Bus 426 - exam1

Bus 426 - exam1 - Test 1 A BUS 426 Spring 2006 Name _...

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BUS 426, Test 1, Spring 2006 1 Test 1 A Name ___________________ BUS 426 Spring 2006 Answer the following questions as completely as possible . Multiple choice questions will be graded on the basis of the opscan (scantron) entries. (@3.25) Multiple choice. Choose the one best answer to each question. 1. The dollar exchange rate with the yen moves from 120 yen/dollar to 110 yen/dollar. What is the percentage change in the value of the dollar? a) -8.33% b) 9.09% c) +8.33% d) -9.09% e) -10.00% 2. In the problem above, what is the percentage change in the value of the yen? a) -8.33% b) 9.09% c) +8.33% d) -9.09% e) -10.00% 3. The dollar rises by 50% relative to the Indonesian rupiah. What is the percentage change of the rupiah relative to the dollar? a) +33% b) -33% c) -25% d) +25% e) -50% 4. Which of the following would happen to foreign exchange market for the dollar if the Chinese government sharply reduced its purchases of dollar reserves? a) The supply of dollars in the foreign exchange market would shift left and the dollar would fall. b) The supply of dollars in the foreign exchange market would shift left and the dollar would rise. c) The supply of dollars in the foreign exchange market would shift right and the dollar would rise. d) The demand for dollars in the foreign exchange market would shift left and the dollar would fall. e) The demand for dollars in the foreign exchange market would shift right and the dollar would fall. 5. Which of the following would happen to the foreign exchange market for the dollar if US companies sharply increased their rate of investment in foreign companies? a) The supply of dollars in the foreign exchange market would shift left and the dollar would fall. b) The demand for dollars in the foreign exchange market would shift left and the dollar would rise. c) The demand for dollars in the foreign exchange market would shift right and the dollar would rise. d) The supply of dollars in the foreign exchange market would shift left and the dollar would rise. e) The supply of dollars in the foreign exchange market would shift right and the dollar would fall. 6. Which of the following is true of a crawling peg? a) It always leads to dollarization of an economy. b) It is used to peg interest rates that respond to changes in inflation. c) It is a fixed exchange rate that is altered frequently to fit new conditions. d) It runs a floating rate with “leaning against the wind”. e) It pegs one country’s currency strongly to another’s with a permanently fixed rate. 7. Which of the following is considered to be an advantage of a fixed exchange rate system? a) Greater volatility of rates most of the time. b) Fewer currency crises.
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This note was uploaded on 11/17/2008 for the course BUS 426 taught by Professor None during the Spring '08 term at N.C. State.

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Bus 426 - exam1 - Test 1 A BUS 426 Spring 2006 Name _...

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