460samplefinal

460samplefinal - Economics 460 P. Conway Final Examination...

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Economics 460 Final Examination P . C o n w a y This examination is conducted under the UNC Honor Code; please comport yourself accordingly and sign the pledge on your answer book after you complete the exam. If you do not do so, I cannot grade your exam. I. Definitions. Define, in no more than two sentences, eight (8) of the following terms. (24 points) 1. official reserves 6. foreign exchange option contract 2. central bank intervention 7. absolute advantage 3. cross exchange rate 8. reciprocal demand 4. speculation 9. factor abundance 5. overshooting 10. Leontief paradox II. Short Answers. Answer briefly three (3) of the following questions. Use diagrams and references to readings where appropriate. (36 points) 1. Suppose that you hear the following report on interest rates and exchange rates today for the US dollar and the Euro. “The US interest rate on one-year Treasury bond is 4.5 percent, while the Euro interest rate on one-year German government bond is 4.5 percent as well. The spot and one-year-ahead forward rates are both equal to $1.36 per Euro.” Is this combination of interest
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This note was uploaded on 05/01/2010 for the course ECON 460 taught by Professor Staff during the Spring '08 term at UNC.

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460samplefinal - Economics 460 P. Conway Final Examination...

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