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- Why would a nation dollarize—that is, adopt another countrys currency instead of having its own?What would make a country decide to change from a common currency, like the euro, back to its own currency?What are some of the reasons a central bank is likely to care, at least to some extent, about the exchange rate?
- 8. International money and capital markets Aa Aa Globalization has led to the progressive integration of capital markets around the world, allowing worldwide investors and corporations to trade with or in other countries. The following table provides descriptions of certain transactions or situations. Based on your understanding of international capital markets and international money, choose the best term to match each description. Description Term Indian rupees are deposited in a bank in Kenya. A U.S. corporation starts a greenfield project in Mexico. This type of bond is issued by a European company in U.S. dollars and sold to American investors in the U.S. stock market under the SEC regulations. Eurocurrency deposits made in the U.S. are often tied to this rate.12. What is the purpose of open market operations? Group of answer options To affect the balance of payments To influence public spending To influence the exchange rate To influence the money supply17. Question 17 options: ---------- is the technique of protecting against the potential losses that result from adverse changes in exchange rates
- 5. Interest rate parity Aa Aa The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. If the demand for a currency increases, the currency's value will increase relative to other currencies. If a government intends to prevent its currency's value from falling relative to other…3. The international monetary system Aa Aa Until August 1971, industrialized countries around the world maintained a fixed exchange rate of their currencies with the U.S. dollar, which was linked to gold. The gold standardized system was called the Bretton Woods Fixed Exchange Rate System. This system collapsed in 1971, and since then, the dollar has not been linked to gold. Based on your understanding of the international monetary system, complete the following statements: A exchange rate is the quoted price for a unit of foreign currency to be delivered within a very short period of time. The government does not set a exchange rate, which means that supply and demand in the market determine the currency's value. • When American customers import more from Europe than they export to Europe, the euro relative to the dollar. • The of a currency refers to an increase or decrease of the stated par value of a currency whose value is fixed. Under a floating regime, supply and demand for the…9 Suggest how the multinational company (MNC) could reduce/eliminate the exchange rate risk
- 4. What factors will shift the supply and demand for currency?2. Classify each of the following as debits or credits in the U.S. balance of payments. Americans buy chocolate from the Swiss. U.S. gives foreign aid to Bosnia. British investors purchase U.S. government bonds American tourists travel to Australia Volkswagen earns profits in the United States from its new cars Toyota builds a new plant in Ohio Capital Records sells rock and roll music in Sweden18. Question 18 options: ---------- is the rate at which the market converts one currency into another. An exchange rate can be quoted as direct or indirect.
