Eco 305 Wk 9 Quiz 8 - Chapters 12 and 13 - All Possible

ECO 305 WK 9 Quiz 8 - Chapters 12 and 13 - All Possible Question

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ECO 305 WK 9 Quiz 8 - Chapters 12 and 13 - All Possible Question

MULTIPLE CHOICE

1. The relationship between the exchange rate and the prices of tradable goods is known as the:

a. Purchasing-power-parity theory

b. Asset-markets theory

c. Monetary theory

d. Balance-of-payments theory

2. If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals:

a. 20 pounds

b. 40 pounds

c. 60 pounds

d. 80 pounds

3. Low real interest rates in the United States tend to:

a. Decrease the demand for dollars, causing the dollar to depreciate

b. Decrease the demand for dollars, causing the dollar to appreciate

c. Increase the demand for dollars, causing the dollar to depreciate

d. Increase the demand for dollars, causing the dollar to appreciate

4. High real interest rates in the United States tend to:

a. Decrease the demand for dollars, causing the dollar to depreciate

b. Decrease the demand for dollars, causing the dollar to appreciate

c. Increase the demand for dollars, causing the dollar to depreciate

d. Increase the demand for dollars, causing the dollar to appreciate

5. Assume that the United States faces an 8 percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing-power parity theory, the dollar would be expected to:

a. Appreciate by 8 percent against the yen

b. Depreciate by 8 percent against the yen

c. Remain at its existing exchange rate

d. None of the above

6. In the presence of purchasing-power parity, if one dollar exchanges for 2 British pounds and if a VCR costs $400 in the United States, then in Great Britain the VCR should cost:

a. 200 pounds

b. 400 pounds

c. 600 pounds

d. 800 pounds

7. If wheat...