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
The theory of relative purchasing power parity states that, between two nations, the ________. A) inflation rates are unrelated B) exchange rate differential reflects the inflation rate differential C) inflation rate is smaller in weaker currencies D) the interest rate is greater than the inflation rate during depreciations ANSWER Answer: B
Date: September 19th, 2020
The following options are all important reasons to study the theory of PPP EXCEPT: A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies. B) deviations from PPP significantly affect the profitability of firms. C) it is particularly useful […]
Date: September 19th, 2020
Controlled disbursing ________. A) reduces a firm’s average collection period B) is a popular technique for effectively managing inventory to keep its level low C) is a popular technique for increasing payment float D) reduces a firm’s average payment period ANSWER C
Date: September 19th, 2020
When the price level of an economy is ________, ________ is occurring. Conversely, when the price level is ________, ________ is occurring. A) rising, deflation, falling, inflation B) rising, inflation, falling, deflation C) falling, inflation, rising, deflation D) falling, deflation, rising, deflation ANSWER Answer: B
Date: September 19th, 2020
If a country’s freely floating currency is undervalued in terms of purchasing power parity, its capital account is likely to be A) in deficit or tending toward a deficit. B) in surplus or tending toward a surplus. C) subsidized by the International Monetary Fund. D) a candidate for loans from the World Bank. […]
Date: September 19th, 2020
