Solving

Question 1

If a traveler has $1,000 CAD and the exchange rate is 1 CAD = 0.75 USD, how much will they have in USD?

Answer 1

$750 USD
Solution:
1
,
000
×
0.75
=
750
1,000×0.75=750

Question 2

If a company must pay ¥10,000,000 JPY in 90 days and the forward exchange rate is 1 JPY = 0.0075 USD, how much will the company need in USD?

Answer 2

$75,000 USD
Solution:
10
,
000
,
000
×
0.0075
=
75
,
000
10,000,000×0.0075=75,000

Question 3

If the exchange rate drops from 1 EUR = 1.20 USD to 1 EUR = 1.10 USD, has the EUR appreciated or depreciated?

Answer 3

EUR Depreciated

Explanation: The exchange rate decreased from 1.20 to 1.10, meaning the EUR has lost value relative to the USD.

Question 4

A company sells €500,000 EUR at a rate of 1 EUR = 1.25 USD. How much will they receive in USD?

Answer 4

$625,000 USD
Solution:
500
,
000
×
1.25
=
625
,
000
500,000×1.25=625,000

Question 5

If a central bank wants to reduce inflation, should it increase or decrease interest rates?

Answer 5

Increase Interest Rates

Explanation: Increasing interest rates reduces borrowing, slows spending, and helps control inflation.