1.If one U.S. dollar exchanges for 90 yen (approximately the rate as of Nov. 24

Question

1.If one U.S. dollar exchanges for 90 yen (approximately the rate as of Nov. 24 2009), then what would it cost to purchase a Toyota Camry priced at 4 million yen? (Use whole numbers in your answer.)

2. The balance of payments account contains information about:     
A. U.S. exports and imports.
B. The purchases of U.S. assets by foreigners.
C. The purchases of foreign assets by Americans.
D. All of the answers are contained in the balance of payments accounts.

Is it D?

3. If the dollar appreciates relative to the yen:     
A.There is no reason to expect either an appreciation or depreciation of the yen.
B.The yen must depreciate relative to the dollar.
C.The yen will appreciate relative to the dollar.
D.None of the above is correct.

Is it B?

4.If a U.S. importer writes a $200 check to cover a 20,000 yen purchase from Japan, the exchange rate is:     
A. 200 yen to one U.S. dollar.
B. 100 yen to one U.S. dollar.
C. 20 yen to one U.S. dollar.
D. 10 yen to one U.S. dollar.
E. 200 U.S. dollars to one yen.

Is it B?

5. U.S. exports, foreign travel in the U.S., and foreign capital inflow into the U.S. give rise to:     
A. A supply of foreign currency.
B. A demand for foreign currency.
C. A supply of the U.S. dollar.
D. Trade deficits for the U.S.

Is it B?

6.Under the current floating (of flexible) exchange rate system, exchange rates are:     
A. Determined by the demand and supply of foreign exchange.
B. Fixed by speculators in the foreign exchange markets.
C. Fixed by governments to ensure stability in global trade.
D. Determined by what is happening to the price of oil in the global oil market.

Is it C?

Explanation / Answer

1. $44,444

2. D. All of the answers are contained in the balance of payments accounts.

3. B.The yen must depreciate relative to the dollar.

4. B. 100 yen to one U.S. dollar.

5. A. A supply of foreign currency.

6. A. Determined by the demand and supply of foreign exchange.

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