60.1K

Verified Solution

Link Copied!

Fin 446-Exam 1 Take-home part Name: Signature: QUESTIONS 1. The equilibrium exchange rate of the Swiss franc is $0.90. At an exchange rate $83 Spledge that I will ork on the examination wilthout collaborating with any other indviduals a. U.S. demand for Swiss francs would exceed the supply of francs for sale and b. U.S. demand for Swiss francs would be less than the supply of francs for sale and c. U.S. demand for Swiss francs would exceed the supply of francs for sale and d. U.S. demand for Swiss francs would be less than the supply of francs for sale and there would be a shortage of francs in the foreign exchange market. there would be a shortage of francs in the foreign exchange market. there would be a surplus of francs in the foreign exchange market. there would be a surplus of Swiss francs in the foreign exchange market. 2. If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of U.S funds to purchase its securities shouldthe outflow of its funds to purchase U.S. securities should a. increase; decrease; downward b. decrease; increase; upward c. increase; decrease; upward d. decrease; increase; downward e. increase; increase; upward and there is pressure on its currency's equilibrium value. 3. To force the value of the British pound to depreciate against the dollar, the Federal Reserve should: a. sell dollars for pounds in the foreign exchange market and the Bank of England b. sell pounds for dollars in the foreign exchange market and the Bank of England c. sell pounds for dollars in the foreign exchange market and the Bank of England d. sell dollars for pounds in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. should sell dollars for pounds in the foreign exchange market. should sell pounds for dollars in the foreign exchange market. should sell pounds for dollars in the foreign exchange market. 4. Under a managed float exchange rate system, the Fed may attempt to stimulate the U.s. economy the U.S. demand for by the dollar. Such an adjustment in the dollar's value should products produced by major foreign countries. a. weakening; increase b. weakening: decrease c. strengthening; increase d. strengthening: decrease

Answer & Explanation Solved by verified expert

See Answer