Chapter 18: Q. 12 (page 495)
If American auto companies make a breakthrough in automobile technology and are able to produce a car that gets 200 miles to the gallon, what will happen to the U.S. dollar exchange rate?
The value of the U.S. dollar will appreciate and the U.S. exchange rate will go up.
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In, the euro was trading at per euro. If the euro is now trading at per euro, what is the percentage change in the euro’s value? Is this an appreciation or depreciation?
You are considering buying a bottle of wine. Suppose that the euro appreciates by 15% with respect to the U.S. dollar. Are you more or less likely to buy a bottle of Californian wine or French wine?
If the demand for a country’s exports falls at the same time that tariffs on imports are raised, will the country’s currency tend to appreciate or depreciate in the long run?
Suppose the president of the United States announces a new set of reforms that includes a new anti-inflation program. Assuming the announcement is believed by the public, what will happen to the exchange rate on the U.S. dollar.
From 2009 to 2011, the economies of Australia and Switzerland suffered relatively mild effects from the global financial crisis. At the same time, many countries in the euro area were hit hard by high unemployment and burdened with unsustainably high government debts. How should this have affected the euro/Swiss franc and euro/Australian dollar exchange rates?
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