Chapter 6: International Finance and Trade
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Sample Questions
Q1) If the U.S.inflation rate is expected to be 3 percent next year, the European inflation rate is expected to be 4% next year, and the spot rate between the euro and dollar is $1.30, then according to purchasing power parity, we would expect the dollar to _________ against the euro from $1.30 to __________:
A)appreciate, $1.2875
B)appreciate, $1.3126
C)depreciate, $1.2875
D)depreciate, $1.3126
Q2) Under the system of flexible exchange rates that began in 1943, exchange rates are determined by the actual process of supply and demand in the foreign exchange market.
A)True
B)False
Q3) The currency quotation method that indicates the amount of a home country's currency needed to purchase one unit of a foreign currency is called the
A)direct quotation method
B)indirect quotation method
C)floating exchange rate method
D)none of the above
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Chapter 7: Savings and Investment Process
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146 Verified Questions
146 Flashcards
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Sample Questions
Q1) If an individual supplies funds to a business firm by purchasing bonds issued by the firm, the transaction:
A)creates two types of financial assets and two types of financial liabilities
B)increases the liquidity and safety of principal for the individual
C)initially occurs in the primary market
D)limits the ability of the security to be sold in the secondary market
Q2) Which of the following statements factors contributed to the 2007-2009 financial crisis?
A)The cultural shift that allowed the public to "spend now and pay later"-rather than their parents' or grandparents' philosophy of "save now, spend later" led to increases in consumer debt levels.
B)U.S.government officials engaged in efforts to expand home ownership by encouraging lenders to make mortgage loans available to a broader spectrum of individuals.
C)Federal fiscal policy also became simulative, with increased government spending and the passage of tax cuts in 2002.
D)The Federal Reserve adopted an expansionary monetary policy characterized by very low interest rates.
E)all of the above.
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