the economics of money, banking, and financial markets

581 #

© 2014 Pearson Canada Inc.#

5. 
   

   The demand curve for the domestic currency ____.
   A) is downward sloping
   B) is vertical because the amount of foreign exchange is finite
   C) shifts when the exchange rate changes
   D) A and C only
   Answer: D
   Diff: 1 Type: MC Page Ref: 477
   Skill: Recall
   Objective List: 19.3 Identify the factors that lead to changes in the exchange rate in the short run

   
   


6. 
   

   Everything else held constant, when the current value of the domestic currency increases, the
   ____ domestic assets ____.
   A) demand for; increases
   B) quantity demanded of; increases
   C) demand for; decreases
   D) quantity demanded of; decreases
   Answer: D
   Diff: 1 Type: MC Page Ref: 477
   Skill: Recall
   Objective List: 19.3 Identify the factors that lead to changes in the exchange rate in the short run

   
   


7. 
   

   Everything else held constant, when the current value of the domestic exchange rate increases,
   the ____ of domestic assets ____.
   A) quantity supplied; does not change
   B) supply; decreases
   C) quantity supplied; increases
   D) supply; increases
   Answer: A
   Diff: 1 Type: MC Page Ref: 477
   Skill: Recall
   Objective List: 19.3 Identify the factors that lead to changes in the exchange rate in the short run