I. Multiple choice.

1. The number of units offoreign currency that can be acquired with one unit of domestic money is calledthe _______________. 

A. exchange rate  

B. balance of payments

C. international finance  

D. none of the above

2. If the dollar appreciate relative to the yen,which of the following is true?___________.

A. The dollar’s purchasing power in terms of yen hasincreased

B. The dollar’s purchasing power in terms of yen hasdecreased

C. A dollar previously worth 100 yen, would you nowbe worth less than 100 yen

D. Both B and C

3. A depreciation of the dollar will________________.

A. lower the foreign currency prices of the U.S.goods in foreign markets

B. increase the foreigncurrency prices of teh U.S. goods in foreign markets.

C. lower the dollar prices offoreign goods in the United States

D. both B and C

4. Which of the following, ceteris paribus, willcause the yen to appreciate?__________

A. A decrease in foreign income

B. An increase in foreign inflation

C. An increase in domestic income

D. An increase in domestic inflation

5. An increasing in real income in the United Stateswill _________________.

A. decrease the supply of dollars

B. increase the supply of dollars

C. decrease the quantity supplied of dollars

D. increase the quantity supplied of dollars

6. A change in foreign interest rates relative to U.S. interest rates, will _____________. 

A. increase the quantity supplied of dollars in the foreignexchange market

B. increase or decrease the quantity supplied ofdollars in the foreign exchange market

C. increase total revenue in the foreign exchangemarket

D. increase or decrease the demand or supply ofdollars in the foreign exchange market

7. For Americans, a change in foreign real incomeswill ___________.

A. increase the quantity demanded of dollars in theforeign exchange market

B. increase or decrease the quantity supplied ofdollars in the foreign exchange market

C. Increase or decrease the supply of dollars in theforeign exchange market

D. Increase or decrease the demand for dollars inthe foreign exchange market

8. As the dollar appreciates, holding all otherfactors constant, dollar prices of foreign goods ________________. 

A. decrease                    B. increase  

C. remain the same       D.increase, holding al foreign exchange constant

9.When the dollarappreciates, which of the following generally occurs in the U.S.?_____________. 

A. Exports increase      B. Imports decrease

C. Imports increase      D. Exports remain the same

10. If an American drum setcost &2,500 and the dollar depreciated, the foreign price of the drum setwould tend to ______________.

A. remain the same     B. increase

C. decrease                 D. none of the above

II Define brieflythe following terms and concepts.

1. Foreign exchange

2. fixed exchange rate system

3. floating exchange rate

4. spot transaction

5. forward  transaction

III Translate thefollowing sentences into Chinese.

1.    An exchange ratequotation is given by stating the number of units of “term currency” or “pricecurrency”

2.    Within the interbankmarket, spreads, which are the difference between the bid and ask prices, are razorsharp and not known to player outside the inner circle.

3.    Exchange rate fluctuationscan effectively raise or lower prices and can be a financial planning ordealfor companies and individuals.

4.    The purchasingpower parity (PPP) theory uses the long-term equilibrium exchange rate of twocurrencies to equalize their purchasing power.

5.    Like PPP, the balanceof payments model focuses largely on tradable goods and services, ignoring theincreasing role of global capital flows.

IV Translate thefollowing sentences into English.

1. 汇率是指一国货币相对于他国货币的价格，它由供需决定。

2. 外汇市场上对美元的需求反映外国居民对美国货物、服务和金融索取权的需求。

3.美元供给反映美国居民对外国货物、服务和金融索取权的需求。

4. 导致美元贬值的因素可能是以下一项或多项：美国利率相对于外国利率下降；美国居民收入提高；外国居民收入降低；美国通货膨胀高于外国通货膨胀。

5.  购买力平价理论的前提假设是货物具有同质性且可交易，不存在交易成本或贸易障碍。