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Question
The equation of exchange which is MV = PY is an identity, which means it is true by definition. If you think carefully, what variable in the equation by the way it is defined really makes the equation of exchange an identity?Answer
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Related questions
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The strong appreciation of the dollar for the last part of the 1990s: A. was a benefit to all U.S. residents but costly to most foreign producers.B. was a benefit to U.S. exporters, but put a severe strain on U.S. Importers.C. was welcomed by all U.S. manufacturers.D. played a key role in keeping inflation in check even though the economy was growing rapidly.
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There was a lot of pressure on U.S. policymakers in late 1999 and into the early 2000's to decrease the value of the dollar. This pressure was coming mainly from: A. importers.B. foreign manufacturers.C. U.S. manufacturers.D. foreign central banks.
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An expected appreciation of the dollar, everything else held constant, should cause: A. the supply of dollars to increase.B. the demand for dollars to increase.C. the demand for dollars to decrease.D. the dollar to depreciate now relative to other currencies.
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An increase in the real interest rate on U.S. bonds, everything else equal, will have the following impact on the foreign exchange market: A. the demand for dollars will decrease.B. the supply of dollars will increase.C. the dollar will depreciate relative to foreign currencies.D. the demand for dollars will increase.
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A country's current account represents: A. the amount one country owes to another country.B. the net flow of all transactions between one country and another country.C. the amount a country imports from the rest of the world.D. the net flow of goods and services between that country and the rest of the world.
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Differences in inflation rates between two countries can explain: A. short-run changes in the exchange rate but not long-run changes.B. changes in the real exchange rate over the long run, but not changes in the nominal exchange rate.C. long-run changes in the exchange rate but not short-run changes.D. changes in the exchange rate in both the short run and the long run.
Q:
The empirical evidence on purchasing power parity seems to point out that: A. purchasing power parity can explain long run movements in exchange rates but does not hold up to scrutiny for short-run changes.B. purchasing power parity does a good job of explaining short-run movements in exchange rates, but does not hold up to scrutiny over the long run.C. purchasing power parity is a good theory for international trade, but is of little use in explaining exchange rate movements.D. inflation and a country's rate of currency appreciation are positively correlated.
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Explain why for speculation, the purchase of an option may be more attractive than a futures contract or the outright purchase of the underlying asset.
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What is a credit-default swap?
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If the current closing price in the stock of XYZ Inc., is $87.50 and the July expiration put options with a strike price of $80 are selling for $1.05, what is the intrinsic value of the option? What is the option premium?
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What are the five functions performed by financial intermediaries?
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Which of the following statements is true? A. Adverse selection is a problem of monopoly and moral hazard is a problem of information asymmetry.B. Adverse selection and moral hazard are problems stemming from asymmetric information.C. Adverse selection is a problem that occurs after a transaction.D. Moral hazard is a problem that occurs before a transaction.
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Compare/contrast the Nasdaq Composite Index with the Dow Jones Industrial Average.
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The Standard & Poor's 500 Index differs from the DJIA in at least two major respects. What are the two major differences?