43) The exchange rate of currencies between countries affects the prices of the goods purchased and sold between them. 44) If the dollar appreciates against the peso it means that U.S. goods become more expensive in Mexico. 45) If the dollar depreciates against the euro it means that French-made goods become more expensive in the United States. 46) The exchange rate between currencies of different countries is controlled primarily by supply and demand in currency markets. 47) If the exchange rate is 0.8 euro per dollar one dollar is equal to 1.25 euros 48) The dollar will depreciate against the euro when the European Central Bank raises interest rates. 49) The dollar will appreciate if interest rates fall in the United States. 50) Suppose that you are an Israeli citizen and had invested in a one-year U.S. bond that yielded 5%. The bond cost $5 000 and paid $5 250 at the end of the year. At the time you bought the bond the exchange rate was 3.8 shekels/dollar. How many shekels did the bond cost? If the exchange rate fell to 3.5 shekels/dollar over this time period what would the return on your investment be? 51) If the current exchange rate is 0.65 British pounds per dollar what is the dollar price of one British pound? If the exchange rate changes to 0.70 British pounds per dollar what is the new dollar value of one British pound? 52) What will happen to the exchange rate between the euro and the U.S. dollar if U.S. interest rates increase?
