ECO 302 Week 11 Quiz

8/20/2019 ECO 302 Week 11 Quiz

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ECO 302 Week 11 Quiz - Strayer

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1. With an internati!na" #e$t!r rea" %&' i# $!n#umpti!n p"u# (r!##in)e#tment p"u# (!)ernment pur$ha#e# p"u# net rea" a##et in$!me *r!m abr!ad.

2. +he ba"an$e !* trade i# net e,p!rt# !r imp!rt# "e## e,p!rt#.

3. hi(her $urrent a$$!unt de*i$it i# $au#ed by a de$"inin( d!me#ti$e$!n!my.

. +he rea" $urrent a$$!unt ba"an$e i# rea" nati!na" #a)in( "e## netd!me#ti$ in)e#tment.

5. +ari**# and u!ta# "ead t! a hi(her rea" %' (r!th rate in the $!untryimp!#in( them.

. +he "a !* !ne pri$e #ay# that there mu#t be a uniue pri$e *!r a (!!din ea$h "!$ati!n here it i# #!"d.

. 4* the h!me $!untry ha# a rea" %&' hi$h i# (reater than rea" d!me#ti$e,penditure then the h!me $!untry ha# a $urrent-a$$!unt de*i$it.

8. 6!rei(n dire$t in)e#tment !$$ur# hen the h!me $!untry a$uire#additi!na" !ner#hip !* $apita" "!$ated in the re#t !* the !r"d.



8/20/2019 ECO 302 Week 11 Quiz


7. 4* the h!me $!untry ha# ne(ati)e trade ba"an$e then it# rea" %' i#"e## than rea" d!me#ti$ e,penditure.

10. +he eui"ibrium bu#ine##-$y$"e m!de" predi$t# that the rea" $urrent-a$$!unt ba"an$e i"" be $!unter$y$"i$a".

%*LTPLE C.OCE

1. +he "a !* !ne pri$e:a. pr!hibit# pri$e di#$riminati!n. $. i# a ta, !n imp!rt#.

b. i# that market# !rk t! en#ure that the #ame (!!d ha# the #ame pri$e in a""

"!$ati!n#. d. pr!hibit# pri$e in$rea#e# un"e## *irm# $an #h! their areunu#ua" $ir$um#tan$e#.

2. +he di**eren$e beteen rea" %' in a $"!#ed e$!n!my and rea" %&'in a !pen e$!n!my i#:a. net rea" a##et in$!me *r!m abr!ad. $. net internati!na" in)e#tment

p!#iti!n. b. net imp!rt#. d. the trade ba"an$e.

3. ea" %&' in an !pen e$!n!my i#:a. the $"!#ed e$!n!my rea" !utput "e## net rea" a##et in$!me *r!m abr!ad. $.

the $"!#ed e$!n!my rea" !utput "e## (r!## rea" a##et in$!me *r!m abr!ad. b. the $"!#ed e$!n!my rea" !utput p"u# (r!## rea" a##et in$!me *r!m abr!ad. d.

the $"!#ed e$!n!my rea" !utput p"u# net rea" a##et in$!me *r!m abr!ad.

. &et rea" a##et in$!me *r!m abr!ad i#:a. rt-19*t-1/'. $. ;*t - *t-1</'.

b. =t - ;Ct >4t >%t <. d. ;;*t - *t-1</'< - ;rt-19*t-1/'<.

5. &et rea" *!rei(n in)e#tment i#:

a. rt-19*t-1/'. $. ;*t - *t-1</'. b. =t - ;Ct >4t >%t <. d. ;;*t - *t-1</'< - ;rt-19*t-1/'<.

8/20/2019 ECO 302 Week 11 Quiz


. +he trade ba"an$e i#:

a. rt-19*t-1/'. $. ;*t - *t-1</'. b. =t - ;Ct >4t >%t <. d. ;;*t - *t-1</'< - ;rt-19*t-1/'<.

. +he ba"an$e !n the $urrent a$$!unt:a. rt-19*t-1/'. $. ;rt-19*t-1/'< > ;;*t - *t-1</'<.

b. =t > ;rt-19*t-1/'< - ;Ct >4t >%t <. d. ;;*t - *t-1</'< - ;rt-19*t-1/'<.

8. +he ba"an$e !n the $urrent a$$!unt i#:a. rea" %&' "e## net *!rei(n in)e#tment in$!me. $. rea" %&' "e## thenet internati!na" in)e#tment p!#iti!n.

b. rea" %&' "e## net *!rei(n in)e#tment.d. rea" %&' "e## rea" d!me#ti$e,penditure.

7. +he rea" $urrent-a$$!unt ba"an$e i#:a. net rea" a##et in$!me *r!m abr!ad "e## trade ba"an$e $. trade

ba"an$e time# the net rea" a##et in$!me *r!m abr!ad. b. trade ba"an$e p"u# the net rea" a##et in$!me *r!m abr!ad. d. trade ba"an$e "e## the net rea" in$!me *r!m abr!ad.

10. +he rea" $urrent a$$!unt ba"an$e eua"#:

a. net *!rei(n in)e#tment#. $. the trade ba"an$e p"u# net rea" a##etin$!me *r!m abr!ad.

b. rea" %&' "e## rea" d!me#ti$ e,penditure. d. a"" !* the ab!)e.

11. +he rea" $urrent a$$!unt ba"an$e eua"#:a. net *!rei(n in)e#tment#. $. the trade ba"an$e.

b. the net internati!na" in)e#tment p!#iti!n. d. a"" !* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


12. +he rea" $urrent a$$!unt ba"an$e eua"#:a. the trade ba"an$e. $. the net internati!na" in)e#tment p!#iti!n.

b. rea" %&' "e## rea" d!me#ti$ e,penditure. d. a"" !* the ab!)e.

13. +he rea" $urrent a$$!unt ba"an$e eua"#a. the net internati!na" in)e#tment p!#iti!n. $. the trade ba"an$e p"u# netrea" a##et in$!me *r!m abr!ad.

b. the trade ba"an$e. d. a"" !* the ab!)e.

1. +he trade ba"an$e i#:a. the di**eren$e beteen e,p!rt# and imp!rt#. $. the rea" $urrent-a$$!unt

ba"an$e "e## net rea" a##et in$!me *r!m abr!ad. b. rea" %' "e## rea" d!me#ti$ e,penditure. d. a"" !* the ab!)e.

15. +he trade ba"an$e i#:a. the di**eren$e beteen e,p!rt# and imp!rt#. $. net *!rei(n in)e#tment.

b. rea" a##et in$!me *r!m abr!ad. d. a"" !* the ab!)e.

1. +he trade ba"an$e i#:a. the ba"an$e !n the $urrent a$$!unt. $. net *!rei(n in)e#tment.

b. rea" %' "e## rea" d!me#ti$ e,penditure. d. a"" !* the ab!)e.

1. +he trade ba"an$e i#:a. net *!rei(n in)e#tment. $. the rea" $urrent-a$$!unt ba"an$e "e## netrea" a##et in$!me *r!m abr!ad.

b. the net internati!na" in)e#tment p!#iti!n. d. a"" !* the ab!)e.

18. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $reditan in$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:

a. an in$rea#e in the ?'@. $. an in$rea#e in b!rr!in( *r!m*!rei(ner#.

8/20/2019 ECO 302 Week 11 Quiz


b. an in$rea#e in h!me $!untry (r!## d!me#ti$ in)e#tment. d. a"" !* theab!)e.

17. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $reditan in$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:a. an in$rea#e in the ?'@. $. an in$rea#e in "endin( t! *!rei(ner#.

b. an de$rea#e in h!me $!untry (r!## d!me#ti$ in)e#tment. d. a"" !* theab!)e.

20. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $redit

an in$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:a. an de$rea#e in the ?'@. $. an in$rea#e in "endin( t! *!rei(ner#.

b. an in$rea#e in h!me $!untry (r!## d!me#ti$ in)e#tment. d. a"" !* theab!)e.

21. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $reditan in$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:a. a de$rea#e in the ?'@. $. an in$rea#e in b!rr!in( *r!m*!rei(ner#.

b. a de$rea#e in (r!## d!me#ti$ in)e#tment. d. a"" !* the ab!)e.

22. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $reditan in$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:a. a "ar(er $urrent a$$!unt de*i$it. $. a "!er ?'@.

b. a #ma""er $urrent a$$!unt de*i$it. d. "!er d!me#ti$ (r!## in)e#tment.

23. 4n the market $"earin( m!de" ith !r"d market# *!r (!!d# and $redita de$rea#e in te$hn!"!(y in the h!me $!untry $au#e#:a. a "ar(er $urrent a$$!unt de*i$it. $. a hi(her ?'@.

b. a #ma""er $urrent a$$!unt de*i$it. d. hi(her d!me#ti$ (r!##in)e#tment.

8/20/2019 ECO 302 Week 11 Quiz


2. +he !pen e$!n!my eui"ibrium bu#ine##-$y$"e m!de" predi$t# that therea" $urrent a$$!unt ba"an$e i"" be:a. a$y$"i$a". $. $!unter$y$"i$a".

b. pr!$y$"i$a". d. e,!(en!u#.

25. +he !pen e$!n!my eui"ibrium bu#ine##-$y$"e m!de" predi$t# that therea" $urrent a$$!unt ba"an$e i"" be:a. the #ame in e,pan#i!n# and re$e##i!n. $. hi(h in e,pan#i!n# and"! in re$e##i!n#.

b. "! in e,pan#i!n# and hi(h in re$e##i!n#. d. in)ariant ith the bu#ine## $y$"e.

2. 4n AS data the rea" $urrent a$$!unt ba"an$e i#:a. pr!$y$"i$a" hen the m!de" predi$t# it i"" be $!unter$y$"i$a". $.

$!unter$y$"i$a" hen the m!de" predi$t# it i"" be pr!$y$"i$a". b. pr!$y$"i$a" a# the m!de" predi$t#. d. $!unter$y$"i$a" a# the m!de" predi$t#.

2. 4n AS data the rea" $urrent a$$!unt ba"an$e i#:a. pr!$y$"i$a". $. $!unter$y$"i$a".

b. eak"y pr!$y$"i$a". d. eak"y $!unter$y$"i$a".

28. Whi"e a$$!rdin( t! the m!de" the $urrent a$$!unt ba"an$e i"" be$!unter$y$"i$a" the ba"an$e $an a"#! de$"ine due t!:a. a temp!rary ne(ati)e #h!$k "ike a har)e#t *ai"ure. $. a temp!rary

in$rea#e in (!)ernment pur$ha#e# a# in ar time. b. a "e## de)e"!ped $!untry ha)in( a "! $apita" #t!$k. d. a"" !* theab!)e.

27. Whi"e a$$!rdin( t! the m!de" the $urrent a$$!unt ba"an$e i"" be$!unter$y$"i$a" the ba"an$e $an a"#! de$"ine due t!:a. a temp!rary ne(ati)e #h!$k "ike a har)e#t *ai"ure. $. a permanentde$rea#e in (!)ernment pur$ha#e#.

b. a "e## de)e"!ped $!untry ha)in( p!!r in#tituti!n# *!r (r!th. d. a""!* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


30. Whi"e a$$!rdin( t! the m!de" the $urrent a$$!unt ba"an$e i"" be

$!unter$y$"i$a" the ba"an$e $an a"#! de$"ine due t!:a. a temp!rary p!#iti)e #h!$k "ike a (!!d har)e#t. $. a permanentde$rea#e in (!)ernment pur$ha#e#.

b. a "e## de)e"!ped $!untry ha)in( a "! $apita" #t!$k. d. a"" !* theab!)e.

31. Whi"e a$$!rdin( t! the m!de" the $urrent a$$!unt ba"an$e i"" be$!unter$y$"i$a" the ba"an$e $an a"#! de$"ine due t!:

a. a temp!rary p!#iti)e #h!$k "ike a p!#iti)e har)e#t $. a temp!raryin$rea#e in (!)ernment pur$ha#e# a# in ar time.

b. a "e## de)e"!ped $!untry ha)in( a hi(h $apita" #t!$k. d. a"" !* theab!)e.

32. 4n the i$ardian $a#e i* the (!)ernment bud(et de*i$it i# in$rea#edthen the trade ba"an$e:a. m!)e# t!ard a de*i$it t!!. $. i# una**e$ted.

b. m!)e# t!ard a #urp"u#. d. i# e,!(en!u#.

33. +he term# !* trade are:a. ;B per h!me (!!d</;B per *!rei(n (!!d<. $. *!rei(n (!!d per h!me(!!d.

b. the number !* unit# !* *!rei(n (!!d# that $an be imp!rted *!r ea$h unit !*h!me (!!d# e,p!rted. d. a"" !* the ab!)e.

3. +he term# !* trade are:a. ;B per h!me (!!d</;B per *!rei(n (!!d<. $. h!me (!!d per *!rei(n(!!d.

b. the number !* unit# !* h!me (!!d# that $an be e,p!rted *!r ea$h unit !**!rei(n (!!d# imp!rted. d. a"" !* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


35. +he term# !* trade are:a. ;B per *!rei(n (!!d</;B per h!me (!!d<. $. h!me (!!d per *!rei(n(!!d.

b. the number !* unit# !* *!rei(n (!!d# that $an be imp!rted *!r ea$h unit !*h!me (!!d# e,p!rted. d. a"" !* the ab!)e.

3. +he term# !* trade are:a. ;B per h!me *!rei(n/;B per h!me (!!d<. $. *!rei(n (!!d per h!me(!!d.

b. the number !* unit# !* h!me (!!d# that $an be e,p!rted *!r ea$h unit !**!rei(n (!!d# imp!rted. d. a"" !* the ab!)e.

3. n in$rea#e in the term# !* trade:a. rai#e# rea" %'. $. in$rea#e# rea" nati!na" #a)in( i* the $han(e interm# !* trade i# "e## than *u""y permanent.

b. in$rea#e# $!n#umpti!n. d. a"" !* the ab!)e.

38. n in$rea#e in the term# !* trade:a. rai#e# rea" %'. $. "!er# rea" nati!na" #a)in(.

b. de$rea#e# $!n#umpti!n. d. a"" !* the ab!)e.

37. n in$rea#e in the term# !* trade:a. redu$e# rea" %'. $. "!er# rea" nati!na" #a)in(.


0. n in$rea#e in the term# !* trade:a. redu$e# rea" %'. $. in$rea#e# rea" nati!na" #a)in( i* the $han(e interm# !* trade i# "e## than *u""y permanent.


1. de$rea#e in the term# !* trade:

8/20/2019 ECO 302 Week 11 Quiz


a. redu$e# rea" %'. $. de$rea#e# rea" nati!na" #a)in( i* the $han(e interm# !* trade i# "e## than *u""y permanent.


2. de$rea#e in the term# !* trade:a. redu$e# rea" %'. $. in$rea#e# rea" nati!na" #a)in( i* the $han(e interm# !* trade i# "e## than *u""y permanent.


3. 4* the (!)ernment redu$e# tari**# !r u!ta# !n imp!rt# then:

a. rea" %' i"" in$rea#e. $. net d!me#ti$ in)e#tment i"" ri#e. b. the rea" $urrent a$$!unt ba"an$e *a""#. d. a"" !* the ab!)e.

. 4* the (!)ernment redu$e# tari**# !r u!ta# !n imp!rt# then:a. rea" %' i"" in$rea#e. $. net d!me#ti$ in)e#tment i"" *a"".

b. the rea" $urrent a$$!unt ba"an$e ri#e#. d. a"" !* the ab!)e.

5. 4* the (!)ernment redu$e# tari**# !r u!ta# !n imp!rt# then:a. rea" %' i"" de$rea#e. $. net d!me#ti$ in)e#tment i"" *a"".

b. the rea" $urrent a$$!unt ba"an$e *a""#. d. a"" !* the ab!)e.

. 4* the (!)ernment redu$e# tari**# !r u!ta# !n imp!rt# then:

a. rea" %' i"" de$rea#e. $. net d!me#ti$ in)e#tment i"" ri#e. b. the rea" $urrent a$$!unt ba"an$e ri#e#. d. a"" !* the ab!)e.

. 4* the (!)ernment imp!#e# !r in$rea#e# tari**# !r u!ta# !n imp!rt#then:a. rea" %' i"" de$rea#e. $. net d!me#ti$ in)e#tment i"" *a"".


8/20/2019 ECO 302 Week 11 Quiz


8. 4* the (!)ernment imp!#e# !r in$rea#e# tari**# !r u!ta# !n imp!rt#then:a. rea" %' i"" de$rea#e. $. net d!me#ti$ in)e#tment i"" ri#e.


7. 4* the (!)ernment imp!#e# !r in$rea#e# tari**# !r u!ta# !n imp!rt#then:a. rea" %' i"" in$rea#e. $. net d!me#ti$ in)e#tment i"" ri#e.


50. 4* the (!)ernment redu$e# tari**# !r u!ta# !n imp!rt# then:a. rea" %' i"" in$rea#e. $. net d!me#ti$ in)e#tment i"" *a"".


51. 4* e !b#er)e that the pri$e !* a (!!d i# hi(her in !ne "!$ati!n than inan!ther "!$ati!n thi# !b#er)ati!na. )i!"ate# the "a !* !ne pri$e. $. )i!"ate# the "a !* !ne %'.

b. )a"idate# the "a !* !ne pri$e.d. )a"idate# the "a !* !ne %'.

52. 6!rei(n dire$t in)e#tment i#a. the h!me $!untry# additi!na" #upp"y !* "ab!r t! the re#t !* the !r"d. $.

the h!me $!untry# additi!na" demand *!r "ab!r *r!m the re#t !* the !r"d. b. the h!me $!untry# additi!na" !ner#hip !* $apita" in the re#t !* the !r"d.d.

the *!rei(n $!untry# additi!na" demand *!r "ab!r in the h!me $!untry.

53. When the h!me $!untry a$uire# additi!na" !ner#hip !* $apita""!$ated in the re#t !* the !r"d it ha# i#a. redu$ed *!rei(n indire$t in)e#tment. $. a$uired *!rei(n dire$tin)e#tment.

b. a$uired *!rei(n di)e#ted in)e#tment. d. redu$ed *!rei(n dire$tinter)enti!n.

8/20/2019 ECO 302 Week 11 Quiz


5. ea" (r!## nati!na" pr!du$t in an !pen e$!n!my in$"ude#a. rea" %'. $. net rea" "ab!r $!#t# *r!m abr!ad.

b. net rea" a##et in$!me *r!m abr!ad. d. ;a< and ;b<.

55. 4* the h!me $!untry ha# a rea" %&' hi$h i# (reater than rea" d!me#ti$e,penditure then the h!me $!untry ha#a. a $urrent-a$$!unt #up"u#. $. ba"an$e !n the $urrent a$$!unt.

b. a $urrent-a$$!unt de*i$it. d. n!ne !* the ab!)e.

5. 4* the h!me $!untry ha# a rea" %&' hi$h i# "e## than rea" d!me#ti$e,penditure then the h!me $!untry ha#a. a $urrent-a$$!unt #up"u#. $. ba"an$e !n the $urrent a$$!unt.


5. 4* the h!me $!untry ha# a rea" %&' hi$h i# eua" t! rea" d!me#ti$e,penditure then the h!me $!untry ha#a. a $urrent-a$$!unt #up"u#. $. ba"an$e !n the $urrent a$$!unt.


58. 4* the h!me $!untry ha# a rea" %&' hi$h i# (reater than net *!rei(nin)e#tment then the h!me $!untry ha#a. a $urrent-a$$!unt #up"u#. $. ba"an$e !n the $urrent a$$!unt.


57. 4* the h!me $!untry ha# a rea" %' hi$h i# (reater than rea" d!me#ti$e,penditure then the h!me $!untry ha#a. a trade ba"an$e that i# p!#iti)e. $. a trade ba"an$e that i# zer!.

b. a trade ba"an$e that i# ne(ati)e. d. n!ne !* the ab!)e.

0. 4* the h!me $!untry ha# a rea" %' hi$h i# "e## than rea" d!me#ti$e,penditure then the h!me $!untry ha#

8/20/2019 ECO 302 Week 11 Quiz


a. a trade ba"an$e that i# p!#iti)e. $. a trade ba"an$e that i# zer!. b. a trade ba"an$e that i# ne(ati)e. d. n!ne !* the ab!)e.

1. Di#t!ri$a" data !n the A.S. $urrent a$$!unt ba"an$e #h!a. a de*i$it *r!m the turn !* the tentieth $entury thr!u(h the mid-170#. $.

a #urp"u# *!r the tentieth $entury thr!u(h the mid-170#. b. a #urp"u# in m!#t !* the pa#t t! de$ade#. d. a zer! $urrent a$$!unt ba"an$e *!r m!#t !* the tentieth $entury.

2. Di#t!ri$a" data !n the A.S. $urrent a$$!unt ba"an$e #h! that !ne !*

the "ar(e#t rati!# *!r the $urrent-a$$!unt ba"an$e re"ati)e t! %' !$$urreda. a# a #urp"u# in the ear"y 170#. $. a# a #urp"u# in the ear"y 2000#.

b. a# a de*i$it in the ear"y 1770#. d. a# a de*i$it in the ear"y 2000#.

3. Di#t!ri$a" data !n the rati! !* A.S. n!mina" e,p!rt# and imp!rt# t!%' #h!a. a (enera""y ri#in( rati! #in$e 1750. $. a (enera""y p!#iti)e but #teadyrati! #in$e 1750.

b. a (enera""y *a""in( rati! #in$e 1750. d. a rati! h!)erin( ar!und zer!#in$e 1750.

. Di#t!ri$a" data !n the rati! !* A.S. net internati!na" in)e#tment t! %'#h!a. a #teady in$rea#e in the rati! #in$e 1780. $. a #teady rati! #in$e 1780.

b. a #teady de$"ine in the rati! #in$e 1780. d. n! di#$ernab"e pattern in

the rati! #in$e 1780.

5. Di#t!ri$a" data !n the rati! !* A.S. net *a$t!r in$!me *r!m abr!ad t!%' #h!a. a #teady in$rea#e in the rati! #in$e 1780. $. a peak in the rati! ar!und1780 *!""!ed by a de$"ine thr!u(h 178.

b. a #teady de$"ine in the rati! #in$e 170. d. n! di#$ernab"e pattern inthe rati! #in$e 1780.

8/20/2019 ECO 302 Week 11 Quiz


. de)e"!pin( $!untry ith (!!d pr!#pe$t# mean# that the $!untry#$urrent-a$$!unt ba"an$e !u"d "ike"y bea. ne(ati)e. $. zer!.

b. p!#iti)e. d. imp!##ib"e t! determine.

S.O)T !/SWE)

1. What i# the rea" $urrent a$$!unt ba"an$e

2. What are the e**e$t# !* a permanent in$rea#e in te$hn!"!(y in the !penmarket $"earin( m!de"

3. What d!e# the !pen market $"earin( m!de" predi$t ab!ut thea##!$iati!n !* the rea" $urrent a$$!unt ba"an$e and rea" %' (r!th and hat d! thedata !n the AS #h!

. !e# a (!)ernment bud(et de*i$it "ead t! a rea" $urrent-a$$!untde*i$it

5. What are the e**e$t# !* redu$in( tari**# and u!ta# in the !pen market$"earin( m!de"

Cha&ter 1(

T)*E+,!LSE

1. 4* the d!""ar per yen e,$han(e rate ri#e# then #! d!e# the )a"ue !* thed!""ar.

2. When ab#!"ute pur$ha#in( p!er parity h!"d# the rea" e,$han(e rate i#1.

8/20/2019 ECO 302 Week 11 Quiz


3. e"ati)e pur$ha#in( p!er parity #ay# that the $!untry ith the hi(herin*"ati!n rate i"" #ee it# $urren$y depre$iate.

. +he intere#t rate di**erentia" beteen t! $!untrie# i# the rea" intere#trate.

5. 4* a $!untry *i,e# it# e,$han(e rate it (i)e# up $!ntr!" !* it# m!ney#upp"y.

. +he n!mina" e,$han(e rate i# mea#ured by uantitie# !* $urren$ie#e,$han(ed hi"e the rea" e,$han(e rate i# mea#ured by uantitie# !* (!!d#e,$han(ed.

. 6i,ed e,$han(e rate# are determined by market *!r$e#.

8. 6"e,ib"e e,$han(e rate# are determined by market *!r$e#.

7. '!!rer $!untrie# tend t! ha)e hi(h rea" e,$han(e rate# be$au#e the pri$e# *!r n!ntradab"e (!!d# i# "! in the#e $!untrie#.

10. +he $!mbinati!n !* intere#t rate parity and re"ati)e pur$ha#in( p!er parity imp"ie# that e,pe$ted rea" in$!me# are the #ame in the h!me $!untry and the

*!rei(n $!untry.

%*LTPLE C.OCE

1. +he n!mina" e,$han(e rate i#:a. *!rei(n (!!d per h!me (!!d. $. the number !* unit# !* *!rei(n $urren$y

per !ne unit !* the h!me $urren$y.

8/20/2019 ECO 302 Week 11 Quiz


b. the number !* unit# !* *!rei(n $urren$y per !ne unit !* h!me $urren$y di)ided by the rati! !* the *!rei(n pri$e "e)e" t! the h!me pri$e "e)e". d. a"" !* theab!)e.

2. +he rea" e,$han(e rate i#:a. *!rei(n (!!d per h!me (!!d. $. the number !* unit# !* *!rei(n $urren$y

per !ne unit !* the h!me $urren$y. b. n!mina" e,$han(e rate di)ided by the rati! !* the *!rei(n pri$e "e)e" t! theh!me pri$e "e)e". d. a"" !* the ab!)e.

3. 6"e,ib"e e,$han(e rate# are determined by:a. the market. $. the A&.

b. the h!me $!untry (!)ernment. d. the 4nternati!na" ?!netary 6und.

. 6i,ed e,$han(e rate# are determined by:a. the market. $. the A&.

b. the (!)ernment# !* the t! $!untrie#. d. the 4nternati!na"?!netary 6und.

5. 'ur$ha#in( p!er parity i# the idea that:a. the n!mina" e,$han(e eua"# the rati! !* the *!rei(n pri$e t! the h!me pri$e.

$. the n!mina" e,$han(e eua"# the h!me pri$e "e## the *!rei(n pri$e. b. the n!mina" e,$han(e rate eua"# the *!rei(n pri$e time the h!me pri$e. d.

the n!mina" e,$han(e eua"# the h!me pri$e "e## the *!rei(n pri$e.

. 'ur$ha#in( p!er parity may n!t h!"d due t!:a. in*"ati!n. $. market $"earin(.

b. n!ntraded (!!d# #u$h a# #er)i$e#. d. a"" !* the ab!)e.

. 'ur$ha#in( p!er parity may n!t h!"d due t!:

a. in*"ati!n. $. #hi*t# in the term# !* trade. b. market $"earin(. d. a"" !* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


8. b#!"ute"y pur$ha#in( p!er parity mean#:

a. the uantity !* (!!d# that $an be b!u(ht in the h!me $!untry eua"# theuantity !* (!!d that $an be b!u(ht in the *!rei(n $!untry. $. the n!mina"e,$han(e rate i# the rati! !* the *!rei(n pri$e t! the h!me pri$e.

b. buyin( and #e""in( (!!d# "!!k# eua""y attra$ti)e in b!th $!untrie#. d.a"" !* the ab!)e.

7. b#!"ute pur$ha#in( p!er parity mean#:a. the uantity !* (!!d# that $an be b!u(ht in the h!me $!untry eua"# the

uantity !* (!!d that $an be b!u(ht in the *!rei(n $!untry. $. the n!mina"e,$han(e rate i# the rati! !* the h!me pri$e t! the !r"d pri$e.

b. buyin( and #e""in( (!!d# "!!k# m!re attra$ti)e in the h!me $!untry. d.a"" !* the ab!)e.

10. b#!"ute pur$ha#in( p!er parity mean#:a. the uantity !* (!!d# that $an be b!u(ht in the h!me $!untry i# (reater thanthe uantity !* (!!d# that $an be b!u(ht in the *!rei(n $!untry. $. then!mina" e,$han(e rate i# the rati! !* the *!rei(n pri$e t! the !r"d pri$e.

b. buyin( and #e""in( (!!d# "!!k# eua""y attra$ti)e in b!th $!untrie#. d.a"" !* the ab!)e.

11. b#!"ute"y pur$ha#in( p!er parity mean#:a. the uantity !* (!!d# that $an be b!u(ht in the h!me $!untry i# (reater thanthe uantity !* (!!d# that $an be b!u(ht in the *!rei(n $!untry. $. the

n!mina" e,$han(e rate i# the rati! !* the *!rei(n pri$e t! the h!me pri$e. b. buyin( and #e""in( (!!d# "!!k# m!re attra$ti)e in the h!me $!untry. d.a"" !* the ab!)e.

12. &!n-traded (!!d# in$"ude:a. per#!na" #er)i$e# "ike hair$ut#. $. $!n#umer (!!d# "ike #hirt#.

b. durab"e (!!d# "ike t) #et#. d. a"" !* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


13. &!n-traded (!!d# in$"ude:a. $!mm!ditie# "ike heat. $. $!n#umer (!!d# "ike #hirt#.

b. rea" e#tate. d. a"" !* the ab!)e.

1. e"ati)e pur$ha#in( p!er parity #ay# that:a. the (r!th rate !* the n!mina" e,$han(e rate i# the *!rei(n in*"ati!n rate "e##the h!me in*"ati!n rate. $. the (r!th rate !* the n!mina" e,$han(e rate i#the h!me in*"ati!n rate p"u# the *!rei(n in*"ati!n rate.

b. the (r!th rate !* the n!mina" e,$han(e rate i# the *!rei(n in*"ati!n rate time#the h!me in*"ati!n rate. d. the (r!th rate !* the n!mina" e,$han(e rate i#the *!rei(n in*"ati!n rate di)ided by the h!me in*"ati!n rate.

15. e"ati)e pur$ha#in( p!er parity imp"ie# a $!untry i"" #ee it#$urren$y *a"" in )a"ue i*a. it# in*"ati!n rate i# "!er than the *!rei(n in*"ati!n rate. $. it# in*"ati!nrate i# hi(her than the *!rei(n in*"ati!n rate.

b. it# pri$e "e)e" i# hi(her than the *!rei(n pri$e "e)e". d. it# pri$e "e)e" i#"!er than the *!rei(n pri$e "e)e".

1. e"ati)e pur$ha#in( p!er parity imp"ie# a $!untry i"" #ee it#$urren$y ri#e in )a"ue i*a. it# in*"ati!n rate i# "!er than the *!rei(n in*"ati!n rate. $. it# in*"ati!nrate i# hi(her than the *!rei(n in*"ati!n rate.

b. it# pri$e "e)e" i# hi(her than the *!rei(n pri$e "e)e". d. it# pri$e "e)e" i#"!er than the *!rei(n pri$e "e)e".

1. e"ati)e pur$ha#in( p!er parity imp"ie# a $!untry i"" #ee it#$urren$y keep the #ame )a"ue i*a. it# in*"ati!n rate i# "!er than the *!rei(n in*"ati!n rate. $. it# in*"ati!nrate i# eua" t! the *!rei(n in*"ati!n rate.

b. it# pri$e "e)e" i# hi(her than the *!rei(n pri$e "e)e". d. it# pri$e "e)e" i#eua" t! the *!rei(n pri$e "e)e".

8/20/2019 ECO 302 Week 11 Quiz


18. 4* the h!me in*"ati!n rate i# 5F and the *!rei(n in*"ati!n rate i# 7Fthen by re"ati)e pur$ha#in( p!er parity the h!me $!untry !u"d e,pe$t i# e,$han(erate t!:a. ri#e in )a"ue by 5F. $. ri#e )a"ue by F.

b. *a"" in )a"ue by 5F. d. *a"" in )a"ue by F.

17. 4* the h!me in*"ati!n rate i# 7F and the *!rei(n in*"ati!n rate i# 5Fthen by re"ati)e pur$ha#in( p!er parity the h!me $!untry !u"d e,pe$t i# e,$han(erate t!:a. ri#e in )a"ue by 5F. $. ri#e )a"ue by F.

b. *a"" in )a"ue by 5F. d. *a"" in )a"ue by F.

20. 4* the h!me in*"ati!n rate i# 5F and the *!rei(n in*"ati!n rate i# 5Fthen by re"ati)e pur$ha#in( p!er parity the h!me $!untry !u"d e,pe$t i# e,$han(erate t!:a. ri#e in )a"ue by 5F. $. ha)e n! $han(e in it# )a"ue.

b. *a"" in )a"ue by 5F. d. *a"" in )a"ue by 10F.

21. 4ntere#t rate parity #ay# that:a. the intere#t rate di**erentia" i# the (r!th rate !* the n!mina" e,$han(e rate.

$. the intere#t rate di**erentia" i# the (r!th rate !* the rea" e,$han(e rate. b. the intere#t rate di**erentia" i# rati! !* the *!rei(n pri$e "e)e" t! the h!me pri$e"e)e". d. the intere#t rate di**erentia" i# rati! !* the h!me pri$e "e)e" t! the*!rei(n pri$e "e)e".

22. 4* the h!me intere#t rate i# 5F and the *!rei(n intere#t rate i# F thenthe e,pe$ted (r!th !* the n!mina" e,$han(e rate i#:a. 2F. $. -2F.

b. 5F. d. -12F.

23. 4* the h!me intere#t rate i# 5F and the *!rei(n intere#t rate i# F thenthe di**eren$e in the e,pe$ted in*"ati!n rate# i#:a. 2F. $. -2F.

b. 5F. d. -12F.

8/20/2019 ECO 302 Week 11 Quiz


2. 4* the h!me intere#t rate i# F and the *!rei(n intere#t rate i# 5F thenthe e,pe$ted (r!th !* the n!mina" e,$han(e rate i#:

a. 2F. $. -2F. b. F. d. -12F.

25. 4* the h!me intere#t rate i# F and the *!rei(n intere#t rate i# 5F thenthe di**eren$e in the e,pe$ted in*"ati!n rate# i#:a. 2F. $. -2F.

b. F. d. -12F.

2. 4* ab#!"ute pur$ha#in( p!er parity h!"d# under *i,ed e,$han(e rate#:a. the h!me intere#t rate eua"# the *!rei(n intere#t rate. $. the (r!thrate !* the n!mina" e,$han(e rate i# zer!.

b. the h!me in*"ati!n rate eua"# the *!rei(n in*"ati!n rate. d. a"" !* theab!)e.

2. 4* ab#!"ute pur$ha#in( p!er parity h!"d# under *i,ed e,$han(e rate#:a. the h!me intere#t rate eua"# the *!rei(n intere#t rate. $. the (r!thrate !* the n!mina" e,$han(e rate i# p!#iti)e.

b. the h!me in*"ati!n i# "!er than the *!rei(n in*"ati!n rate. d. a"" !* theab!)e.

28. 4* ab#!"ute pur$ha#in( p!er parity h!"d# under *i,ed e,$han(e rate#:a. the h!me intere#t rate i# hi(her than the *!rei(n intere#t rate. $. the(r!th rate !* the n!mina" e,$han(e rate i# ne(ati)e.

b. the h!me in*"ati!n rate eua"# the *!rei(n in*"ati!n rate. d. a"" !* theab!)e.

27. 4* ab#!"ute pur$ha#in( p!er parity h!"d# under *i,ed e,$han(e rate#:a. the h!me intere#t rate i# hi(her than the *!rei(n intere#t rate. $. the

(r!th rate !* the n!mina" e,$han(e rate i# zer!.

8/20/2019 ECO 302 Week 11 Quiz


b. the h!me in*"ati!n rate i# "!er than the *!rei(n in*"ati!n rate. d. a""!* the ab!)e.

30. 4* a $!untry ith a *i,ed e,$han(e rate trie# t! rai#e it# m!ney #t!$k iti"":a. #ee it# $entra" bank (ain d!me#ti$ (!)ernment b!nd#. $. #ee it#m!ney #t!$k *a"" ba$k t! it# initia" "e)e".

b. #ee it# $entra" bank "!#e internati!na" re#er)e#. d. a"" !* the ab!)e.

31. 4* a $!untry ith a *i,ed e,$han(e rate trie# t! rai#e it# m!ney #t!$k it

i"":a. #ee it# $entra" bank (ain d!me#ti$ (!)ernment b!nd#. $. #ee it#m!ney #t!$k $!ntinue t! ri#e.

b. #ee it# $entra" bank (ain internati!na" re#er)e#. d. a"" !* the ab!)e.

32. 4* a $!untry ith a *i,ed e,$han(e rate trie# t! rai#e it# m!ney #t!$k:a. #ee it# $entra" bank "!#e d!me#ti$ (!)ernment b!nd#. $. #ee it#m!ney #t!$k $!ntinue t! ri#e.

b. #ee it# $entra" bank "!#e internati!na" re#er)e#. d. a"" !* the ab!)e.

33. 4* a $!untry ith a *i,ed e,$han(e rate trie# t! rai#e it# m!ney #t!$k:a. #ee it# $entra" bank "!#e d!me#ti$ (!)ernment b!nd#. $. #ee it#m!ney #t!$k *a"" ba$k t! it# initia" "e)e".

b. #ee it# $entra" bank (ain internati!na" re#er)e#. d. a"" !* the ab!)e.

3. re)a"uati!n i# hen a $!untry:a. a""!# it# $urren$y# )a"ue t! *"!at. $. "!er# the *i,ed )a"ue !* it#$urren$y.

b. rai#e# the *i,ed )a"ue !* it# $urren$y. d. a""!# it# $urren$y )a"ue t! be #et by the market.

35. de)a"uati!n i# hen a $!untry:

8/20/2019 ECO 302 Week 11 Quiz


a. a""!# it# $urren$y# )a"ue t! *"!at. $. "!er# the *i,ed )a"ue !* it#$urren$y.

b. rai#e# the *i,ed )a"ue !* it# $urren$y. d. a""!# it# $urren$y )a"ue t! be #et by the market.

3. depre$iati!n i# hen the )a"ue !* a $!untry# $urren$y:a. i# *i,ed by the (!)ernment. $. *a""# in )a"ue in the e,$han(e market.

b. ri#e# in )a"ue in the e,$han(e market. d. i# *i,ed in re"ati!n#hip t!(!"d.

3. n appre$iati!n i# hen the )a"ue !* a $!untry# $urren$y:a. i# *i,ed by the (!)ernment. $. *a""# in )a"ue in the e,$han(e market.

b. ri#e# in )a"ue in the e,$han(e market. d. i# *i,ed in re"ati!n#hip t!(!"d.

38. Ander a *i,ed e,$han(e rate re(ime "!##e# !* internati!na" re#er)e#imp"y that:a. the pre##ure !n a $!untry that need# t! de)a"ue it $urren$y i# (reater. $.

$!untrie# are n!t under mu$h pre##ure t! $han(e the )a"ue !* their $urren$y. b. the pre##ure !n a $!untry that need# t! re)a"ue it# $urren$y i# (reater. d.

$!untrie# $an n!t $han(e the )a"ue !* their $urren$ie#.

37. 6i,ed e,$han(e rate#:a. *a$i"itate tran#a$ti!n# beteen $!untrie# $!mpared t! *"!atin( e,$han(e rate#.

$. $!n#train m!netary p!"i$y !**i$ia"#.

b. make m!netary p!"i$y interdependent beteen the $!untrie# *i,in( theire,$han(e rate. d. a"" !* the ab!)e.

0. 6i,ed e,$han(e rate#:a. *a$i"itate tran#a$ti!n# beteen $!untrie# $!mpared t! *"!atin( e,$han(e rate#.

$. (i)e d!me#ti$ m!netary p!"i$y !**i$ia"# m!re aut!n!my. b. make m!netary p!"i$y independent beteen the $!untrie# *i,in( theire,$han(e rate. d. a"" !* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


1. 6i,ed e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# ri#kier $!mpared t! *"!atin( e,$han(erate#. $. (i)e d!me#ti$ m!netary p!"i$y !**i$ia"# m!re aut!n!my.

b. make m!netary p!"i$y interdependent beteen the $!untrie# *i,in( theire,$han(e rate. d. a"" !* the ab!)e.

2. 6i,ed e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# ri#kier $!mpared t! *"!atin( e,$han(erate#. $. $!n#train m!netary p!"i$y !**i$ia"#.

b. make m!netary p!"i$y independent beteen the $!untrie# *i,in( theire,$han(e rate. d. a"" !* the ab!)e.

3. 6"!atin( e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# m!re di**i$u"t. $. pr!)ide aut!n!my*!r m!netary p!"i$y auth!ritie#.

b. make m!netary p!"i$y independent. d. a"" !* the ab!)e.

. 6"!atin( e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# m!re di**i$u"t. $. $!n#trainm!netary p!"i$y !**i$ia"#.

b. make m!netary p!"i$y interdependent beteen the $!untrie#. d. a""!* the ab!)e.

5. 6"!atin( e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# ea#ier. $. $!n#train m!netary p!"i$y!**i$ia"#.

b. make m!netary p!"i$y independent. d. a"" !* the ab!)e.

. 6"!atin( e,$han(e rate#:a. make tran#a$ti!n# beteen $!untrie# ea#ier. $. pr!)ide aut!n!my *!rm!netary p!"i$y auth!ritie#.

b. make m!netary p!"i$y interdependent beteen the $!untrie#. d. a""!* the ab!)e.

8/20/2019 ECO 302 Week 11 Quiz


. Ander *i,ed e,$han(e rate# a $!untry#:

a. m!ney #upp"y i# *i,ed. $. m!netary p!"i$y maker# are n!tindependent.

b. in*"ati!n rate i# *i,ed. d. a"" !* the ab!)e.

8. Ander *i,ed e,$han(e rate# a $!untry#:a. m!ney #upp"y i# *i,ed. $. m!netary p!"i$y maker# are independent.

b. in*"ati!n rate i"" ri#e. d. a"" !* the ab!)e.

7. Ander *i,ed e,$han(e rate# a $!untry#:a. m!ney #upp"y i# d!me#ti$a""y $!ntr!""ed. $. m!netary p!"i$y maker#are independent.

b. in*"ati!n rate i# *i,ed. d. a"" !* the ab!)e.

50. Ander *i,ed e,$han(e rate# a $!untry#:a. m!ney #upp"y i# d!me#ti$a""y $!ntr!""ed. $. m!netary p!"i$y maker#are n!t independent.

b. in*"ati!n rate i"" ri#e. d. a"" !* the ab!)e.

51. Supp!#e the e,$han(e rate beteen the A.S. d!""ar and the r(entinian pe#! i# 3 pe#!# per d!""ar t!day. 4t ri#e# t! 3.1 pe#!# per d!""ar the ne,t day. +hi#

mean# the d!""ar ha#a. appre$iated and the pe#! ha# depre$iated. $. appre$iated and the pe#!ha# appre$iated.

b. depre$iated and the pe#! ha# appre$iated. d. depre$iated and the pe#!ha# depre$iated.

52. 4n 1750 !ne A.S. d!""ar b!u(ht 31 Gapane#e yen and in 200 !neA.S. d!""ar b!u(ht 11 yen. +he A.S. d!""ar

a. (ained !)er ha"* !* it# )a"ue in term# !* yen. $. appre$iated re"ati)e t! theyen.

8/20/2019 ECO 302 Week 11 Quiz


b. "!#t !)er ha"* !* it# )a"ue in term# !* yen. d. appre$iated re"ati)e t!m!#t !* the !r"d# $urren$ie#.

53. 4* a $!untry# (!)ernment inter)ene# !*ten in the e,$han(e rate marketthen the $!untrya. i# !peratin( $"!#er t! a *"e,ib"e e,$han(e-rate m!de" than a *i,ed e,$han(e-rate m!de". $. i# !peratin( $"!#er t! a *i,ed e,$han(e-rate m!de" than a*"e,ib"e e,$han(e-rate m!de".

b. i"" e,perien$e repeated appre$iati!n# !* it# $urren$y. d. i# n!t amember !* the 4nternati!na" ?!netary 6und ;4?6<.

5. t a #imp"i*ied "e)e" pur$ha#in( p!er parity make# #en#e be$au#e i*it did n!t h!u#e*h!"d# !u"da. ant t! pur$ha#e a"" !* their (!!d# in !ne p"a$e the m!re e,pen#i)e $!untry.

$. n!t ant t! pur$ha#e any (!!d# *r!m either $!untry. b. ant t! pur$ha#e eua" p!rti!n# !* their (!!d# in ea$h $!untry. d.

ant t! pur$ha#e a"" !* their (!!d# in !ne p"a$e the $heaper $!untry.

55. +he rea" e,$han(e rate i# mea#ured in unit# !* a. (!!d# b!u(ht in the *!rei(n $!untry re"ati)e t! (!!d# b!u(ht in the h!me$!untry. $. "ab!r #upp"y in the *!rei(n $!untry re"ati)e t! "ab!r #upp"y inthe h!me $!untry.

b. pri$e# in the *!rei(n $!untry re"ati)e t! pri$e# in the h!me $!untry. d.n!ne !* the ab!)e.

5. 4* y!u $an buy !ne p!und !* *"!ur *!r B1.25 in the A.S. and !ne p!und!* *"!ur *!r 0.5 H ;p!und#< in the A.@. then pur$ha#in( p!er parity imp"ie# thea. rea" e,$han(e rate i# 1.25 H per B. $. n!mina" e,$han(e rate i# 1. H

per B. b. n!mina" e,$han(e rate i# 0. H per B. d. rea" e,$han(e rate i# 0. H per B.

5. 'ur$ha#in( p!er parity imp"ie# thea. n!mina" e,$han(e rate eua"# !ne. $. rea" e,$han(e rate eua"# !ne.

b. n!mina" e,$han(e i# (reater than !ne. d. rea" e,$han(e rate i# "e##than !ne.

8/20/2019 ECO 302 Week 11 Quiz


58. +he a"a##a-Samue"#!n hyp!the#i# identi*ie# a pattern !* p!!r

$!untrie# ha)in(a. "! n!mina" e,$han(e rate#. $. "! rea" e,$han(e rate#.

b. hi(h n!mina" e,$han(e rate#. d. hi(h rea" e,$han(e rate#.

57. +he pattern !* rea" e,$han(e rate# a$r!## $!untrie# that i# identi*ied bythe a"a##a-Samue"#!n hyp!the#i# !$$ur# be$au#ea. "!-in$!me $!untrie# tend t! ha)e "! pri$e# *!r n!ntradab"e (!!d#. $.

"!-in$!me $!untrie# tend t! ha)e "! pri$e# *!r tradab"e (!!d#.

b. "!-in$!me $!untrie# tend t! ha)e hi(h pri$e# *!r n!ntradab"e (!!d#. d."!-in$!me $!untrie# tend t! ha)e "! rea" e,$han(e rate#.

0. +he $!mbinati!n !* intere#t-rate parity and re"ati)e pur$ha#in( p!er parity "ead# t! the $!n$"u#i!n that thea. *!rei(n e,pe$ted rea" intere#t rate i# (reater than the h!me e,pe$ted rea"intere#t rate. $. *!rei(n e,pe$ted n!mina" intere#t rate eua"# the h!mee,pe$ted rea" intere#t rate.

b. *!rei(n e,pe$ted rea" intere#t rate eua"# the h!me e,pe$ted rea" intere#t rate.d. *!rei(n e,pe$ted n!mina" intere#t rate eua"# the h!me e,pe$ted

n!mina" intere#t rate.

1. +he rett!n W!!d# Sy#tem re*er# t!a. the *"e,ib"e e,$han(e-rate #y#tem that the 4nternati!na" ?!netary 6und ;4?6<

pre*er#. $. the *i,ed e,$han(e-rate re(ime hi$h "inked !ther $urren$ie# t!

the d!""ar and the d!""ar t! (!"d. b. the *"e,ib"e e,$han(e-rate re(ime intr!du$ed Iu#t a*ter W!r"d War 44 that (a)e6ran$e the maI!r r!"e in #tabi"izin( $urren$ie#. d. the *i,ed e,$han(e-ratere(ime hi$h "inked the A.S. and !ther $urren$ie# t! #i")er.

2. Ander the rett!n W!!d# Sy#tem the A.S. d!""ar a. a# a""!ed t! )ary ar!und a ide band $!mpared t! !ther parti$ipatin($!untrie#. $. a# n!t *i,ed but the A.S. n!mina" intere#t rate a# *i,ed

re"ati)e t! !ther parti$ipatin( $!untrie#.

8/20/2019 ECO 302 Week 11 Quiz


b. )aried a$$!rdin( t! market $!nditi!n# but the !ther parti$ipatin( $!untrie# didn!t a""! their $urren$ie# t! )ary. d. a# the !n"y parti$ipatin( $urren$y"inked dire$t"y t! (!"d.

3. 4* the $!untry !* C!"!mbia de$ide# t! *i, it# n!mina" e,$han(e rateith the A.S. d!""ar then in the "!n( run it i"" ha)ea. r!u(h"y the #ame in*"ati!n rate a# the A.S. $. r!u(h"y the #ame rea"%' a# the A.S.

b. a hi(her in*"ati!n rate than the in*"ati!n rate *!r the A.S. d. a hi(herrea" %' than the rea" %' in the A.S.

. One rea#!n that a $!untry ith a re$!rd !* hi(h in*"ati!n mi(ht ant t!*i, it# n!mina" e,$han(e rate ith the A.S. d!""ar i# thata. the $!untry i"" in the "!n( run ha)e ab!ut the #ame in*"ati!n rate a# the A.S.

$. the *i,ed e,$han(e-rate i"" a$t a# a m!netary-p!"i$y ru"e hi$h pre)ent# the $!untry *r!m rene(in( !n a p"ed(e !* "! in*"ati!n. b. the *i,ed e,$han(e-rate i"" he"p the $!untry (ain $redibi"ity in *i(htin( hi(hin*"ati!n. d. a"" !* the ab!)e.

5. 4n e,$han(e rate p!"i$y #teri"izati!n re*er# t!a. the market# abi"ity t! $"ear e,$e## uantitie# !* $urren$y #upp"ied rapid"y. $.

anti-$rime "a# the A.S. pa##ed t! pre)ent Jm!ney "aunderin(.K b. the $entra" bank# attempt t! !**#et an initia" inter)enti!n in the e,$han(emarket. d. the pr!$e## the 4nternati!na" ?!netary 6und ;4?6< u#e# t! "endt! a $!untry in need.

. 4n a *i,ed e,$han(e-rate re(ime the m!ney #upp"y i#a. e,!(en!u#. $. end!(en!u#.

b. interdependent. d. hi(h"y #keed.

SDO+ &SWE

1. What i# a n!mina" e,$han(e rate

8/20/2019 ECO 302 Week 11 Quiz


2. What i# ab#!"ute pur$ha#in( p!er parity hat d!e# it imp"y and hymi(ht it n!t h!"d

3. What i# re"ati)e pur$ha#in( p!er parity and hen d!e# it #ay theh!me $!untry i"" #ee it# $urren$y "!#e )a"ue

. What i# intere#t-rate parity and hat d!e# thi# imp"y ab!ut hen thee,$han(e rate i"" be #tab"e

5. What are the ad)anta(e# !* *i,ed and *"!atin( e,$han(e rate#

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ECO 302 Week 11 Quiz