1. counter-pricing is a strategy employed by foreign firms during week dollar periods and is designed to decrease the foreign firm’s market share the US.?
True
Fals
2. If the US and Japan engage in much trade but little financial flows,_______ directly influences their exchange rate the most. If the US and Switzerland engage in much financial flows but little trade,______ directly influences their exchange rate the most.?
Inflation and income differentials; interest rate differentials
interest rate differentials; inflation and income differentials
inflation and interest rate differentials; interest rate differentials
income and interest rate differentials; inflation differentials
3. Suppose at the start of the year the exchange rate was $1.60/£ and you imported a product from Britain that costs £110. Over a one year time period, the British pound has appreciated 6% and British inflation (affecting all British products) has been 3%. What is the cost of importing the good at the end of the year?
$186.56
$113.30
$192.16
$171.02