ECON 295 Study Guide - Final Guide: European Route E40, European Route E6, European Route E80

Exports are:

A. Positively related to domestic income and currency depreciation

B. Positively related to income in the rest of the world and currency depreciation

C. Positively related to income in the rest of the world and currency appreciation

D. Positively related to domestic income and currency appreciation

In a currency crisis, investors demand for the currency falls and demand shifts ___. This results in a ____ of the currency. In response the country can defend the exchange rate by ____ supply of the local currency.

A. left, appreciation, increasing

B. left, depreciation, decreasing

C. right, appreciation increasing

D. right, depreciation decreasing

Given a two-country world, assume Canada and Sweden devalue their currencies by 20 percent. This would result in: 

a. An appreciation in the Canadian currency.

b. An appreciation in the Swedish currency.

c. An appreciation in neither currency.

d. An appreciation in both currencies