If the Costa Rican colone is expected to depreciate in the future, it will temporarily appreciate as people move to take advantage based on this expectation. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
If Juana contracts to buy U.S. office equipment in U.S. dollars and her domestic currency depreciates against the U.S. dollar between the time the contract is signed and the bill is paid, she will wind up paying less for the equipment because she stayed in the spot market. Indicate whether the statement is true or […]
Date: September 10th, 2020
At higher income levels the interest rate must be lower to achieve money market equilibrium. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Describe the policies that would be associated with Import Substitution Industrialization. What are the primary criticisms of these policies? What will be an ideal response? ANSWER Replacing imported manufactured goods with domestically produced products is the basis of import substitution. Tariffs and other trade restrictions were used, the government created or supported new industrial […]
Date: September 10th, 2020
A current account deficit implies that A) the country is a net lender with the rest of the world. B) the country is running a net capital account surplus. C) foreign investment in domestic securities is at very low levels. D) All of the above. ANSWER B
Date: September 10th, 2020
The Ricardian model of comparative advantage lends support to the argument that A) trade tends to worsen the conditions of unskilled labor in rich countries. B) trade tends to worsen the conditions of owners of capital in rich countries. C) trade tends to worsen the conditions of workers in poor countries. D) trade tends to […]
Date: September 10th, 2020
The following is an example of Radio Shack hedging its foreign currency risk A) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack makes a forward-exchange deal to buy yen. B) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack makes a forward-exchange […]
Date: September 10th, 2020
Intraindustry trade can lead to lower prices and job creation in both the exporting and the importing nation. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
When Jeneva went to Costa Rica in July 2008, a U.S. dollar was worth 550 colones. If today a U.S. dollar is worth 650 colones, it means that the U.S. dollar has depreciated against the colone. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
A balance sheet for the central bank of Pecunia is shown below: Central Bank Balance Sheet Assets Liabilities Foreign assets $1,000 Deposits held by private banks $500 Domestic assets $1,500 Currency in circulation $2,000 Please write the new balance sheet if the bank sells $100 worth of foreign bonds for domestic currency. ANSWER Central […]
Date: September 10th, 2020
