Latin American economies have become relatively more closed to international trade since 1985. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Intraindustry trade is most common in the trade patterns of A) developing countries of Asia and Africa. B) developed countries of Western Europe. C) all countries. D) None of the above. ANSWER B
Date: September 10th, 2020
What is the expected dollar rate of return on euro deposits if today’s exchange rate is $1.10 per euro, next year’s expected exchange rate is $1.166 per euro, the dollar interest rate is 10%, and the euro interest rate is 5%? A) 10% B) 11% C) -1% D) 0% E) 15% ANSWER B
Date: September 10th, 2020
Describe and explain the relationship between expected inflation rates in two countries and their interest rate differential according to the PPP theory. What will be an ideal response? ANSWER Expected inflation is given by the following equation: Πe = (Pe – P)/P where Pe is the expected price level in a country a year […]
Date: September 10th, 2020
Many countries in sub-Saharan Africa have very low labor productivities in many sectors, for example in manufacturing and agriculture. They often despair of even trying to attempt to build their industries unless it is done in an autarkic context, behind protectionist walls because they do not believe they can compete with more productive industries abroad. […]
Date: September 10th, 2020
The current account can be defined as exports plus imports. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
The figure above represents the demand and cost functions facing a Brazilian Steel producing monopolist. If it were unable to export, and was constrained by its domestic market, what quantity would it sell at what price? What will be an ideal response? ANSWER It would sell 5 (million tons) at a price of $8/ton.
Date: September 10th, 2020
Which of the following are true statements about IBFs? A) IBFs are subject to reserve requirements. B) IBFs are allowed to receive deposits from, and make loans to, nonresidents of the U.S. or other IBFs. C) IBFs are subject to interest rate regulations. D) All of the above. ANSWER B
Date: September 10th, 2020
Fiscal expansion under fixed exchange rates will have what temporary effect? A) the money supply will decrease. B) output will decrease. C) the exchange rate will increase. D) the exchange rate will decrease. E) there will be no effect. ANSWER D
Date: September 10th, 2020
Illustrate the effectiveness of monetary policy with fixed exchange rates. What will be an ideal response? ANSWER The required intervention to maintain the fixed exchange rate will undo any effect on income of an increase or decrease in the money supply. Illustrate by shifting LM curve and then explaining how intervention will return LM […]
Date: September 10th, 2020
