Suppose a U.S. citizen purchases a one-year Norwegian bond that yields 10 percent interest. Between the purchase date and the maturity date, the exchange rate changes from to How much was initially invested in the bond if the dollar value of the proceeds at maturity is 3,500? (roundoff up to the nearest whole number)
a. 2,916
b. 3,150
c. 3,500
d. 3,850
e. 4,200
Question 2If the United States purchases oil from Kuwait, what is the effect in the exchange market?
a. It will increase the supply of U.S. dollars.
b. It will decrease the supply of U.S. dollars.
c. It will increase the demand for U.S. dollars.
d. It will decrease the demand for U.S. dollars.
Question 3Each person in the population can be classified as employed or unemployed.
a. True
b. False
Indicate whether the statement is true or false
Question 4Assume that a one-year Malaysian bond yields 10 percent interest and that the dollar return on maturity is 5 percent. If the exchange rate at maturity is 1 = MYR 4.00 (Malaysian ringgit), what was the exchange rate at the time the bond was purchased?
a. 1 = MYR 4.2
b. 1 = MYR 3.8
c. 1 = MYR 3.6
d. MYR 1 = 0.26
e. MYR 1 = 0.4
Question 5If a Japanese pension fund decides to purchase U.S. government bonds, what is the effect in the exchange market?
a. It will increase the supply of U.S. dollars.
b. It will decrease the supply of U.S. dollars.
c. It will increase the demand for U.S. dollars.
d. It will decrease the demand for U.S. dollars.
Question 6Each person in the population can be classified as employed, unemployed, or not in the labor force.
a. True
b. False
Indicate whether the statement is true or false
Question 7Given a one-year Canadian bond with a yield of 8 percent, what will be the U.S. investor's rate of return at maturity if the Canadian dollar appreciates 10 percent against the U.S. dollar?
a. 2 percent
b. 8 percent
c. 10 percent
d. 18 percent
e. 25 percent
Question 8If more French tourists visit the Grand Canyon, what is the effect in the exchange market?
a. It will increase the supply of U.S. dollars.
b. It will decrease the supply of U.S. dollars.
c. It will increase the demand for U.S. dollars.
d. It will decrease the demand for U.S. dollars.
Question 9The cost of unemployment to society includes the loss of the goods and services that might have been produced if the unemployed had been employed.
a. True
b. False
Indicate whether the statement is true or false
Question 10What is the interest rate on a 12-month U.K. certificate of deposit if the dollar return on the certificate is 4 percent and the dollar has appreciated 9 percent against the British pound?
a. 15 percent
b. 13 percent
c. 9 percent
d. 5 percent
e. 4 percent
Quick Reply
