A)
volatile
B)
steady
C)
gradually rising
D)
gradually declining
14.
The exchange rate between the U.S. dollar and the Chinese yuan:
A)
resulted in a rise in Chinese buying power.
B)
declined 15% between 2005 and the financial crisis in 2008.
C)
has created a situation in which China is able to get cheap products from the United States.
D)
has been unchanged since July 2005.
15.
In June of 2010, the Chinese government:
A)
cracked down on illegal currency trading.
B)
reduced the value of the yuan in terms of the U.S. dollar.
C)
allowed a gradual appreciation in the value of the yuan in terms of the U.S. dollar.
D)
allowed the yuan to fluctuate freely according to the market.
16.
When an exchange rate is said to be fixed, it:
A)
does not vary at all.
B)
can vary a lot.
C)
changes every day.
D)
is volatile.
17.
Compared with the dollar–yuan exchange rate, the dollar–euro exchange rate is best described as:
A)
volatile.
B)
steady.
C)
gradually falling.
D)
gradually rising.
18.
Compared with the U.S. dollar–euro, the U.S. dollar–yuan exchange rate has exhibited:
A)
extreme fluctuation.
B)
much less fluctuation.
C)
a constant value.
D)
complete control by the World Bank.
19.
Compared with the U.S. dollar–yuan, the average fluctuation in the U.S. dollar–euro exchange rate is:
A)
6 or 7 times as large.
B)
about the same.
C)
somewhat smaller.
D)
6 or 7 times less.
20.
Which one of the following reasons does NOT explain why exchange rates are important?
A)
They affect the affordability of imports.
B)
They make exports either more or less expensive for foreign buyers.
C)
They affect the value of foreign assets and their returns.
D)
They affect the profits of all domestic producers.
21.
A good's relative price indicates its:
A)
value only in its own nation.
B)
value compared with the same good sold in another nation, expressed in a common currency.
C)
exchange value only.
D)
net value after taxes and depreciation.
22.
In the mid-2000s, a Swiss cheese maker blamed its decline in U.S. sales on:
A)
the fall of the euro in terms of the Swiss franc.
B)
the rise of the euro in terms of the Swiss franc.
C)
German tariffs that made the cheese more expensive.
D)
the Euro area recession.
23.
When the exchange value of the euro rises in terms of the U.S. dollar, U.S. residents find that European imports are:
A)
cheaper.
B)
more expensive.
C)
oversupplied to the United States.
D)
more heavily taxed by the U.S. government.
24.
European residents who hold U.S. dollar assets experience a _______ in their value when the dollar exchanges for fewer units of foreign currency.
A)
rise
B)
decline
C)
stagnation
D)
rise in instability
25.
If in January 2007, $1 = 110 yen, and in July 2007, $1 = 90 yen, then a Harley Davidson motorcycle that cost $8,000 in January would now cost _______ in Japan in July.
A)
180,000 yen
B)
880,000 yen
C)
720,000 yen
D)
890,000 yen
26.
Assume that in 2006, the dollar–euro exchange rate was 1 and in 2007 it was .75. If you have $100 million in assets in Germany in 2006, then in 2007 your assets in Germany are: