Podcast
Questions and Answers
What is one advantage of an appreciating Ethiopian Birr mentioned in the text?
What is one advantage of an appreciating Ethiopian Birr mentioned in the text?
- Travel abroad becomes cheaper
- Imported goods become more affordable (correct)
- Exporters can sell abroad more easily
- Local inflation rates rise
Which factor is a disadvantage of a depreciating Ethiopian Birr according to the text?
Which factor is a disadvantage of a depreciating Ethiopian Birr according to the text?
- Increased prices on imports (correct)
- Promotion of foreign tourism
- Exporters face less competition from imports
- Travel abroad becomes cheaper
How does an appreciating Ethiopian Birr impact foreign travel?
How does an appreciating Ethiopian Birr impact foreign travel?
- It has no impact on foreign travel
- It makes foreign travel more expensive for tourists (correct)
- It reduces the cost of foreign travel for locals
- It encourages foreign tourists to visit Ethiopia
What does the cross exchange rate measure?
What does the cross exchange rate measure?
In the context of the text, what is the broad meaning of foreign exchange?
In the context of the text, what is the broad meaning of foreign exchange?
What is a con associated with an appreciating Ethiopian Birr?
What is a con associated with an appreciating Ethiopian Birr?
What is the primary function of the foreign exchange market according to the text?
What is the primary function of the foreign exchange market according to the text?
What is the real effective exchange rate (REER) a measure of?
What is the real effective exchange rate (REER) a measure of?
Which entity is not mentioned as a participant in the foreign exchange market in the text?
Which entity is not mentioned as a participant in the foreign exchange market in the text?
What does an increase in the real effective exchange rate (REER) imply?
What does an increase in the real effective exchange rate (REER) imply?
What is the purpose of hedging facilities in the foreign exchange market?
What is the purpose of hedging facilities in the foreign exchange market?
In the context of comparing the prices of American and Japanese cars, what does it mean when it is mentioned that 'the American car costs one-half of what the Japanese car costs'?
In the context of comparing the prices of American and Japanese cars, what does it mean when it is mentioned that 'the American car costs one-half of what the Japanese car costs'?
How does a nation's demand for foreign exchange change with the depreciation of its currency?
How does a nation's demand for foreign exchange change with the depreciation of its currency?
How does an increase in the real effective exchange rate (REER) impact a nation's trade competitiveness?
How does an increase in the real effective exchange rate (REER) impact a nation's trade competitiveness?
Which sector benefits from the provision of credit in the foreign exchange market?
Which sector benefits from the provision of credit in the foreign exchange market?
In the context of foreign exchange, what is the primary objective of a speculator?
In the context of foreign exchange, what is the primary objective of a speculator?
If a speculator believes that a particular foreign currency will rise in value, what action could they take according to the text?
If a speculator believes that a particular foreign currency will rise in value, what action could they take according to the text?
What is the main factor driving the demand for foreign exchange according to the text?
What is the main factor driving the demand for foreign exchange according to the text?
What happens to the dollar when the price level in Ethiopia increases?
What happens to the dollar when the price level in Ethiopia increases?
How do interest rate increases in Ethiopia affect the dollar?
How do interest rate increases in Ethiopia affect the dollar?
What happens to the birr when interest rates in the US increase?
What happens to the birr when interest rates in the US increase?
What does a real effective exchange rate (REER) divided by a price deflator measure?
What does a real effective exchange rate (REER) divided by a price deflator measure?
What occurs to the dollar when Americans increase their demand for Ethiopian coffee?
What occurs to the dollar when Americans increase their demand for Ethiopian coffee?
At current prices and exchange rates, how many American cars can be exchanged for one Japanese car?
At current prices and exchange rates, how many American cars can be exchanged for one Japanese car?
What is the main purpose of hedging in the context of foreign exchange?
What is the main purpose of hedging in the context of foreign exchange?
How does speculation differ from hedging in the foreign exchange market?
How does speculation differ from hedging in the foreign exchange market?
What would be the likely outcome if traders and investors did not engage in hedging according to the text?
What would be the likely outcome if traders and investors did not engage in hedging according to the text?
How does an increase in Ethiopia’s real GDP impact the dollar?
How does an increase in Ethiopia’s real GDP impact the dollar?
What characterizes the Flexible (Floating) Exchange Rate System?
What characterizes the Flexible (Floating) Exchange Rate System?
How does a speculative position differ from a hedged position in the foreign exchange market?
How does a speculative position differ from a hedged position in the foreign exchange market?
