Reading 19: Foreign Exchange Parity Relations - LOS a ～

答案和详解如下：

11．If the exchange rate value of the euro goes from $0.95 to $1.10, then the euro has:

A)   depreciated and the Dutch will find U.S. goods cheaper.

B)   appreciated and the Dutch will find U.S. goods cheaper.

C)   appreciated and the Dutch will find U.S. goods more expensive.

D)   depreciated and the Dutch will find U.S. goods more expensive.

The correct answer was B)

An exchange rate is a ratio that describes how many units of one currency you can buy per unit of another currency. The numerator will be in the currency in which the quote is made, and the denominator is the other unit of the currency you are comparing. A currency appreciates when it rises in value relative to another foreign currency. Likewise, a currency depreciates when it falls in value relative to another foreign currency. An appreciation in value of a currency makes that country's goods more expensive to residents of other countries. The depreciation of the value of a currency makes a country's goods more attractive to foreign buyers.

12．If there is an excess demand for dollars by Croatians, Croatians will least likely:

A)   sell kunas for dollars.

B)   sell dollars for kunas.

C)   create a demand for dollars.

D)   make the dollar appreciate.

The correct answer was B)

If there is excess demand for dollars by Croatians, they will sell kunas and buy dollars thereby making the dollar appreciate relative to the kuna.

13．If the exchange rate value of the English pound goes from $1.75 to $1.50, determine if the pound depreciates or appreciates relative to the dollar and if the English will find U.S. goods cheaper or more expensive.

       Pound                U.S. goods

A) appreciated       more expensive

B) depreciated       more expensive

C) appreciated           cheaper

D) depreciated           cheaper

The correct answer was B)

An exchange rate is a ratio that describes how many units of one currency you can buy per unit of another currency. The numerator will be in the currency in which the quote is made, and the denominator is the other unit of the currency you are comparing. A currency appreciates when it rises in value relative to another foreign currency, and likewise, a currency depreciates when it falls in value relative to another foreign currency. An appreciation in value of a currency makes that country's goods more expensive to residents of other countries. The depreciation of the value of a currency makes a country's goods more attractive to foreign buyers.

14．In a floating exchange rate system, if there is an excess demand for:

A)   German goods by Americans, Americans will have to sell more goods to Germans so as to be able to buy more German goods.

B)   United States dollars by the British, then the British will sell pounds and buy dollars. This will cause the pound to depreciate relative to the dollar.

C)   British pounds by the Belgians, Belgians will lower their interest rates so as to enable their citizens to borrow more easily in order to buy British goods.

D)   Russian rubles by Spaniards, Russians will lower their interest rates so as to enable Spaniards to buy Russian goods on credit and satisfy their demand for Russian products.

The correct answer was B)

In a floating exchange rate system, exchange rates between countries are based on the demand and supply of currencies relative to each other. If British demand dollars, they will sell pounds and buy dollars in exchange, thus depressing their own currency. The dollar will appreciate relative to the pound. Other choices are incorrect because they are not based on the supply and demand argument underlying floating exchange rates.