midterm03 - Pierre-Olivier Gourinchas Department of...

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Pierre-Olivier Gourinchas Econ182 Department of Economics International Monetary Economics UC Berkeley Fall 2003 Midterm examination Instructions: This is a 1 hour 30 minute exam with 3 questions worth a total of 90 points (1 point per minute, plus 10 bonus points), as indicated at the start of each question. In order to get full credit, you must give a clear, concise, and correct answer, including all necessary explanations. Calculators are permitted, books and notes are not. Good luck! 1. [20 points, 5 each] True, False, Uncertain . Explain brie f yyouranswers ,andc itethe relevant theories, when applicable. (a) If the US interest rate increases relative to the rest of the world, the dollar will appreciate slowly over time as investors progressively rebalance their portfolio towards US based assets. (b) You read in the press: ‘The strength of the dollar comes from the superior performance of the US economy.’ (c) An increase in domestic nominal interestra te
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midterm03 - Pierre-Olivier Gourinchas Department of...

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