# Midterm365_L0101_ans - UNIVERSITY OF TORONTO Faculty of Arts and Science MID-TERM(WINTER 2011 ECO365H1(L0101 Instructor Prof Kunal Dasgupta

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Unformatted text preview: UNIVERSITY OF TORONTO Faculty of Arts and Science MID-TERM (WINTER 2011) ECO365H1 (L0101) Instructor - Prof. Kunal Dasgupta Duration - 1.5 hours Examination Aids - Only calculators Total points : 100 Read every question carefully. Answers should be to the point. All calculations should be clearly shown on the answer sheet. Good luck!! 1. Multiple Choice Questions (20 points) (Write down the answers on the answer sheet) 1.1 A contract that contains a promise that a specified amount of foreign currency will be delivered on a specified date in the future is : A) A spot contract B) A forward contract C) A foreign exchange option D) A swap 1.2 The interest parity condition involves four variables. Which one adjusts to ensure equilibrium? A) Foreign interest rate B) Current exchange rate C) Expected future exchange rate D) Domestic interest rate 1.3 If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then A) an investor should invest only in dollars. B) an investor should invest only in euros. C) an investor should be indifferent between dollars and euros. D) It is impossible to tell given the information. Page 1 of 5 1.4 Which economic agent determines money supply in Canada? A) Government B) Bank of Canada C) Commercial banks D) Consumers 1.5 Which of the following happens during hyperinflations? A) The real demand for money falls. B) The economy experiences very high levels of inflation. C) The monetary authorities print money at a high rate. D) All of the above. 1.6 When a country’s currency depreciates, A) foreigners find that their imports are cheaper, and domestic residents find that imports from abroad are more expensive....
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## This note was uploaded on 02/24/2012 for the course ECO 365 taught by Professor Jordimondria during the Spring '08 term at University of Toronto- Toronto.

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Midterm365_L0101_ans - UNIVERSITY OF TORONTO Faculty of Arts and Science MID-TERM(WINTER 2011 ECO365H1(L0101 Instructor Prof Kunal Dasgupta

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