Econ 243 Final exam AHKING

Econ 243 Final exam AHKING - Economics 243-01 Final...

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Economics 243-01 Final Examination December, 2000 Instructions: Put your name, social security number and your seat number on the blue book provided. Put all your answers in the blue book provided. Turn both question sheet and blue book in at the end of the examination. Part A is 25 points, Part B is 25 points, and part C is 30 points. The total is 80 points. Part A: Multiple Choice. Choose the best alternative that answer or completes the sentence. 1. Balance of Payments equilibrium means a. the balance of trade equals zero b. the current account balance equals zero c. the capital account balance equals zero d. the current account balance is exactly offset by the capital account balance 2. Macroeconomic equilibrium in an open economy requires a. goods market equilibrium b. money market equilibrium c. balance of payments equilibrium d. all of the above e. only (a) and (b) above 3. An implication of the asset approach is that a. since financial asset prices change rapidly, exchange rate should vary more than goods prices b. since PPP holds even in the short-run, goods prices should change as rapidly as the exchange rate c. covered interest parity will rarely hold if there is perfect capital mobility d. goods prices will be largely unaffected by exchange rate changes in the long run 4. Suppose the U.S. fixes the price of gold at $2.00 per ounce, and Germany fixes the price of gold at DM4.00 per ounce. The $/DM exchange rate is a. 1:2 b. 2:1 c. 1:1 d. 1:4 5. The elasticity approach to the balance of trade a. focuses on the effects of changing relative prices of domestic and foreign goods on the balance of trade b. is only applicable with a floating exchange rate system c. is based on an analysis of the absolute prices of a country’s exports in world markets d. indicates that the demand elasticity for exports is always inelastic 6. The J-curve a. only occurs under fixed exchange rates b. occurs when a currency is appreciated c. shows the initial worsening of the balance of trade with a devaluation d. shows how the balance of trade immediately improves after a devaluation
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Economics 243, Final examination, Fall 2000 Page 2 7. The monetary approach to the balance of payments a. focuses on the importance of the current account balance b. views exchange rate variations as the sole adjustment mechanism c. highlights the role of financial assets of payments adjustment d. implies that the price level and exchange rate can both be determined by the central bank 8. Under the flexible exchange rate, an increase in the foreign price level that leads to a domestic currency appreciation is an example of a. interest rate parity b. purchasing power parity c. insulating property of the flexible exchange rate d. both (a) and (b) e. both (b) and (c) 9. An expansionary monetary policy under flexible exchange rates will lead to __________ of the home currency and thus will be __________ effective in increasing national income than under fixed exchange
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This test prep was uploaded on 04/21/2008 for the course ECON 243 taught by Professor Ahking during the Spring '08 term at UConn.

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Econ 243 Final exam AHKING - Economics 243-01 Final...

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