The Balance of Payments always balances. Indicate whether the statement is true or false ANSWER TRUE Explanation: Sum of the credits and debits on all accounts will always be equal.
Date: September 10th, 2020
If one country’s wage level is very high relative to the other’s (the relative wage exceeding the relative productivity ratios), then if they both use the same currency A) neither country has a comparative advantage. B) only the low wage country has a comparative advantage. C) only the high wage country has a comparative advantage. […]
Date: September 10th, 2020
If people expect relative PPP to hold A) the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, in the United States and Europe, respectively, over the relevant horizon. B) the difference between the interest rates offered by dollar and euro deposits will equal […]
Date: September 10th, 2020
Speculation would involve using forward contracts and options to reduce the exchange rate risk on future foreign exchange transactions. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Inflationary tendencies and even hyperinflation in many Latin American countries have been exacerbated by the tendency of governments to A) tax too heavily. B) regulate too heavily. C) print money to finance policies to stimulate the economy. D) keep out foreign competition. E) use industrial policies to foster growth. ANSWER C
Date: September 10th, 2020
Please define and give an example of sterilized foreign exchange intervention. What will be an ideal response? ANSWER Sterilized foreign exchange intervention occurs when a central bank carries out equal foreign and domestic asset transactions in opposite directions to nullify the impact on the domestic money supply. An example is a central bank purchasing […]
Date: September 10th, 2020
All the following nations except ________ have recently utilized export-led growth policies. A) Hong Kong B) South Korea C) Argentina D) Singapore E) Taiwan ANSWER C
Date: September 10th, 2020
Which major actor is at the center of the foreign exchange market? A) corporations B) central banks C) commercial banks D) non-bank financial institutions E) individual firms ANSWER C
Date: September 10th, 2020
Tests of the Heckscher-Ohlin model by Bowen, Leamer, and Sveikauskas and by Maskus continue to A) provide strong support for the theory. B) provide weak support for the theory. C) provide evidence against the theory. ANSWER C
Date: September 10th, 2020
