Order the answer to: True or False: 1. Any…
| Question | True or False: 1. Any change in the demand for foreign goods will shift the demand curve for foreign currency in the opposite direction. 2. A decrease in tastes for European goods in the United States would decrease the demand for euros, hence decreasing the equilibrium price (exchange value) of euros. 3. An increase in incomes in the United States would increase the amount of European imports purchased by Americans, which would increase the demand for euros, resulting in a higher for euros. 4. If European incomes rose, European tariffs on U.S. goods increased, or European tastes for U.S. goods increased, the for euros would tend to increase. 5. A decrease in U.S. tariffs on European goods would tend to have the same effect on the for euros as an increase in U.S. incomes. 6. If interest rates in the United States were to increase relative to European interest rates, the result would be a new, lower for euros, other things being equal. 7. If Europe experienced a higher inflation rate than the United States, the supply of euros would tend to increase and the demand for euros would tend to decrease, leading to a new, lower for euros. 8. If currency speculators believe that the United States is going to experience more rapid inflation than Japan in the future, they believe that the value of the dollar will soon be falling, which will increase the demand for the yen, and so the yen will appreciate relative to the dollar. |
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| Subject | business economics |
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