28) Use the above figur A) dollar depreciation. B) dollar appreciation. C) euro

Question

28) Use the above figur A) dollar depreciation. B) dollar appreciation. C) euro depreciation. D) reducing the equilibrium quantity of euros. e. A rightward shift of the demand curve, ceteris paribus, would result in 29) If the foreign exchange rate is 70 cents for one Swiss franc, then A) a car that costs 40,000 francs will cost $7,143.00 B) a wine that costs 200 francs will cost $14.00. C) a clock that costs 500 francs will cost $350.00. D) a house that costs 100,000 francs will cost $700,000.00. 30) The foreign exchange system that has the highest foreign exchange risk is A) the dirty floating exchange rate. B) the fixed exchange rate. C) the floating exchange rate. D) the Bretton Woods system

Explanation / Answer

28. B. dollar appreciates. One dollar was purchasing 0.8 Euros, if the demand shifts to the right then dollar will purchase more Euros for a given dollar. The demand for dollar has risen.

29. C. One Swiss Franc costs 70 cents, therefore, 500 Swiss Francs will cost (500x.70 cents)=$350.

30. C. Floating exchange rate. The exchange rate of a currency is determined by forces of demand and supply. It is volatile. The intervention of the Central Bank of a country becomes necessary in times of great volatility.

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