u Dased Bh the demand for foreign products QUESTION 37 O Japanese residents dema
ID: 1123952 • Letter: U
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u Dased Bh the demand for foreign products QUESTION 37 O Japanese residents demand more U.S. goods. O u.S residents demand fewer Japanese goods. O U.S. residents demand more Japanese goods. O None of the above. QUESTION 38 O one country could easily manipulate the system to its advantage and the disadvantage of other countries O a country did not have control of its domestic monetary policy it was too complicated and restricted business activity O exchange rates tended to fluctuate a great deal, making it difficult for businesses to make long-run plans QUESTION 39 wants to hold the value of the dollar at $1.00 US. equals 100 Japanese yen, but t finds that the value of yen is appreciating against the U S dollar Assume the U.S. g What would be an appropriate policy to reverse this trend? O Sell U.S. dollars O Buy U.S. dollars. O Encourage U.S. investments abroad. O Buy more Japanese goods. QUESTION 40 Which of the following is an advantage of fixing exchange rates? O making residents more mobile across countries O eliminating trade deficits O making the prices of foreign goods more flexable in the domesc market O limiting foreign exchange risk uit Click Save All Answers to save all ansiversExplanation / Answer
1) The Japanese yen will appreciate against the dollar if
Solution: U.S. residents demand more Japanese goods
Explanation: The reason is that the supply of dollars increases in relation to the demand for dollars.
2) An important problem with the gold standard was
Solution: one country could easily manipulate the system to its advantage and disadvantage of other countries
Explanation: One problem with a gold standard is that the size and health of a country's economy are dependent upon its supply of gold
3) Assume the U.S. government wants to hold the value of the dollar at $1.00 U.S. equals 100 Japanese yen, but it finds that value of yen is appreciating against the U.S. dollar. What would be an appropriate policy to reverse this trend?
Solution: Buy U.S. dollars
Explanation: With the purchase of U.S. dollars this trend can be reversed and yen will begin to depreciate against the U.S. dollar.
4) Which of the following is an advantage of fixing exchange rates? 1
Solution: limiting foreign exchange risk
Explanation: The main advantage is to eliminate the foreign exchange risk and improve international trade and investment
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