Make sure you show all your work for the problems requiring calculations. Otherwise, you will not receive credit for the question. 1. Define: a. Foreign currency. b. The exchange rate. c. The U.S. interest rate differential. 2. In each example, determine if the demand or supply of dollars (or both) will change and in what direction (increase or decrease): a. The interest rate in other countries decreases. b. Increase in U.S. demand for imports. c. Decrease in world demand for U.S. exports d. The interest rate in the U.S. decreases. e. U.S. residents believe the dollar will depreciate. 3. a. Define appreciation and depreciation of the dollar (Please note this is a question - don't skip it). b. If the demand for the dollar increases, will the dollar appreciate or depreciate? c. If the demand for the dollar decreases, will the dollar appreciate or depreciate? d. If the supply of dollars increases, will the dollar appreciate or depreciate? e. If the supply of dollars decreases, will the dollar appreciate or depreciate? 4. If the dollar's value changes from 33 Thailand Baht to 31 Thailand Baht per dollar, has: a. The dollar appreciated or depreciated? b. The Baht appreciated or depreciated