1. In January 2003 the average exchange rate of the euro to the dollar was .941605. In December 2003 the average rate was .813343 euros to the dollar. This means that the dollar
A)	was weaker at the end of 2003 versus the euro than it was at the beginning of 2003.
B)	was stronger at the end of 2003 versus the euro than it was at the beginning of 2003
C)	Neither. The exchange rate does not reflect the strength or weakness of a currency

2. Countries that depend on exports to keep their economy growing strongly will generally prefer that their currencies be
A)	weak relative to the currencies of the countries with whom they trade.
B)	strong relative to the currencies of the countries with whom they trade.

3. If interest rates rise in the US in the next year while eurozone interest rates stay stable or go down, one would expect that the dollar would ______________ against the euro, other things being basically equal.
A)	weaken
B)	strengthen
C)	Neither. Interest rates are irrelevant to the exchange rate.

4. If the American dollar strengthens against the euro, then Americans should pay ____________ for goods imported from the eurozone than they do now.
A)	more
B)	less

5. A strong economy will generally be associated with a _______________ currency.
A)	strong
B)	weak

6. For some time China has pegged its currency to the dollar rather than letting it “float” or react to market forces. If China is persuaded to move away from pegging of its currency so closely to the dollar, it is expected that the Chinese currency would strengthen versus the dollar. This means that
A)	Chinese consumers would likely pay more for goods imported from America while American consumers would pay less for Chinese goods.
B)	Chinese consumers would likely pay less for goods imported from America while American consumers would pay more for goods imported from China.
C)	both Chinese and American consumers would pay more for goods imported from the other country.
D)	both Chinese and American consumers would pay less for goods imported from the other country.

7. The very low interest rates in the US over the past couple of years have
A)	made the dollar stronger than it would otherwise have been given the American recession.
B)	encouraged other countries to raise their rates to compensate.
C)	are part of the reason for the slide in the value of the dollar during this time period.
D)	None of the above.

8. If a US company is considering moving some of it jobs offshore, the weaker the dollar relative to the currency of the country where it plans to move the jobs, the more it would
A)	increase the economic incentive for companies to send jobs offshore.
B)	decrease the economic incentive for US-based companies to send jobs offshore.
C)	probably not figure into the calculation at all since income and expenses would all be translated into US dollars in the long run anyway.

9. One way in which the price of gasoline in America is related to the weakening dollar is that
A)	the oil producing countries outside of the US need more dollars per barrel to maintain the same purchasing power in terms of currency exchange they had when the dollar was stronger. Therefore they have raised their price in dollar terms.
B)	oil producing countries are waiting until the dollar strengthens to begin increasing production, and therefore a lower supply means higher prices.
C)	the countries with stronger currencies can outbid the US on the spot market.
D)	None of the above. The two things are not related.

10. The American trade deficit and the overall American government deficit are financed in large part by governments and institutions from other countries. Some people are concerned that if the American dollar continues to slide against other currencies, this could pose a significant threat to the American economy because these debt holders
A)	might decide to sell their dollars in order to cut their losses and this would drive the dollar still lower as demand decreases
B)	will demand higher interest rates for new debt, which could impact the American economic recovery.
C)	Both of the above.
D)	Neither of the above.