Chap022

Chap022 - Chapter 22 - The Monetary and Portfolio Balance...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 22 - The Monetary and Portfolio Balance Approaches Chapter 22 The Monetary and Portfolio Balance Approaches Multiple Choice Questions 1. In the monetary approach to the balance of payments and the exchange rate, if there is an excess demand for money, the result is a balance-of-payments __________ in a fixed exchange rate situation and __________ of the country's currency in a flexible exchange rate situation. A . Surplus; an appreciation b. Surplus; a depreciation c. Deficit; an appreciation d. Deficit; a depreciation 2. If Ms is the money supply, BR = reserves of commercial banks (depository institutions), C = currency held by the nonbank public, and a = the money multiplier, then a. Ms = aBR + C B . Ms = a(BR + C) c. BR = Ms - C d. AC = Ms - BR 3. If id is the domestic interest rate, if is the foreign interest rate, xa is the expected rate of appreciation of the foreign currency (or the expected rate of depreciation of the home currency), and financial capital is mobile across countries (and assuming no risk premium), then equilibrium in international financial asset markets is indicated by the expression a. Xa = (id/if) b. Xa = id + if c. If = id + xa D . Id = if + xa 22-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 22 - The Monetary and Portfolio Balance Approaches 4. In the asset market or portfolio balance approach, other things equal, a depreciation of the home currency would be caused by __________ in inflationary expectations in the home country and by __________ in real income in the home country. a. An increase; an increase
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/27/2009 for the course ECON 421 taught by Professor Macphee,c during the Spring '08 term at UNL.

Page1 / 4

Chap022 - Chapter 22 - The Monetary and Portfolio Balance...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online