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Reading 19: Foreign Exchange Parity Relations - LOS a ~ Q

Q6. If there is an excess demand for dollars by Croatians, Croatians will least likely:

A)     sell dollars for kunas.

B)     sell kunas for dollars.

C)     make the dollar appreciate.

Q7. A German parts manufacturer builds a manufacturing plant in the United States. In the foreign exchange market, this action creates:

A)   demand for dollars and a supply of euros.

B)   supply of both dollars and euros.

C)   supply of dollars and a demand for euros.

Q8. If the U.S. dollar appreciates relative to the Elbonian peso, it becomes:

A)   more expensive for U.S. citizens to buy Elbonian goods.

B)   more expensive for foreigners to buy U.S. goods.

C)   cheaper for foreigners to buy U.S. goods.

Q9. An English textile manufacturer builds a plant in the United States. In the foreign exchange market, this action creates a:

A)   demand for dollars and a supply of pounds.

B)   supply of dollars and a demand for pounds.

C)   supply of both dollars and pounds.

Q10. A U.S. tourist planning to visit Germany exchanges $500 for euros at a rate of $0.95/

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