Question

1.

Acting as a fiscal agent is a central bank's role as an agent of its government's finance ministry or treasury department, in which the central bank issues, services, and redeems debts on the government's behalf.

Select one:

a. TRUE

b. FALSE

2.

If the nominal exchange is measured in units of domestic currency per unit of foreign currency, then the real exchange rate equals:

Select one:

a. the ratio of the domestic price level to the foreign price level divided by the nominal exchange rate.

b. the ratio of the foreign price level to the domestic price level divided by the nominal exchange rate.

c. the nominal exchange rate multiplied by the ratio of the foreign price level to the domestic price level.

d. the nominal exchange rate multiplied by the ratio of the domestic price level to the foreign price level.

3.

The World Bank classifies low-income countries as those with per capita incomes less than a maximum threshold of about:

Select one:

a. 18000

b. 12000

c. 4000

d. 1000

Answer 1

Question 1]

TRUE

Fiscal Agent describing a central bank's role as an agent of its government's finance ministry or treasury department, in which the central bank issues, services, and redeems debts on the government's behalf.

In the U.S. the treasury department issues securities at auctions. In their role as fiscal agents, central banks often review, tabulate and summarize bids to purchase securities, issue securities to successful bidders, and process the purchasers' payments to the government. In emerging nations, central banks play more direct roles effectively acting as investment banks for their governments by lining up private individuals or firms willing to purchase new government security issues.

Question 2]

Option C is correct

Nominal exchange rate format is DC/FC. Therefore,

Real exchange rate = Nominal exchange rate x (Foreign country price level / Domestic country price level)

Question 3]

As of 1 July 2016, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2015

Low income countries have income less than $1000.

The answer is option D] 1000