13. In the foreign exchange market, what could be a possible consequence of an i
ID: 1126304 • Letter: 1
Question
13. In the foreign exchange market, what could be a possible consequence of an increase in t stocks of Toyota, a Japanese automobile firm, by the U.S. residents? a. Demand for dollar will increase b. Yen will depreciate c. Dollar will depreciate d. Supply curve for dollar will shift to the left 14. An increase in the dollar per euro exchange rate will result in: a. b. c. d. a decline in the quantity demanded for euro. a decline in the quantity demanded for dollar. an inward shift of the supply curve of euro. an outward shift of the demand curve for dollar.
Explanation / Answer
13> c
Dollar will depreciate as dollars will be used to buy the Yen from Japan to purchase the stock.
14> b
The quantity demand for dollar will fall due to the lesser value of the Dollar.
20> c
Official intervention is the attempt by a government to influence the exchange rate by buying or selling foreign currency.
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