Quiz 9 - Exam Name MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1 If a British automobile sells

Quiz 9 - Exam Name MULTIPLE CHOICE Choose the one...

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Unformatted text preview: Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If a British automobile sells for £20,000 and the British pound is worth $1.50, then the dollar price of the automobile is 1) _______ A) $1.60. B) $30,000. C) $12,500. D) $20,000. 2) When a country'ʹs nominal exchange rate appreciates, the price of 2) _______ A) that country'ʹs goods produced and sold at home increases. B) foreign goods sold in the country increases. C) that country'ʹs goods abroad decreases. D) that country'ʹs goods abroad increases. 3) If the British pound depreciates against the U.S. dollar, 3) _______ A) British consumers lose by an increase in the pound price of U.S. exports Britain. B) U.S. consumers lose by an increase in the dollar price of British exports to the United States. C) British businesses gain by an increase in the dollar price of exports to the United States. D) British consumers gain by a decrease in the pound price of U.S. exports to Britain. 4) If the price level in Japan increases more rapidly than the price level in Britain, we would expect 4) _______ A) interest rates in Japan to lower than interest rates in Britain. B) the British pound to depreciate against the Japanese yen. C) the Japanese yen to depreciate against the British pound. D) Japanese productivity to have increased more rapidly than British productivity. 5) The theory of purchasing power parity assumes that 5) _______ A) real exchange rates are volatile. B) inflation rates are roughly the same in most countries. C) movements in nominal exchange rates are the result of movements in relative price levels. D) movements in nominal exchange rates are the result of movements in real exchange rates. 6) If the 2005 inflation rate in Canada is 4 percent, and the inflation rate in Mexico is 2 percent, then the theory of purchasing power parity predicts that, during 2005, the value of the Canadian dollar in terms of Mexican pesos will 6) _______ A) fall by 6 percent. B) fall by 2 percent. C) rise by 2 percent. D) rise by 6 percent. 7) From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009, amount of Federal Reserve assets rose, leading to 7) _______ A) a high inflation. B) a huge increase in the monetary base. C) a huge expansion of the money supply. D) an economic expansion. 8) The purpose of the commitment by the Fed to keep the federal funds rate at zero for a long period of time is to 8) _______ A) increase the short term interest rates. B) lower the short term interest rates. C) lower the long term interest rates. D) increase the long term interest rates. 9) Temporary, short-­‐‑term discount loans to banks in areas in which agriculture and tourism are important are known as 9) _______ A) primary credit. B) seasonal credit. C) repo loans. D) secondary credit. 10) How did Operation Twist affect the monetary base? 10) ______ A) indeterminate B) no change C) reduced D) increased 1) B 2) D 3) A 4) C 5) C 6) B 7) B 8) C 9) B 10) B ...
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  • Spring '13
  • Chikhladze
  • interest  rates, British  pound, nominal  exchange  rates

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