Voting power in the IMF is determined by a country’s A) political power. B) quota. C) size. D) All of the above. ANSWER B
Date: September 10th, 2020
According to the text, which of the following factors may make the theory of purchasing power parity unrealistic? A) Purchasing power parity works only with traded goods. B) Trading countries may stop exchanging goods once prices between them equalize. C) Shipping, insurance, and transaction costs may reduce the implication of purchasing power parity. D) Prices […]
Date: September 10th, 2020
If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then an investor should A) invest only in dollars. B) invest only in euros. C) be indifferent between dollars and euros. D) invest only in dollars if the exchange rate is expected to remain constant. E) invest only in […]
Date: September 10th, 2020
How can regional concentration of firms in an industry lead to external economies of scale? Give examples of these types of industrial clusters in the United States. Are they always beneficial? What will be an ideal response? ANSWER When an industry is highly concentrated in a specific location, this leads to a decrease in […]
Date: September 10th, 2020
How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country? What will be an ideal response? ANSWER In the two-good-two-country version of the Ricardian model, comparative advantage is totally determined by physical productivity ratios. […]
Date: September 10th, 2020
While the Brady Plan did not end the debt crisis, it was a significant step toward greater stability in the Latin American region. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
One of the leading alternative theories to the HO model of international trade is the Human Skills theory, which was developed by A) Donald Keesing. B) Adam Smith. C) David Ricardo. D) G. D. A. MacDougall. ANSWER A
Date: September 10th, 2020
Which of the following is not a factor which would be relevant to country risk analysis? A) political uncertainty B) external debt C) economic growth D) none of the above. ANSWER D
Date: September 10th, 2020
Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would A) have no effect on nominal exchange rates. B) be completely offset by changes […]
Date: September 10th, 2020
To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation. What will be an ideal response? ANSWER Lower right quadrant shows the equilibrium in the U.S. Money Market, where = / A given interest rate R1$ […]
Date: September 10th, 2020
