Mod 6.2: Exchange Rates

An exchange rate that has been adjusted for inflation is called:

• nominal exchange rate

• real exchange rate

• equilibrium exchange rate

• fixed exchange rate

• floating exchange rate

If it costs more Canadian dollars to buy a US dollar, then the US dollar has:

• appreciated

• depreciated

• devalued

• floated

• not changed

The nominal exchange rate at which a basket of goods & services would cost the same in each country describes

• the international consumer price index

• the current account

• the financial account

• purchasing power parity

• fixed exchange rates

Which of the following will cause a decrease in the demand for US dollars?

• more foreigners visit the US

• US products are popular in other countries

• a worldwide recession

• an increase in relative interest rates in the US

• an increase in productivity in the US

In the foreign exchange market for U.S. dollars & Mexican pesos, what occurs when the demand for the US$ increases?

• The dollar depreciates

• The peso appreciates

• Interest rates in the US decrease

• Demand for pesos increases

• Supply of pesos increases