Question 1

Non-traded goods include:

Accepted Answer

A) commodities like wheat. 
B) real estate. 
C) consumer goods like shirts. 
D) all of the above. 
A) commodities like wheat. 
B) real estate. 
C) consumer goods like shirts. 
D) all of the above.

Question 2

Under fixed exchange rates a country's:

Accepted Answer

A) money supply is fixed. 
B) inflation rate is fixed. 
C) monetary policy makers are not independent. 
D) all of the above. 
A) money supply is fixed. 
B) inflation rate is fixed. 
C) monetary policy makers are not independent. 
D) all of the above.

Question 3

If absolute purchasing power parity holds, under fixed exchange rates:

Accepted Answer

A) the home interest rate equals the foreign interest rate. 
B) the home inflation is lower than the foreign inflation rate. 
C) the growth rate of the nominal exchange rate is positive. 
D) all of the above. 
A) the home interest rate equals the foreign interest rate. 
B) the home inflation is lower than the foreign inflation rate. 
C) the growth rate of the nominal exchange rate is positive. 
D) all of the above.

Question 4

If absolute purchasing power parity holds, under fixed exchange rates:

Accepted Answer

A) the home interest rate is higher than the foreign interest rate. 
B) the home inflation rate is lower than the foreign inflation rate. 
C) the growth rate of the nominal exchange rate is zero. 
D) all of the above. 
A) the home interest rate is higher than the foreign interest rate. 
B) the home inflation rate is lower than the foreign inflation rate. 
C) the growth rate of the nominal exchange rate is zero. 
D) all of the above.

Question 5

What is absolute purchasing power parity, what does it imply and why might it not hold?

Accepted Answer

Absolute purchasing power parity is the

Question 6

Absolutely purchasing power parity means:

Accepted Answer

A) the quantity of goods that can be bought in the home country is greater than the quantity of goods that can be bought in the foreign country. 
B) buying and selling goods looks more attractive in the home country. 
C) the nominal exchange rate is the ratio of the foreign price to the home price. 
D) all of the above. 
A) the quantity of goods that can be bought in the home country is greater than the quantity of goods that can be bought in the foreign country. 
B) buying and selling goods looks more attractive in the home country. 
C) the nominal exchange rate is the ratio of the foreign price to the home price. 
D) all of the above.

Question 7

Relative purchasing power parity implies a country will see its currency fall in value, if

Accepted Answer

A) its inflation rate is lower than the foreign inflation rate. 
B) its price level is higher than the foreign price level. 
C) its inflation rate is higher than the foreign inflation rate. 
D) its price level is lower than the foreign price level. 
A) its inflation rate is lower than the foreign inflation rate. 
B) its price level is higher than the foreign price level. 
C) its inflation rate is higher than the foreign inflation rate. 
D) its price level is lower than the foreign price level.

Question 8

If the dollar per yen exchange rate rises, then so does the value of the dollar.

Accepted Answer

A) True 
 B)False

Question 9

Under fixed exchange rates a country's:

Accepted Answer

A) money supply is fixed. 
B) inflation rate will rise. 
C) monetary policy makers are independent. 
D) all of the above. 
A) money supply is fixed. 
B) inflation rate will rise. 
C) monetary policy makers are independent. 
D) all of the above.

Question 10

Absolute purchasing power parity means:

Accepted Answer

A) the quantity of goods that can be bought in the home country equals the quantity of good that can be bought in the foreign country. 
B) buying and selling goods looks more attractive in the home country. 
C) the nominal exchange rate is the ratio of the home price to the world price. 
D) all of the above. 
A) the quantity of goods that can be bought in the home country equals the quantity of good that can be bought in the foreign country. 
B) buying and selling goods looks more attractive in the home country. 
C) the nominal exchange rate is the ratio of the home price to the world price. 
D) all of the above.

Question 11

The nominal exchange rate is:

Accepted Answer

A) foreign good per home good. 
B) the number of units of foreign currency per one unit of home currency divided by the ratio of the foreign price level to the home price level. 
C) the number of units of foreign currency per one unit of the home currency. 
D) all of the above. 
A) foreign good per home good. 
B) the number of units of foreign currency per one unit of home currency divided by the ratio of the foreign price level to the home price level. 
C) the number of units of foreign currency per one unit of the home currency. 
D) all of the above.

Question 12

Absolute purchasing power parity means:

Accepted Answer

A) the quantity of goods that can be bought in the home country is greater than the quantity of goods that can be bought in the foreign country. 
B) buying and selling goods looks equally attractive in both countries. 
C) the nominal exchange rate is the ratio of the foreign price to the world price. 
D) all of the above. 
A) the quantity of goods that can be bought in the home country is greater than the quantity of goods that can be bought in the foreign country. 
B) buying and selling goods looks equally attractive in both countries. 
C) the nominal exchange rate is the ratio of the foreign price to the world price. 
D) all of the above.

Question 13

What is interest-rate parity and what does this imply about when the exchange rate will be stable?

Accepted Answer

Interest rate parity says that the growt

Question 14

Fixed exchange rates are determined by:

Accepted Answer

A) the market. 
B) the governments of the two countries. 
C) the UN. 
D) the International Monetary Fund. 
A) the market. 
B) the governments of the two countries. 
C) the UN. 
D) the International Monetary Fund.

Question 15

An appreciation is when the value of a country's currency:

Accepted Answer

A) is fixed by the government. 
B) rises in value in the exchange market. 
C) falls in value in the exchange market. 
D) is fixed in relationship to gold. 
A) is fixed by the government. 
B) rises in value in the exchange market. 
C) falls in value in the exchange market. 
D) is fixed in relationship to gold.

Question 16

Absolutely purchasing power parity means:

Accepted Answer

A) the quantity of goods that can be bought in the home country equals the quantity of good that can be bought in the foreign country. 
B) buying and selling goods looks equally attractive in both countries. 
C) the nominal exchange rate is the ratio of the foreign price to the home price. 
D) all of the above. 
A) the quantity of goods that can be bought in the home country equals the quantity of good that can be bought in the foreign country. 
B) buying and selling goods looks equally attractive in both countries. 
C) the nominal exchange rate is the ratio of the foreign price to the home price. 
D) all of the above.

Question 17

Under fixed exchange rates a country's:

Accepted Answer

A) money supply is domestically controlled. 
B) inflation rate will rise. 
C) monetary policy makers are not independent. 
D) all of the above. 
A) money supply is domestically controlled. 
B) inflation rate will rise. 
C) monetary policy makers are not independent. 
D) all of the above.

Question 18

What is relative purchasing power parity and when does it say the home country will see its currency lose value?

Accepted Answer

Relative purchasing power parity says th

Question 19

If a country with a fixed exchange rate tries to raise its money stock:

Accepted Answer

A) see its central bank lose domestic government bonds. 
B) see its central bank lose international reserves. 
C) see its money stock continue to rise. 
D) all of the above. 
A) see its central bank lose domestic government bonds. 
B) see its central bank lose international reserves. 
C) see its money stock continue to rise. 
D) all of the above.

Question 20

Purchasing power parity may not hold due to:

Accepted Answer

A) inflation. 
B) market clearing. 
C) shifts in the terms of trade. 
D) all of the above. 
A) inflation. 
B) market clearing. 
C) shifts in the terms of trade. 
D) all of the above.

Non-traded goods include:

Under fixed exchange rates a country's:

If absolute purchasing power parity holds, under fixed exchange rates:

If absolute purchasing power parity holds, under fixed exchange rates:

What is absolute purchasing power parity, what does it imply and why might it not hold?

Absolutely purchasing power parity means:

Relative purchasing power parity implies a country will see its currency fall in value, if

If the dollar per yen exchange rate rises, then so does the value of the dollar.

Under fixed exchange rates a country's:

Absolute purchasing power parity means:

The nominal exchange rate is:

Absolute purchasing power parity means:

What is interest-rate parity and what does this imply about when the exchange rate will be stable?

Fixed exchange rates are determined by:

An appreciation is when the value of a country's currency:

Absolutely purchasing power parity means:

Under fixed exchange rates a country's:

What is relative purchasing power parity and when does it say the home country will see its currency lose value?

If a country with a fixed exchange rate tries to raise its money stock:

Purchasing power parity may not hold due to:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Filters

Exam 19: Exchange Rates

Non-traded goods include:

Under fixed exchange rates a country's:

If absolute purchasing power parity holds, under fixed exchange rates:

If absolute purchasing power parity holds, under fixed exchange rates:

What is absolute purchasing power parity, what does it imply and why might it not hold?

Absolutely purchasing power parity means:

Relative purchasing power parity implies a country will see its currency fall in value, if

If the dollar per yen exchange rate rises, then so does the value of the dollar.

Under fixed exchange rates a country's:

Absolute purchasing power parity means:

The nominal exchange rate is:

Absolute purchasing power parity means:

What is interest-rate parity and what does this imply about when the exchange rate will be stable?

Fixed exchange rates are determined by:

An appreciation is when the value of a country's currency:

Absolutely purchasing power parity means:

Under fixed exchange rates a country's:

What is relative purchasing power parity and when does it say the home country will see its currency lose value?

If a country with a fixed exchange rate tries to raise its money stock:

Purchasing power parity may not hold due to:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Filters