MULTIPLE-CHOICE QUESTIONS 1. If there is a spike in export goods and services from Mexico to Germany, what will happen to the peso-euro exchange rate? (A) The euro will appreciate because more will be spent to purchase pesos. the euro. (B) Because the demand for pesos will be high, it will depreciate against (C) The peso will appreciate relative to the euro. (D) The euro will depreciate at the same rate that the peso appreciates. (E) Both currencies will appreciate because of increased demand for both. 2. If the demand curve for U.S. dollars shifts to the left, what happens to the equilibrium exchange rate of euros to dollars? (A) The equilibrium rate will result in more expensive dollars. (B) The U.S. dollar will depreciate and cost more euros. (C) The equilibrium rate will result in a rise in euros. (D) It will remain the same; the rate is based on the supply of dollars. (E) It will cost fewer euros to purchase a U.S. dollar. 3. Why does the supply curve for a currency slope upward? (A) When demand for a country's goods rises, the country needs to supply more currency. (B) There is always a demand for currencies in a global economy. (C) The more goods a country imports, the more currency supply is needed. (D) Even in low export years, a country's currency must always remain in high supply ME) It shows how equilibrium in the currency's exchange rate is maintained