In its absolute version, purchasing power parity states that price levels worldwide should be ________ when expressed in a common currency. A) equal B) roughly equal C) different D) opportunities for arbitrage ANSWER Answer: A
Date: September 19th, 2020
When is a currency said to be overvalued? A) when its internal purchasing power is greater than its external purchasing power B) when its external purchasing power is greater than its internal purchasing power C) when its external purchasing power is less than its internal purchasing power D) when its internal purchasing power is equal […]
Date: September 19th, 2020
All of the following options are some of the factors that cause deviations from absolute PPP EXCEPT: A) transaction costs. B) non-traded goods. C) balance of payments. D) changes in relative prices. ANSWER Answer: A
Date: September 19th, 2020
To be truly marketable, a security must ________. A) be highly rated by a credit rating agency B) have the characteristics of a callable bond C) be readily convertible into cash D) have a maturity of 10 years or more ANSWER C
Date: September 19th, 2020
________ are obligations of the U.S. Treasury with common maturities of 91 to 182 days and that have a strong secondary market. A) Treasury notes B) Treasury bills C) Federal agency issues D) Banker’s acceptances ANSWER B
Date: September 19th, 2020
Which one of the following reasons for violations of the Law of One Price is the most obvious? A) tariffs on imports B) banking rules C) industrial policies D) exchange rate controls ANSWER Answer: A
Date: September 19th, 2020
A ________ is a telegraphic communication that, via bookkeeping entries, removes funds from the payer’s bank and deposits them in an account of the payee’s bank. A) direct send B) wire transfer C) depository transfer check D) preauthorized check ANSWER B
Date: September 19th, 2020
In the absence of pure competition, firms who segment markets may be able to charge different prices in different countries for the same good. This practice is known as ________. A) mark to market B) interest rate arbitrage C) pricing to market D) speculation ANSWER Answer: C
Date: September 19th, 2020
The version of purchasing power parity that states the exchange rates will adjust to equalize the internal and external purchasing power of a currency is known as the ________. A) relative purchasing power parity B) equilibrium purchasing power parity C) absolute purchasing power parity D) real exchange rate equilibrium ANSWER Answer: C
Date: September 19th, 2020
Within Germany, what is the name for the power of a U.S. dollar when it is used to purchase an amount of goods and services? A) internal purchasing power B) external purchasing power C) absolute purchasing power parity D) relative purchasing power parity ANSWER Answer: B
Date: September 19th, 2020
