Homework Answers
Question 3)
Option 2 and 3 are true
2) When a domestic currency depreciates, domestic interest rate rise
This is true , as domestic currency depreciates ,inflation rises as it is now costly to import and more goods are exported out , so as to reduce inflation interest rates must rise
3) Interest rate parity between countries is a reasonable assumption given arbitrage and floating exchange rate
Question 4)
All 4 options are true
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QUESTION 3 Select all of the following that are true regarding interest rates and foreign exchange...
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange...
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris p aribus Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency
QUESTION 1 10 points Save Answer Select all of the following that are true regarding interest...
QUESTION 1 10 points Save Answer Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris paribus When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates...
QUESTION 1 10 points Save Answer Select all that are true given an increase in domestic...
QUESTION 1 10 points Save Answer Select all that are true given an increase in domestic interest rates: It indicates investment flowing out of the loanable funds market, ceteris paribus It will attract foreign investment into the domestic economy, mitigating the increase It indicates a growing domestic economy The thickly and freely traded currency spot markets will restore interest rate parity between countries QUESTION 2 10 points Save Answer Select all of the following that are true regarding interest rates...
QUESTION 1 Following a report of additional economic growth in country A (the domestic currency), the...
QUESTION 1 Following a report of additional economic growth in country A (the domestic currency), the balance of payments re-equilibration occurs in which order? - The DC depreciates - . . - - - - Foreign agents increase their interest in domestic investment (DI) Foreign agents decrease their demand for the domestic currency (DC) to trade Foreign agents increase their demand for the domestic currency (DC) to trade The fx re-equilibrates to new level The relative price (RP) of exports...
Following a report of additional economic growth in country A (the domestic currency), the balance of...
Following a report of additional economic growth in country A (the domestic currency), the balance of payments re-equilibration occurs in which order? - The DC depreciates - The fx re-equilibrates to new level - Foreign agents decrease their demand for the domestic currency (DC) to invest - Foreign agents increase their interest in domestic investment (DI) Foreign agents increase their demand for the domestic currency (DC) to invest - The DC appreciates - The foreign interest in DI decreases -...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The risks of QE include uncertainty over inflation expectations since it has never been done and it involves massive increases in the money supply, a lack of incentives to borrow since interest rates are so low for so long, and a disincentive for banks to lend due to regulatory uncertainty QE is expressly designed to depreciate the domestic currency via increases in the supply of...
4. Interest rate parity The rise of globalization is due to the many companies that have...
4. Interest rate parity The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can be represented through...
(16) When interest rates in the U.S. increase, the supply of dollars ________ and the demand...
(16)
When interest rates in the U.S. increase, the supply of dollars
________ and the demand for dollars ________.
decreases; increases
increases; decreases
increases; increases
decreases; decreases
(17)
The World Trade Organization
was established as part of the
Bretton Woods agreement.
requires members to charge the
same prices on goods traded internationally.
requires members to reduce
tariffs and eliminate non-tariff barriers.
is made up of business leaders
from all over the world.
(18)
If...
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on...
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on bonds rise when the demand for bonds increases regardless of risk US Quantitative Easing causes all interest rates to fall Interest rates fall when the economy grows since the central bank is providing stimulus As the yield curve flattens, all interest rates fall Interest rates are controlled by the central bank Interest rates fall to attract investors since it indicates lower risk
the possible answers: How will an expansionary fiscal policy affect exchange rates, via interest rates? Expansionary...
the possible answers:
How will an expansionary fiscal policy affect exchange rates, via interest rates? Expansionary Fiscal Policy select answer select answer Competitiveness decreases Competitiveness increases The domestic currency depreciates The domestic currency appreciates Income decreases Income increases Interest rates decrease Interest rates increase Imports decrease Imports increase Price level decreases Price level increases Trade deficit decreases Trade deficit increases
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris p aribus Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency
QUESTION 1 10 points Save Answer Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris paribus When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates...
QUESTION 1 10 points Save Answer Select all that are true given an increase in domestic interest rates: It indicates investment flowing out of the loanable funds market, ceteris paribus It will attract foreign investment into the domestic economy, mitigating the increase It indicates a growing domestic economy The thickly and freely traded currency spot markets will restore interest rate parity between countries QUESTION 2 10 points Save Answer Select all of the following that are true regarding interest rates...
QUESTION 1 Following a report of additional economic growth in country A (the domestic currency), the balance of payments re-equilibration occurs in which order? - The DC depreciates - . . - - - - Foreign agents increase their interest in domestic investment (DI) Foreign agents decrease their demand for the domestic currency (DC) to trade Foreign agents increase their demand for the domestic currency (DC) to trade The fx re-equilibrates to new level The relative price (RP) of exports...
Following a report of additional economic growth in country A (the domestic currency), the balance of payments re-equilibration occurs in which order? - The DC depreciates - The fx re-equilibrates to new level - Foreign agents decrease their demand for the domestic currency (DC) to invest - Foreign agents increase their interest in domestic investment (DI) Foreign agents increase their demand for the domestic currency (DC) to invest - The DC appreciates - The foreign interest in DI decreases -...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The risks of QE include uncertainty over inflation expectations since it has never been done and it involves massive increases in the money supply, a lack of incentives to borrow since interest rates are so low for so long, and a disincentive for banks to lend due to regulatory uncertainty QE is expressly designed to depreciate the domestic currency via increases in the supply of...
4. Interest rate parity The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can be represented through...
(16)
When interest rates in the U.S. increase, the supply of dollars
________ and the demand for dollars ________.
decreases; increases
increases; decreases
increases; increases
decreases; decreases
(17)
The World Trade Organization
was established as part of the
Bretton Woods agreement.
requires members to charge the
same prices on goods traded internationally.
requires members to reduce
tariffs and eliminate non-tariff barriers.
is made up of business leaders
from all over the world.
(18)
If...
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on bonds rise when the demand for bonds increases regardless of risk US Quantitative Easing causes all interest rates to fall Interest rates fall when the economy grows since the central bank is providing stimulus As the yield curve flattens, all interest rates fall Interest rates are controlled by the central bank Interest rates fall to attract investors since it indicates lower risk
the possible answers:
How will an expansionary fiscal policy affect exchange rates, via interest rates? Expansionary Fiscal Policy select answer select answer Competitiveness decreases Competitiveness increases The domestic currency depreciates The domestic currency appreciates Income decreases Income increases Interest rates decrease Interest rates increase Imports decrease Imports increase Price level decreases Price level increases Trade deficit decreases Trade deficit increases
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