Suppose we were analyzing the pound per Swiss franc foreign exchange market. If there is the expectation that the Swiss franc will rise in value in the near future, then in the spot market:
a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc.
b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc.
c. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc.
d. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
e. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc.
.A
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Depreciation refers to a decrease in the value of a good caused by
A) an increase in the price level. B) a decrease in the price level. C) "wear and tear" of capital goods over time. D) the depreciation allowance. E) a decrease in purchasing power.
If Japan imposes a quota on imports of rice, the effect will be
A. less rice and higher price in Japan, lower rice prices in exporting countries. B. more rice and higher price in Japan, higher rice prices in exporting countries. C. less rice and lower price in Japan, higher rice prices in exporting countries. D. more rice and lower price in Japan, lower rice prices in exporting countries. E. less rice and higher price in Japan, higher rice prices in exporting countries.