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Unformatted text preview: The country is growing economically.
e. The country is a popular tourist destination 62. A large government deficit relative to GDP, a
high rate of money expansion accompanied by
fixed exchange rates, along with substantial
government expenditures are some of the
common characteristics of ____.
e. Exchange rate risk
Interest rate risk
None of the above 63. Which of the following was set up to promote
exchange rate stability and facilitate the
international flow of currencies?
d. The International Monetary Fund
The World Bank
The Federal Reserve Bank
The Bank for International Settlements 64. The _____ lends money to countries to help
ease balance of payments difficulties.
e. United nations
Federal Reserve Bank
International Monetary Fund
Bank for International Settlements 65. A strengthening of Japanese yen would
result in which of the following outcomes?
e. Higher unemployment in Japanese import industry
Greater competition in Japanese domestic market
Higher unemployment in Japanese export industry
Higher employment in Japanese export industry
Both b and c. 66. An increase in U.S. real interest rate relative
to Japanese rate would result in a:
d. Strengthening of the dollar and a weakening of the yen
Strengthening of the yen and weakening of the dollar
Higher US inflation in comparison with Japanese inflation
Higher demand for Japanese securities in the US and
lower demand for US securities in Japan
lower 67. A drop in U.S. real interest rate relative to
European rate would result in a:
a. Strengthening of the dollar and weakening of the euro
b. Weakening of the dollar and a strengthening of the euro
c. No change in the dollar or the euro
d. A weakening of both the dollar and the euro 68. Because real interest rates are equalized among countries by arbitrage, which of the
following is true?
true a. The country with higher nominal interest rate
should have higher inflation
b. The country with the higher nominal interest rate
should have lower inflation
c. The country with the higher nominal interest rate
should have lower taxes
d. The country with the higher nominal interest rate
should have higher currency values
should 69. The theory that “nominal interest rate
differential is an unbiased predictor of future
changes in the spot exchange rate” is called
e. Interest Rate Parity
Purchasing Power Parity
International Fisher Equation
Forward Rate Parity
Generalized Fisher Equation 70. Which of the following types of forecasting
methods uses past trends in exchange rate
movement to predict future trends?
Random walk 71. The purchase of U.S. Commercial Paper by a
German investor shows up on U.S. BOP as a:...
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This note was uploaded on 12/17/2012 for the course FIN 3604 taught by Professor Zhang during the Spring '12 term at University of San Francisco.
- Spring '12
- Exchange Rate