The Figure Given Below Depicts the Foreign Exchange Market for British

question 54

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-If you receive a dollar return of 6 percent on a one-year Korean bond that yields 10 percent annually, this means that between the purchase date and the time of maturity:

• A)the Korean won (KR
• W) has depreciated 4 percent against the U.S. dollar.
• B)the dollar price of the Korean won (KR
• W) has risen by 10 percent.
• C)the percentage change in the dollar per Korean won exchange rate is 6 percent.
• D)the dollar proceeds from the Korean bond are 4 percent higher than the initial dollar investment.
• E)the dollar has depreciated 16 percent against the Korean won.

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Definitions:

Natural Rate

A concept referring to the level of economic activity or rate (such as unemployment) that corresponds to the economy's long-term potential or equilibrium state.

Long-run Unemployment

A situation where the unemployment rate persists at a high level for a long period of time, often due to structural changes in the economy.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and reporting data on employment, labor market activity, working conditions, and price changes.

Average Workweek

The average number of hours worked per week by employees in a specific sector or economy.