Answer FALSE Diff 2 Skill Concept Objective 4 78 The Big Mac Index suggests

Answer false diff 2 skill concept objective 4 78 the

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Answer: FALSEDiff: 2Skill: ConceptObjective: 478) The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers costing the same in the U.S. as abroad.Answer: TRUEDiff: 2Skill: ConceptObjective: 4
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79) The International Fisher Effect links interest rates and exchange rates.Answer: TRUEDiff: 1Learning Outcome: Summarize the roles of the international monetary system and global capital marketSkill: ConceptObjective: 480) The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.Answer: FALSEDiff: 2Learning Outcome: Summarize the roles of the international monetary system and global capital marketSkill: ConceptObjective: 481) Fundamental forecasters assume that if current exchange rates reflect all facts in the market, then under similar circumstances, future rates will follow the same patterns.Answer: FALSEDiff: 1Skill: ConceptObjective: 582) Fundamental forecasting uses trends in economic variables to predict future rates.Answer: TRUEDiff: 1Skill: ConceptObjective: 583) The three variables predicted by forecasting are the timing, magnitude, and length of exchange rate movements.Answer: FALSEDiff: 2Skill: ConceptObjective: 584) When forecasting exchange rates, forecasters must predict the magnitude, timing, and direction of change in exchange rates.Answer: TRUEDiff: 2Skill: ConceptObjective: 585) Technical forecasting relies on trends in economic variables to predict future exchange rates. Answer: FALSEDiff: 2Skill: Concept
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Objective: 586) A current account deficit suggests that a country is importing more than it is exporting and building up foreign debt. Answer: TRUEDiff: 2Skill: ConceptObjective: 587) An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates are most favorable so it can maximize its return.Answer: TRUEDiff: 2Skill: ConceptObjective: 688) Producers are affected by exchange rate changes because goods manufactured in acountry with a weak currency will be relatively cheap in world markets.Answer: TRUEDiff: 2Skill: ConceptObjective: 689) The IMF uses the quota system to determine how much a country may borrow from the Fund. Answer: TRUEDiff: 2Learning Outcome: Summarize the roles of the international monetary system and global capital marketSkill: ConceptObjective: 1AACSB: Dynamics of the global economy90) El Salvador's hard peg exchange rate arrangement involves the use of both the U.S. dollar and its own separate legal tender.Answer: FALSEDiff: 2Skill: ConceptObjective: 2
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  • Fall '07
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