What is the Fisher Effect? Provide an example. What will be an ideal response? ANSWER All else equal, a rise in a country’s expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer. Similarly, a fall in the expected inflation rate will eventually cause a […]
Date: September 10th, 2020
The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
The two-country, multi-product model differs from the two-country, two-product model in that, in the former A) the relative wage ratio will determine the pattern of trade ( which good is exported by which country. B) which country will export which product is determined entirely by labor productivity data. C) full specialization is likely to hold […]
Date: September 10th, 2020
The U.S. is the world’s largest creditor. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
What is a pollution haven? What will be an ideal response? ANSWER A pollution haven is a country with relatively lax environmental standards or enforcement. In effect, countries with strict standards export activities that pose high environmental risks to countries that are willing to accept the risks.
Date: September 10th, 2020
An exchange of developing country debt for an ownership position in a developing country business is called A) IMF conditionality. B) indirect investment. C) debt-equity swap. D) debt-rescheduling. ANSWER C
Date: September 10th, 2020
When a country’s currency is devalued A) output decreases. B) output increases and the money supply decreases. C) the money supply decreases. D) output decreases and the money supply increases. E) both the output and the money supply increases. ANSWER E
Date: September 10th, 2020
A country’s gross national product (GNP) is A) the value of all final goods and services produced by its factors of production and sold on the market in a given time period. B) the value of all intermediate goods and services produced by its factors of production and sold on the market in a given […]
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
