1. If a U.S. firm sells property in Japan, and the USD appreciates, the U.S. firm will suffer an opportunity loss upon converting yen into USD.

TRUE

FALSE.

2. Assume that the dollar is quoted at 105 yen per dollar, and that Japan's central bank prefers an exchange rate of 120 yen per dollar. In order to achieve its objective the Bank of Japan will buy dollars in the FX market.

TRUE

FALSE.

3. Targeting the exchange rate at 120 yen per dollar, as in the previous question, may be designed to stimulate imports.

TRUE

FALSE.

4. Southland has dollarized. Since it cannot print USD, its money supply cannot change.

TRUE

FALSE.

5. An increase in the dollar price of the euro represents an appreciation of the dollar.

TRUE

FALSE.