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Question
Which one of the following statements is the MOST accurate?
A) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to fall.
B) A reduction in the average value of transactions carried out by a household or a firm causes its demand for money to rise.
C) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to rise.
D) A rise in the average value of transactions carried out by a household or a firm causes its demand for real money to rise.
E) a decrease in the average value of transactions carried out by a household or a firm causes its demand for real money to rise.
Answer
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A) the real side of the international economy.
B) the international trade side of the international economy.
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D) the issues of international cooperation between Central Banks.
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B) by the International Monetary Fund.
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B) Banking regulation: Banks were excessively regulated, which reduced profits.
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Futures contracts differ from forward contracts in that
A) future contracts ensures you will receive a certain amount of foreign currency at a specified future date.
B) future contracts bind you into your end of the deal.
C) future contracts allow you to sell your contract on an organized futures exchange.
D) future contracts are a disadvantage if your views about the future spot exchange rate are to change.
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D) non-bank financial institutions
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Which one of the following statements is the MOST accurate?
A) A depreciation of a country's currency makes its goods cheaper for foreigners.
B) A depreciation of a country's currency makes its goods more expensive for foreigners.
C) A depreciation of a country's currency makes its goods cheaper for its own residents.
D) A depreciation of a country's currency makes its goods cheaper.
E) An appreciation of a country's currency makes its goods more expensive.
Q:
The Japanese currency is called the
A) DM.
B) Yen.
C) Euro.
D) Dollar.
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A) The interest rate is not the prime target of monetary policy.
B) Most central banks adjust their policy interest rates expressly so as to keep inflation in check.
C) Central banks increase the money supply leading to overshooting of the exchange rate.
D) Inflation will increase the purchasing power of a currency.
E) The world market does not adjust their currency trade to reflect inflation.
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During hyperinflation, exploding inflation causes real money demand to
A) fall over time, and this additional monetary change makes money prices rise even more quickly than the money supply itself rises.
B) increase over time, and this additional monetary change makes money prices rise even more quickly than the money supply itself rises.
C) fall over time, and this additional monetary change makes money prices decrease even more quickly than the money supply itself rises.
D) increase over time, and this additional monetary change makes money prices decrease even more quickly than the money supply itself rises.
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B) change only as a result of demographic trends.
C) change only as a result of financial innovations such as electronic cash-transfer facilities.
D) not change as a result of demographic trends or financial innovations such as electronic cash-transfer facilities.
E) change as a result of demographic trends but not as a result of financial innovations such as electronic cash-transfer facilities.
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C) they will attempt to reduce their liquidity by converting real money holdings into nominal money holdings.
D) they will keep their holdings constant.
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In the interest rate parity condition with imperfect substitutes and a risk premium of ρ
A) an increased stock of domestic government debt will raise the difference between the expected returns on domestic and foreign currency bonds.
B) a decreased stock of domestic government debt will raise the difference between the expected returns on domestic and foreign currency bonds.
C) an increased stock of domestic government debt will reduce the difference between the expected returns on domestic and foreign currency bonds.
D) an increased stock of domestic government debt will have no effect on the difference between the expected returns on domestic and foreign currency bonds.
E) a decreased stock of domestic government debt will have no effect on the difference between the expected returns on domestic and foreign currency bonds.
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Imperfect asset substitutability exists
A) when it is possible for the expected returns on two assets to be different.
B) when the expected returns on two assets are the same.
C) only when one asset is foreign and the other is domestic.
D) when there is risk in the foreign exchange market.
E) when assets are liquid.