Forward O $0.6024-£1.00 $1.66 €1.00 O $1.61-£1.00 $1.60-£1.00 O $1.00-£0.6024 U.S. $ equiv. Tuesday Monday 1.6000 1.6100 1.6300 1.6100 1.6300 1.6600 1.6600 1.7200 Currency per U.S. $ Tuesday Monday 0.6250 0.6211 0.6173 0.6024 0.6211 0.6173 0.6024 0.5814
46.
Last month the US dollar appreciated by 1% against the Japanese Yen. The US dollar also appreciated by 3.1% against the Euro. By approximately how much did the Euro shift against the Yen over this period? O a. Euro appreciated by 4.1% O b. Euro depreciated by 4.1% O c. Euro appreciated by 2.1% 4 O d. Euro neither appreciated nor depreciated against the Yen O e. Euro depreciated by 2.1%
Answer and Breif explantion
QUESTION 3 sdenoted by GBP/USD and reflects the price of one Pound in Dollars. Search for the current GBP/USD exchange rate The U.S. Dollar-British Pound exchange rate and select a correct statement among the options below O A. Pound is a less expensive currency than Dollar O B. Pound is a more expensive currency than Dollar O C. Pound has always been less expensive than Dollar in the last 5 years O D. If GBP/USD falls, British goods would be more expensive for American consumers
Which type of money is most likely to see its value fluctuate in the foreign exchange market? O a. fiat money O b. commodity money O c. price-indexed money O d. pegged-exchange rate
QUESTION 3 The U.S. Dollar-British Pound exchange rate is denoted by GBP/USD and reflects the price of one Pound in Dollars. Search for the current GBP/USD exchange rate and select a correct statement among the options below O A. Pound is a less expensive currency than Dollar O B. Pound is a more expensive currency than Dollar OC. Pound has always been less expensive than Dollar in the last 5 years O D. If GBP/USD falls, British goods would be more expensive for American consumers