A box of chocolate candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate? O a. 1 U.S. dollar equals 1.44 Swiss francs O b. 1 U.S. dollar equals 1.21 Swiss francs O c. 1 US. dollar equals 1.29 Swiss francs O d. 1 U.S. dollar equals 0.69 Swiss francs Oe. 1 U.S. dollar equals 0.85 Swiss francs

In the short run, all of the following are disadvantages of a fixed exchange rate regime except: O A. macroeconomic shocks must be addressed with fiscal policy. O B. open market operations are overused. OC. they can lead to future exchange rate crises. O D. interest rates are constant. According to Robert Mundell, for countries to constitute an optimal currency area, such as adopting a common currency, they must have: O A. a different composition of industries. O B. high factor mobility. O C. similar per capita GDP. O D. all of the above.

In the foreign exchange market, an increase in the U.S. interest rate leads to in the exchange rate because the supply of dollars a fall; increases O b. no change; does not change Ос a rise; decreases O d. a rise; increases O . a fall; decreases

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