QUESTION 1 12.5 points Save Answer In the short run, an increase in the nominal exchange rate will net exports O A. increase 0 B. decrease O C. not change QUESTION 2 12.5 points Save Answer In the long run, an increase in the nominal exchange rate is likely to lead to . Note: Multiple answers are possible. A. an increase in exports B. a decrease in exports C. an increase in imports 7 De decrease in imports QUESTION 3 12.5 points Save Answer How are purchases or sales of foreign currency by a central bank are related to monetary policy? 0 A. a purchase of foreign currency will increase money supply O B. a purchase of foreign currency will reduce the nominal exchange rate 0 C. a purchase of foreign currency will reduce money supply 0 D. a purchase of foreign currency will increase the nominal exchange rate QUESTION 4 12.5 points Save Answer Consider the following two figures. Japanese Yen per 1 US Dollar Graph Danish Krone per 1 Euro Graph 12 Mar 2018 16:00 UTC - 11 Apr 2018 16:48 UTC 12 Mar 2018 16:00 UTC - 11 Apr 2018 16:10 UTC 107.07591 7.4648491 106 39703 7.4552022 105. 11816 7:445355 105.03928 7.4359083. 104.36040 7.4262613 Mar 12 Mar 19 Mar 26 Apr 2 Apr 9 Mar 12 Mar 19 Mar 26 Apr 2 Apr 9 Which of the following statements is correct? A. the left figure describes a fixed exchange rate; the right figure describes a fixed exchange rate O B. the left figure describes a flexible exchange rate; the right figure describes a flexible exchange rate O C. the left figure describes a fixed exchange rate; the right figure describes a flexible exchange rate O D. the left figure describes a flexible exchange rate; the right figure describes a fixed exchange rateQUESTION 5 1 2.5 points Save Answer How can a central bank support a xed exchange rate? Note: Multiple answers are possible. 3 A. by buying and selling foreign currency 3 B. by changing the interest rate 3 C. by increasing government spending 3 D. by investing in infrastructure QUESTION 6 12.5 points Save Answer From 1980 to 2000, the dollar-yen exchange rate fell from 240 yen/dollar to 102 yen/dollar, while the pound-dollar exchange rate fell from 2.22 dollars/pound to 1.62 dollars/pound. As a result, _. O A. the dollar appreciated relative to the yen, but depreciated relative to the pound O B. the dollar depreciated relative to the yen, but appreciated relative to the pound O C. the dollar appreciated relative to both the yen and the pound O D. the dollar depreciated relative to both the yen and the pound QUESTION 7 12.5 polnts Save Answer A currency crisis may occur when 0 A. there is a global nancial crisis 0 B. there is strong economic growth 0 C. the country reduces its international borrowing O D. seasonal birds migrate to the south QUESTION 8 12.5 polnts Save Answer Imagine the following scenario: The central bank of Neverland ensures that the exchange rate between the Nevenand dollar and the U.S. dollar is xed. Due to a global nancial crisis the demand for US. dollars goes up and the demand for Neverland dollars goes down First, the Neverland's central bank spends US dollar reserves to support the peg but then it runs out of reserves. What is most likely to happen next? 0 A. the Neverland dollar's exchange rate with respect to U.S. dollar (i.e., the price of Neverland dollars in U.S. dollars) will go up 0 B. the Neverland dollar's exchange rate with respect to U.S. dollar will go down O C. the Neverland dollar's exchange rate with respect to U.S. dollar will not change 0 D. the stock market index of the Neverland stock exchange will go up