460FinalExamB

# 460FinalExamB - ECON 460 001 Final Exam B Fall 2010 I pledge that I have abided by the UNC Honor Code and that I will not reveal the contents of

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ECON 460 – 001, Final Exam B, Fall 2010 I pledge that I have abided by the UNC Honor Code and that I will not reveal the contents of this exam to anybody. Honor Pledge: __________________________________________________ SECTION I: Multiple Choice Questions (3 points each) 1. In which of the following situations will there be capital inflows into the US? a. e = \$1.30/Euro; e FOR = \$1.313/Euro; i US = 0.02; i EUR = 0.01 b. e = \$1.30/Euro; e FOR = \$1.287/Euro; i US = 0.02; i EUR = 0.01 c. e = \$1.30/Euro; e FOR = \$1.313/Euro; i US = 0.01; i EUR = 0.02 d. e = \$1.30/Euro; e FOR = \$1.287/Euro; i US = 0.01; i EUR = 0.02 2. The following are the exchange rates in three financial centers: \$1.30 = € 1 in New York \$1 = 80 ¥ in Tokyo €1 = 100 ¥ in Paris Given these exchange rates, an arbitrageur will a. sell Euros in Paris b. buy yen in Tokyo c. sell dollars in New York d. (a) and (b) 3. U.S. export industries are likely to resist a. An appreciation of the dollar because U.S. exports would become more expensive. b. A depreciation of the dollar because U.S. exports would become more expensive. c. An appreciation of the dollar because U.S. exports would become less expensive. d. A depreciation of the dollar because U.S. exports would become less expensive 4. In a country with a fixed exchange rate system, the central bank purchased large quantities of foreign currency to prevent its domestic currency from appreciating. The following will be the result on the country’s Balance of Payments (BOP): a. The official reserve account will be in deficit and the country’s BOP will also be in deficit. b. The official reserve account will be in surplus and the country’s BOP will also be in surplus. c. The official reserve account will be in deficit and the country’s BOP will be in surplus.

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## This document was uploaded on 10/28/2011 for the course ECON 460 at UNC.

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460FinalExamB - ECON 460 001 Final Exam B Fall 2010 I pledge that I have abided by the UNC Honor Code and that I will not reveal the contents of

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