53) What will happen to the exchange rate between the British pound and the U.S. dollar if British prices increase? 18.5 Fixed and Flexible Exchange Rates 1) If a country’s currency depreciates the country will experience a ________ in exports and a ________ in imports. A) rise; rise B) fall; fall C) rise; fall D) fall; rise 2) If a country’s currency appreciates the country will experience a ________ in exports and a ________ in imports. A) rise; rise B) fall; fall C) rise; fall D) fall; rise 3) If the value of the U.S. dollar changes from 1.4 euros to 1.2 euros we would expect that the United States would experience a ________ in exports and a ________ in imports. A) rise; rise B) fall; fall C) rise; fall D) fall; rise 4) If the value of the U.S. dollar changes from 1.2 euros to 1.4 euros we would expect that the United States would experience a ________ in exports and a ________ in imports. A) rise; rise B) fall; fall C) rise; fall D) fall; rise 5) The efforts of nations to influence exchange rates are known as A) open market operations. B) foreign exchange market intervention. C) rate discrimination. D) establishing terms of trade. 6) In the United States the ________ has the official responsibility for foreign exchange intervention. A) State Department B) Treasury Department C) International Trade Commission D) Department of Commerce 7) If the U.S. government enters the foreign exchange market and purchases dollars to maintain a specific exchange rate with the yen the dollar will ________ and the yen will ________. A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate 8) If the U.S. government enters the foreign exchange market and sells dollars to maintain a specific exchange rate with the yen the dollar will ________ and the yen will ________. A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate 9) If the Japanese government enters the foreign exchange market and purchases yen to maintain a specific exchange rate with the dollar the dollar will ________ and the yen will ________. A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate
