1. If the home currency depreciates, who benefits?
A) local importers
B) local exporters
C) everyone benefits
D) no one benefits
2. American Depositary Receipts (ADRs) allow
A) U.S. investors to purchase an interest in foreign stocks on U.S. exchanges
B) U.S. investors to purchase an interest in foreign stocks on foreign exchanges
C) Foreign investors to purchase an interest in U.S. stocks on U.S. exchanges
D) Multinational Corporations to hedge exchange rate risk
3. The value of the Australian dollar (A$) today is $0.73. Yesterday, the value of the Australian dollar was $0.69. The Australian dollar _______ by _______%.
A) depreciated; 5.80
B) depreciated; 4.00
C) appreciated; 5.80
D) appreciated; 4.00
4. The demand for U.S. exports tends to increase when:
A) economic growth in foreign countries decreases.
B) the currencies of foreign countries strengthen against the dollar.
C) U.S. inflation rises.
D) none of these
5. Most of the world's countries currently have a _________exchange rate.
A) fixed
B) floating
C) pegged
D) variable