AEM230 - FINAL EXAM - 2007 - SUGGESTED ANSWERS_1

AEM230 - FINAL EXAM - 2007 - SUGGESTED ANSWERS_1 - AEM/ECON...

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AEM/ECON 230 Spring, 2007 International Trade and Finance Final Exam May 18, 2007 1. (4 points each; 20 points total) The following terms (a – p) relate to concepts and phenomena encountered in international finance and exchange rate determination. Indicate, by inserting the correct letter next to (i) – (v) below, the term that most closely corresponds with each of the definitions or characteristics given. a. Sterilization i. Portfolio balance approach b. Kuznet’s Curve j. Monetary approach c. Currency spot market k. Fixed exchange rates d. Currency options l. Managed floating exchange rates e. Currency futures m. Adjustable pegged exchange rates f. Currency hedging n. Devaluation g. Purchasing power parity approach o. Revaluation h. Overshooting p. J-curve i. __i____ Approach to exchange rate management that stresses maximizing returns by reducing risk across assets in different currencies. ii. __l____ The type of exchange rate regime increasingly used by countries around the world over the past 20 years. iii. __e____ Type of currency market instrument that involves the obligation to buy or sell a quantity of foreign currency at a specific time and price. iv. __h____ Path of the exchange rate following a devaluation. v. __p____ Path of the current account balance following a devaluation. 1
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Questions 2 – 8 (5 points each; 35 points total): For each of the following questions, circle the letter next to the correct response: 2. Which of the following statements best summarizes the evidence on the "export promotion" economic growth strategy (EP), as it contrasts with the "Import substitution industrialization" (ISI) economic growth strategy? a. EPS has been an unambiguous failure, while ISI has generally worked. b.
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This note was uploaded on 02/25/2011 for the course AEM 2300 taught by Professor Lee,d.r. during the Spring '06 term at Cornell University (Engineering School).

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AEM230 - FINAL EXAM - 2007 - SUGGESTED ANSWERS_1 - AEM/ECON...

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