IHW14ANS

IHW14ANS - Ihw14 Question4 - Single Correct 1.0 Point The...

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Ihw14 Question4 - Single Correct 1.0 Point The sum of net exports of goods and services plus net income from abroad plus net unilateral current transfers equals A the trade balance. B the balance on current account. C the capital account balance. D the capital and financial account balance. DEFINITION. ROUGHLY X-M, BUT MORE PRECISELY INCLUDES THE OTHER ITEMS – ALL RELATED TO CURRENTLY PRODUCED GOODS AND SERVICE (HENCE **CURRENT** ACCT). INCOME IS INCOME FROM INVESTMENTS ABROAD, INTEREST EARNED ABROAD, ETC. UNILATERAL TRANSFERS ARE GIFTS ETC Question19 - Single Correct 1.0 Point The bulk of the transactions in the foreign exchange market are driven by A the flow of financial assets between countries B the flow of goods between countries C the flow of services between countries D none of the above FACT. MOSTLY SPECULATIVE FLOWS (’BETTING ON INTEREST RATES AND EXCHANGE RATE CHANGES) – WHICH IS WHY EXCHANGE RATES ARE SO VOLATILE – DEPENDS A LOT ON ANIMAL SPIRITS Question21 - Single Correct 1.0 Point One difference between arbitrageurs and speculators is that A arbitrageurs buy and sell foreign exchange; speculators do not B speculators only buy foreign exchange but do not sell it C arbitrageurs take more risks than do speculators D speculators take more risks than do arbitrageurs E arbitrageurs buy foreign exchange in the hope that its value will increase ARBITRAGEURS TAKE NO RISK – SIMULTANEOUS BUY AND SELL – GURANTEED GAIN Question23 - Single Correct 1.0 Point If the yen is rapidly appreciating in exchange markets, the Bank of Japan can counter this appreciation by A selling bonds in the open market
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B using its stock of foreign currencies to buy existing dollars C buying foreign currencies with yen D none of the above SUPPLY AND DEMAND – IF ‘PRICE’ OF YEN GOING UP, INCREASE SUPPLY TO LOWER IT – I.E. SELL YEN BY BUYING OTHER CURRENCY ($ FOR EXAMPLE) - THAT IS, GOV’T IN OPEN MARKET BUYS $ AND PAYS WITH YEN Question28 - Single Correct 1.0 Point If interest rates fall in country A, other things constant, A demand for that country's currency will fall and the currency will depreciate B demand for that country's currency will fall and the currency will appreciate C demand for that country's currency will rise and the currency will depreciate D demand for that country's currency will rise and the currency will appreciate
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This document was uploaded on 10/31/2011 for the course 202 101 at Rutgers.

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IHW14ANS - Ihw14 Question4 - Single Correct 1.0 Point The...

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