Suppose the economy was in equilibrium, and the national government increased spending by 200 billion. Monetarist theory would predict that the main factor that will readjust the economy is the:
a. Price level.
b. Real GDP.
c. Nominal and real exchange rates.
d. Real risk-free interest rate.
e. Money supply.
Question 2 - Which of the following is not a segment of the foreign exchange market?
a. The stock market for multinational companies.
b. The outright forward market.
c. The futures-and-options market.
d. The spot market.
e. All of the above are segments of the foreign exchange market.
Question 3 - Suppose the economy was in equilibrium, and the national government increased spending by 200 billion. Monetarist theory would predict that the main factor that will readjust the economy is the:
a. Real risk-free interest rate.
b. Real GDP.
c. Nominal and real exchange rates.
d. Money supply.
e. Real wage rate.
Question 4 - Which of the following is not a segment of the foreign exchange market?
a. The stock market for multinational companies.
b. The swap market.
c. The outright forward market.
d. The spot market.
e. All of the above are segments of the foreign exchange market.
Question 5 - Suppose the economy was in equilibrium, and the national government increased spending by 200 billion. Monetarist theory would predict that:
a. Both consumption and investment will fall, and net exports will rise.
b. Consumption will fall, and both investment and net exports will rise.
c. Any increase in government spending will be offset dollar for dollar by reduction in private demand.
d. In the end, government spending, consumption, investment, and net exports will all settle back to their old position with no net change in any of them.
Question 6 - The forward exchange market:
a. Is a market for current deliveries but future payments.
b. Handles transactions for individuals or companies who would like to lock in now the price of future exchange rate payments or receipts.
c. Is a market with no default risk.
d. Provides sufficient liquidity for almost any transaction with a maturity up to 5 years and amount up to 1.9 trillion a day.
e. Is called forward because the dealers are likely to ask you out for a date.
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