The spot exchange rate is equal to the forward exchange rate:
a. When the central bank chooses to equalize both rates.
b. When the interest rates of the two countries are not expected to change.
c. When the difference between the interest rates of the two countries are expected to remain constant.
d. When the nominal interest rates of the two countries are equal.
e. When the interest rate of at least one of the two countries equals the spot exchange rate.
Question 2 - In Monetarist theory, the role of the government should be to:
a. Use fiscal policies to ensure that aggregate demand is sufficient to meet aggregate supply.
b. Control prices.
c. Seek to raise productivity by setting up and enforcing fair rules of behavior, encouraging competitive markets, imposing reasonable taxes, and creating stable and predictable political environments.
d. All of the above.
e. None of the above.
Question 3 - The spot exchange rate is equal to the forward exchange rate:
a. Only when the exchange rate is equal to 1.00 because then the inverse is also 1.00.
b. When the central bank chooses to equalize both rates.
c. When the interest rates of the two countries are not expected to change.
d. When the difference between the interest rates of the two countries are expected to remain constant.
e. When the nominal interest rates of the two countries are equal.
Question 4 - In the short run, the downward slope to the Phillips curve is mainly due to:
a. Differences between expected inflation and actual inflation.
b. Differences between actual and expected real GDP growth rates.
c. Differences between actual and expected sun spots.
d. Differences between actual and expected changes in productivity.
e. Differences between actual and expected nominal exchange rate changes.
Quick Reply
