Economics - Exchange-Rate Determination
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This is The MCQs of Economics
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Question 1 of 38
1. Question
The relationship between the exchange rate and the prices of tradable goods is known as the:
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Question 2 of 38
2. Question
If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals:
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Question 3 of 38
3. Question
If a Big Mac hamburger sells for the same dollar value in New York as in London then:
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Question 4 of 38
4. Question
Relatively low real interest rates in the United States tend to:
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Question 5 of 38
5. Question
Relatively high real interest rates in the United States tend to:
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Question 6 of 38
6. Question
Assume that the United States faces an a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to:
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Question 7 of 38
7. Question
In the presences of purchasing power parity, if one dollar exchanges for 2 British pounds and if a DVD player costs $400 in the United States then in Britain the DVD player should cost:
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Question 8 of 38
8. Question
IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be:
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Question 9 of 38
9. Question
A primary reason that explains the appreciation in the value of U.S dollar would be:
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Question 10 of 38
10. Question
The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by:
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Question 11 of 38
11. Question
When the price of foreign currency (i.e the exchange rate) is below the equilibrium level:
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Question 12 of 38
12. Question
When the price of foreign currency (the exchange rate) is above the equilibrium level:
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Question 13 of 38
13. Question
The appreciation in the value of the dollar in the early 1980s is explained by all of the following except:
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Question 14 of 38
14. Question
Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that:
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Question 15 of 38
15. Question
If Canada runs a balance of payments surplus and exchange rates are floating:
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Question 16 of 38
16. Question
If Japan runs current account deficit and exchange rates are floating:
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Question 17 of 38
17. Question
The exchange value of the U.S dollar is primarily determined by:
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Question 18 of 38
18. Question
For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent The above variables would cause investment funds to flow from:
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Question 19 of 38
19. Question
For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from:
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Question 20 of 38
20. Question
Given a system of floating exchange rates rising income in the United States would trigger a (an):
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Question 21 of 38
21. Question
Given a system of floating exchange rates falling income in the United States would trigger a (an):
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Question 22 of 38
22. Question
Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an):
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Question 23 of 38
23. Question
Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an):
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Question 24 of 38
24. Question
Which example of market expectations causes the dollar to appreciate against the yen– expectations that the U.S economy will have:
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Question 25 of 38
25. Question
Which example of market expectations causes the dollar to depreciate against the yen – expectation that the U.S economy will have:
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Question 26 of 38
26. Question
Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a (an):
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Question 27 of 38
27. Question
Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium economic theory suggests that the nation’s balance of payments would move into a surplus position if there occurred in the nation a (an):
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Question 28 of 38
28. Question
Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to:
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Question 29 of 38
29. Question
Suppose that rising U.S income leads to higher sales and profits in the United States This would likely result in:
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Question 30 of 38
30. Question
Due to Japan’s high saving rate, suppose that the Japanese invest abroad. This investment may result in a/an ___ of the Japanese yen and therefore a for Japan
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Question 31 of 38
31. Question
Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro,and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would:
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Question 32 of 38
32. Question
Assume that a Big Mac hamburger cost $3 in the United States 2 pesos in Mexico The implied purchasing power parity exchange rate between the peso and the dollar is:
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Question 33 of 38
33. Question
Consulting firms that use large-scale econometric models to forecast exchange rate movements are engaging in:
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Question 34 of 38
34. Question
Exchange rate overshooting often occurs because:
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Question 35 of 38
35. Question
The assets market approach is most helpful in explaining:
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Question 36 of 38
36. Question
According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to:
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Question 37 of 38
37. Question
The asset market approach views exchange rates as being determined mainly by:
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Question 38 of 38
38. Question
The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except
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