the economics of money, banking, and financial markets

587 #

© 2014 Pearson Canada Inc.#

21. 
    

    A decrease in the foreign interest rate causes the demand for domestic assets to ____
    and the domestic currency to ____, everything else held constant.
    A) increase; appreciate
    B) increase; depreciate
    C) decrease; appreciate
    D) decrease; depreciate
    Answer: A
    Diff: 1 Type: MC Page Ref: 480
    Skill: Recall
    Objective List: 19.4 Understand the factors that change the exchange rate

    
    


22. 
    

    A decrease in the foreign interest rate causes the demand for domestic assets to shift to the
    ____ and the domestic currency to ____, everything else held constant.
    A) right; appreciate
    B) right; depreciate
    C) left; appreciate
    D) left; depreciate
    Answer: A
    Diff: 1 Type: MC Page Ref: 480
    Skill: Recall
    Objective List: 19.4 Understand the factors that change the exchange rate

    
    


23. 
    

    ____ in the foreign interest rate causes the demand for domestic assets to increase and
    the domestic currency to ____, everything else held constant.
    A) An increase; appreciate
    B) An increase; depreciate
    C) A decrease; appreciate
    D) A decrease; depreciate
    Answer: C
    Diff: 1 Type: MC Page Ref: 480
    Skill: Recall
    Objective List: 19.4 Understand the factors that change the exchange rate

    
    


24. 
    

    ____ in the foreign interest rate causes the demand for domestic assets to shift to the
    right and the domestic currency to ____, everything else held constant.
    A) An increase; appreciate
    B) An increase; depreciate
    C) A decrease; appreciate
    D) A decrease; depreciate
    Answer: C
    Diff: 1 Type: MC Page Ref: 480
    Skill: Recall
    Objective List: 19.4 Understand the factors that change the exchange rate