The exchange rate policy where the exchange rate is determined completely by market forces is called a Multiple Choice O managed float. O fixed peg. free float. currency board.
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The exchange rate policy where the exchange rate is determined completely by market forces is called a Multiple Choice O managed float. O fixed peg. free float. currency board.
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- Which of the following exchange rate policices requires the least central bank intervention in the foreign exchange markets? O crawling peg O floating exchange rate O fixed exchange rate O managed floatSuppose the exchange rates betwe he United States and Canada are in long -run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would O be completely offset by changes in the real exchange rate. O have no effect on nominal exchange rates. be completely offset by changes in the nominal exchange rate. O violate the conditions for the law of one price.How are spot exchange rates determined? O the interaction between demand and supply of a currency relative to other currencies O government decree using historical average prices of different currencies O taking the average of a basket of currencies O predicting future currency movements in nonmember countries
- If the dollar interest rate is 5 percent and the euro interest rate is 3 percent, then an investor should O be indifferent between dollars and euros. invest only in euros if the exchange rate is expected to remain constant. O invest only in euros. O invest only in dollars if the exchange rate is expected to remain constant. O invest only in dollars.The spot exchange rate between the dollar and the Swiss franc is a floating, or flexible, What are the effects of each of the following on this exchange rate? a.There is a large increase in Swiss demand for US exports as US culture becomes more popular in Switzerland. b.There is a large increase in Swiss demand for US investments in US dollar-denominated financial assets due to a belief that the US economy are imporoving markedly. c. Political uncertainties in Europe lead US investors to shift their financial investments out of Switzerland, back to the US. d. US demand for products imported from Switzerland falls significantly as bad press reports lead Americans to question the quality of Swiss products.The purchasing power parity may not fully explain exchange rate movements because Select one: the foreign price level changes by more than the domestic price level O a. O b. of changes in the price of goods and services not traded internationally O c. different countries have different inflation rates O d. monetary policy differs across countries O e. the domestic price level changes by more than the foreign price level Next pa Epage e to search
- Only like if no ai or downvoted for ai content Suppose that the equilibrium exchange rate between the United States and South African is 15.13 Rand per US dollar. Further suppose that the two countries are trading partners with each other. Inflation now rises in South Africa. Which of the following answer choices correctly represents the shift that would occur in the US foreign exchange market? The supply of US dollars would fall. The demand for South African Rands would rise. The supply of South African Rands would rise.The purchasing power parity may not fully explain exchange rate movements because Select one: O a. monetary policy differs across countries O b. different countries have different inflation rates O c. the foreign price level changes by more than the domestic price level O d. of changes in the price of goods and services not traded internationally O e. the domestic price level changes by more than the foreign price levelEconomic theory suggests that in the long run, since money is neutral, the real exchange rate will be defined by the difference between home and foriegn inflation. Consider the Big Mac index. A. Consider the Euro Area, the UK and Brazil. Do the differences in inflation rates (you need to look these up) imply the extent of the undervaluation of the exchange rate? B. Find the Big Mac Index for 2018 and 2019. Do exchabge rates appear to be converging ot diverging? Provide an economic explanation for their behaviour.
- The nominal ekchange rate is defined as the price of domestic currency in terms of foreign currency From the perspective of the United States, an increase in the nominal exchange rate will cause which of the following? O American goods are less expensive than foreign goods O Forelen currency is more expensive than the dollar. O The dollar becomes more experisive than foreign currency O Foreign goods are more expensive than American goods.Which of the following is a benefit of having a flexible exchange rate? a. Crowding-out effects created by fiscal policies could be avoided b. Current account is more likely to be positive O c. More control over monetary policies O d. Fiscal and monetary policy coordination is required for this countrySuppose that we observe the following change in the international market for USD: a USD B O The CAD woul appreciate. O The CAD woul depreciate. S₁ Q In this case, what wopuld we expect to happen to the price of CAD if the CAD-USD exchange rate was flexible?