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
A 150% return in Belarus is higher than a 15% dollar return in the U.S. A) because arbitrage opportunities exist. B) when the inflation controls are suspended in Belarus. C) it depends on whether these are nominal or real returns. D) regardless of nominal or real returns. ANSWER Answer: C
Date: September 19th, 2020
What is the name of the expression that refers to the costs that a firm incurs in changing its prices? A) fixed costs B) variable costs C) cost-base pricing D) menu costs ANSWER Answer: D
Date: September 19th, 2020
What is more appropriate to use when attempting to find information about the purchasing power of a currency? A) the spot exchange rate B) the forward rate C) the price levels D) the price indexes ANSWER Answer: C
Date: September 19th, 2020
When the external purchasing power or a currency is greater than the internal purchasing power, the currency is said to be ________. A) overvalued B) undervalued C) at parity D) in arbitrage ANSWER Answer: A
Date: September 19th, 2020
If people expect that their future purchasing power will decline, what will happen to the exchange rate today? What will be an ideal response? ANSWER Answer: Typically, when people think that the purchasing power of a money is going to decline in the future, due to higher expected inflation, they try to sell […]
Date: September 19th, 2020
