Question 2 (1 point) Which of the following affects the exchange rate in the sho

Question

Question 2 (1 point)

Which of the following affects the exchange rate in the short run?

Question 2 options:

expected relative price level

expected future exchange rate

all of the above

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Question 3 (1 point)

If a central bank is following a policy of fixing an interest rate at a constant value, then, if the economy expands, the bank will respond by

Question 3 options:

shifting the demand for money to the left.

shifting the supply of money to the left.

shifting the supply of money to the right.

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Question 5 (1 point)

Which of the following factors affects the exchange rate in the short run but not the long run?

Question 5 options:

domestic interest rate

relative expected trade barriers

relative import demand

Question 6 (1 point)

A central bank would increase interest rates to

Question 6 options:

lower inflation.

raise employment.

stimulate the economy.

Question 7 (1 point)

If the euro/dollar exchange rate is 1.20 euro/dollar, and an American washing machine costs $250, assuming no trade barriers or transportation costs, what is the euro price of the washing machine?

Question 7 options:

200e

250e

none of the above

expected relative price level

expected future exchange rate

all of the above

Explanation / Answer

2. The following affects the exchange rate in the short run:

Expected future exchange rate.

Forward exchange rate is the exchange rate at which a party is willing to enter into a contract to receive or deliver a currency at some near future date.

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