Question

In: Economics

Question 31 1. Other things equal, capital flowing into a domestic country tends to, a. cause...

Question 31 1. Other things equal, capital flowing into a domestic country tends to,

a. cause the domestic currency to get weaker and causes greater difficulty for domestic borrowers in repaying debt denominated in a foreign currency

b. cause the domestic currency to get weaker and causes less difficulty for domestic borrowers in repaying debt denominated in a foreign currency

c. cause the domestic currency to get stronger and causes greater difficulty for domestic borrowers in repaying debt denominated in a foreign currency

d. cause the domestic currency to get stronger and causes less difficulty for domestic borrowers in repaying debt denominated in a foreign currency
Question 32 1. A weak exchange rate for the domestic currency,

a. tends to cause a larger trade deficit

b. tends to hurt the domestic tourist industry

c. tends to help domestic buyers

d. tends to cause higher inflation

Question 33 1. Suppose -- for a long enough period -- a country fixes an exchange rate for its currency stronger than the market exchange rate. Eventually currency traders will expect that,

a. the country will run out of the domestic currency to use in buying foreign currencies and the domestic currency will strengthen

b. the country will run out of the domestic currency to use in buying foreign currencies and the domestic currency will weaken

c. the country will run out of foreign currency to use in buying the domestic currency and the domestic currency will strengthen

d. the country will run out of foreign currency to use in buying the domestic currency and the domestic currency will weaken

Question 34 1. Suppose there are two countries that are otherwise the same (including their inflation and risk), except that the domestic country has a lower interest rate than the foreign country. In this case,

a. financial capital will flow into the domestic country and its currency will strengthen

b. financial capital will flow into the domestic country and its currency will weaken

c. financial capital will flow out of the domestic country and its currency will strengthen

d. financial capital will flow out of the domestic country and its currency will weaken

Question 35 1. Consider the gold exchange standard during the Great Depression.

a. the gold exchange standard enabled the U.S. central bank to lower interest rates to help stimulate the economy

b. the depression caused countries to leave the gold exchange standard of the period

c. both A and B

d. neither A nor B

Expert Solution

Question 31 1. Other things equal, capital flowing into a domestic country tends to,

d. cause the domestic currency to get stronger and causes less difficulty for domestic borrowers in repaying debt denominated in a foreign currency

Incoming foreign exchange will create demand for domestic currency and it will appreciate.

Question 32 1. A weak exchange rate for the domestic currency,

d. tends to cause higher inflation, imported goods will become expensive and this may spiral in average prces in country going up.

Question 33 1. Suppose -- for a long enough period -- a country fixes an exchange rate for its currency stronger than the market exchange rate. Eventually currency traders will expect that,

b. the country will run out of the domestic currency to use in buying foreign currencies and the domestic currency will weaken

To maintain high exchange rates, country needs to constantly sell foreign exchange and eventualy it will run out of foreign currency and its domestic currency will weaken.

Question 34 1. Suppose there are two countries that are otherwise the same (including their inflation and risk), except that the domestic country has a lower interest rate than the foreign country. In this case,

d. financial capital will flow out of the domestic country and its currency will weaken

People invest more where they get higher returns may be in the form of interest rates. If domestic rates are low then investment will go out.

Rahul Sunny answered 2 years ago

Question 5 1. Other things equal, a lending country tends to have, a. a weak currency...

Question 5 1. Other things equal, a lending country tends to have, a. a weak currency and a trade surplus b. a weak currency and a trade deficit c. a strong currency and a trade surplus d. a strong currency and a trade deficit Question 6 1. Suppose a country decreases its saving rate. Then the country, a. could fund more private sector borrowing (while holding other things equal) b. could fund a larger government budget deficit (while holding other...

QUESTION 6 Other things equal, as perceived risk falls for a country, a. the domestic interest...

QUESTION 6 Other things equal, as perceived risk falls for a country, a. the domestic interest rate rises and the domestic currency gets stronger b. the domestic interest rate rises and the domestic currency gets weaker c. the domestic interest rate falls and the domestic currency gets stronger d. the domestic interest rate falls and the domestic currency gets weaker QUESTION 7 Suppose investors and currency speculators expect that a currency will depreciate in about six months. This will cause...

1. Other things equal, the domestic currency _____ when the domestic money supply increases relative to...

1. Other things equal, the domestic currency _____ when the domestic money supply increases relative to the foreign money supply. a. depreciates in the long-run b. appreciates in the long-run c. remains unchanged in the long-run. d. appreciates in the short-run but returns to its initial value in the long-run. 2. Which of the following refers to foreign exchange? a. The act of trading different nations’ moneys b. The holdings of foreign assets c. The act of exchanging goods and...

Question 26 1. Which of the following tends to cause financial markets to expect that a...

Question 26 1. Which of the following tends to cause financial markets to expect that a currency will depreciate in the future? a. the expectation that the country will have a stronger economy in the future (and other things equal) b. the expectation that the country will have less inflation in the future (and other things equal) c. the expectation that the country will have less risk in the future (and other things equal) d. the expectation that the country...

QUESTION 5 A weaker currency tends to cause a larger trade deficit. True False QUESTION 6...

QUESTION 5 A weaker currency tends to cause a larger trade deficit. True False QUESTION 6 To guard against the risk of the currency strength fluctuating, a business could sign a contract now that sets a specified exchange rate that will be used for a future payment. True False QUESTION 7 Suppose that goods in a foreign country are expensive from a domestic country perspective. This means that, a. the domestic currency is relatively weak and real exchange rate for...

3. Consider two fictional economies, one called the domestic country and the other the foreign country....

3. Consider two fictional economies, one called the domestic country and the other the foreign country. Given the transactions listed in (a) through (g), construct the balance of payments for each country. If necessary, include a statistical discrepancy. a. The domestic country purchased $120 in oil from the foreign country. b. Foreign tourists spent $35 on domestic ski slopes. c. Foreign consumers purchased $50 of wine from our domestic wineries. d. Domestic investors were paid $25 in dividends from holdings...

All other things being equal, if a division’s traceable fixed expenses increase: 1) The divisions’ contribution...

All other things being equal, if a division’s traceable fixed expenses increase: 1) The divisions’ contribution margin will increase. 2) The divisions’ contribution margin will decrease. 3) The divisions’ segment margin will increase. 4) The divisions’ segment margin will decrease. If there are traceable fixed costs then: 1) The company will breakeven. 2) Sales will be greater than the contribution margin. 3) The segment margin will be less than the contribution margin. 4) None of the above. In a Net...

1. A country has $20 million of domestic investment and net capital outflow of $10 million....

1. A country has $20 million of domestic investment and net capital outflow of $10 million. What is saving? show work 2. If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos, then the forecast is given in nominal terms and implies the dollar will _____appreciate____________(Appreciate/Depreciate). 3. A U.S. purchase of oil from overseas paid for with foreign currency it already owned _________(increases/decreases) U.S. net exports, and ______________(increases/decreases) U.S. net capital...

Do you agree with the statement that: “Other things being equal, the higher the quality of...

Do you agree with the statement that: “Other things being equal, the higher the quality of a business the more it should be worth”? Describe the quantitative and qualitative factors you consider important in determining the quality of a business.

Other things equal, what is the likely impact of a U.S. trade deficit on the current...

Other things equal, what is the likely impact of a U.S. trade deficit on the current account? foreign savings if domestic investment is greater than domestic saving? foreign savings if domestic investment is less than domestic saving?