Classical

Advanced Questions - Section 2

41:  

Under managed floating exchange rates, if the rate of inflation in the United States is less than the rate of inflation of its trading partners, the dollar will likely

A.

appreciate against foreign currencies

B.

depreciate against foreign currencies

C.

be officially revalued by the government

D.

be officially devalued by the government

 
 

Option: A

Explanation :


42:  

The role of ____ is to direct one nation's savings into investments of another nation

A.

merchandise trade flows

B.

services flows

C.

current account flows

D.

capital flows

 
 

Option: D

Explanation :


43:  

Speculators in foreign exchange markets do all of the following except

A.

attempt to profit by trading on expectations about future currency prices

B.

bear risk as they attempt to beat the market

C.

attempt to buy currency at a low price and later resell that currency at a higher price

D.

simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit

 
 

Option: D

Explanation :


44:  

Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called

A.

differential actions

B.

cash transactions

C.

arbitrage

D.

forward transactions

 
 

Option: C

Explanation :


45:  

In the balance of payments, the statistical discrepancy is used to

A.

insure that the sum of all debits matches the sum of all credits

B.

insure that trade imports equal the value of trade exports

C.

obtain an accurate account of a balance-of-payments deficit

D.

obtain an accurate account of a balance-of-payments surplus

 
 

Option: A

Explanation :




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