Mid2Practice

# Mid2Practice - 1 The nominal exchange rate A Is the amount...

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1. The nominal exchange rate: A. Is the amount of one country's goods that could be obtained with the same goods of another country? B. Is always expressed as units of a foreign currency per U.S. \$ C. Is the rate that one can exchange the currency of one country for the currency of another country? D. Is a synonymous term for the swap rate? C 2. If the Japanese yen appreciates against the U.S. dollar: A. Americans should find Japanese goods are now less expensive B. Japanese residents would find Japanese goods are relatively less expensive than American goods C. U.S. goods should have an easier time competing against Japanese goods in both countries D. Japanese goods should have an easier time competing against U.S. goods in both countries C 3. If the current exchange rate is 1 /1\$U.S. and bagels cost 1 in France and 1\$ in the U.S. and the current exchange rate for bagels is 0.74 European bagel/1U.S. bagel and if the bagels are identical: A. U.S. bagels are less expensive than French bagels B. U.S. and French bagels are the same price C. French bagels are less expensive than U.S. bagels D. Americans should import French bagels A 4. Which of the following does not contribute to the failure of the law of one price? A. Tariffs B. Transportations costs C. The fact that all goods can be traded D. Technical specifications C 5. When a currency is described as undervalued , this implies: A. It is undervalued relative to what the describer believes purchasing power parity to be B. It is undervalued relative to the exchange rate set by the nation's central bank C. The exchange rate is greater than one D. The exchange rate is lower than one year previous A

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6. If Americans develop a greater appreciation for Mexican-made goods, we should observe the following change(s) in the dollar-peso market: A. The demand curve for dollars shifts left B. The supply curve of dollars shifts left C. The demand curve for pesos shifts right D. A movement down the supply curve of dollars C 7. Financial intermediation exists, in part, because: A. Financial markets work so well B. Direct finance through stocks and bonds is the dominant form of financing C. Transaction costs of financial intermediation is always higher than direct finance D. The transaction costs associated with direct finance can at times be prohibitive D 8. Automated teller machines provided by financial intermediaries are an example of: A. High transactions costs associated with financial intermediaries B. Diseconomies of scale C. The ability of financial intermediaries to provide liquidity D. The ability of financial intermediaries to earn profits by raising transaction costs above the norm C 9. Asymmetric information poses two important obstacles to the smooth flow of funds from savers to investors. They are: A. Adverse selection, which arises before the transaction occurs, and moral hazard, which occurs
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Mid2Practice - 1 The nominal exchange rate A Is the amount...

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