Question 1

The stability of the Russian Ruble in the 1990s (until the Russian debt crisis) was considered an observable success of the Yeltsin administration.

Accepted Answer

A) True 
 B)False

Question 2

During the 1990s Argentina's exports became some of the least expensive in all of South America thanks in part to the pegging of the Argentine peso to the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 3

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

Accepted Answer

A)  balance of payments 
B)  parity conditions 
C)  managed float 
D)  asset market

Question 4

The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

Accepted Answer

A)  banking liquidity 
B)  shareholder's wealth 
C)  reestablishing fixed currency exchange rates in Asia 
D)  dollarization of Asian currencies

Question 5

________ is the official Chinese currency.

Accepted Answer

A)  Baht 
B)  Won 
C)  Ringgit 
D)  Renminbi

Question 6

A popular speculation in the 1990s was

Accepted Answer

A)  U.S. investors investing in Japanese securities to take advantage of Japan's higher nominal and real interest rates. 
B)  Japanese investors investing in the United States securities to take advantage of the higher U.S. nominal and real interest rates. 
C)  selling short the U.S. dollar against the Russian Ruble. 
D)  None of the above was a popular speculation technique in the 1990s.

Question 7

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

Accepted Answer

A) True 
 B)False

Question 8

The U.S. economic bubble burst after the attacks of September 11, 2001. Which of the following could be considered a contributing factor to the U.S. economic downturn?

Accepted Answer

A)  a negative reassessment of long-term economic growth prospects in the U.S. 
B)  a newly formed level of political risk 
C)  lower expected earnings 
D)  all of the above

Question 9

Corporate socialism in the Asian markets could be contributed in part

Accepted Answer

A)  to the relatively short and stable post-WWII history of capitalism in their markets. 
B)  a belief by the owners of Asian companies that their governments would not allow them to fail. 
C)  the practice of lifetime employment at many corporations. 
D)  all of the above.

Question 10

Which of the following is NOT a current account activity?

Accepted Answer

A)  Net import/export of goods (Balance of Trade). 
B)  Net import/export of services. 
C)  Net portfolio investment. 
D)  All of the above are activities of the current account.

Question 11

Which of the following did NOT contribute to the exchange rate collapse in emerging markets in the 1990s?

Accepted Answer

A)  Infrastructure weaknesses. 
B)  Speculation on the part of market participants. 
C)  The sharp reduction of cross-border foreign direct investment. 
D)  All of the above contributed to the emerging markets exchange rate collapse of the 1990s.

Question 12

A currency board is

Accepted Answer

A)  a structure, rather than a mere commitment, to limiting the growth of the money supply in the economy. 
B)  a recipe for conservative and prudent financial management. 
C)  designed to eliminate the power of politicians to exercise judgment by relying on an automatic and unbendable rule. 
D)  all of the above.

Question 13

In the years immediately preceding 1998 the Russian Ruble operated under a ________ type of exchange rate regime.

Accepted Answer

A)  fixed 
B)  free floating (market determined) 
C)  managed floating 
D)  pegged (to the U.S. dollar)

Question 14

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT a factor in determining exchange rate equilibrium?

Accepted Answer

A)  relative inflation rates 
B)  relative interest rates 
C)  market expectations 
D)  All of the above are factors in determining equilibrium exchange rates.

Question 16

The ________ argues that exchange rates are determined by the supply and demand for a wide variety of financial assets

Accepted Answer

A)  balance of payments 
B)  monetary 
C)  asset market 
D)  law of one price

Question 17

The ________ is the Argentine currency unit.

Accepted Answer

A)  peso 
B)  dollar 
C)  real 
D)  peseta

Question 18

Assume your country has a balance of payments surplus. How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?

Accepted Answer

The answer of Assume your country has a balance of...

Question 19

The Asian Currency crisis appeared to begin in ________.

Accepted Answer

A)  South Korea 
B)  Taiwan 
C)  Thailand 
D)  Japan

Question 20

It is safe to say that the Russian transition from a communist economy to a capitalist economy has been smooth for the Russian people

Accepted Answer

A) True 
 B)False

Exam 7: Foreign Exchange Rate Determination and Forecasting

The stability of the Russian Ruble in the 1990s (until the Russian debt crisis) was considered an observable success of the Yeltsin administration.

During the 1990s Argentina's exports became some of the least expensive in all of South America thanks in part to the pegging of the Argentine peso to the U.S. dollar.

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

________ is the official Chinese currency.

A popular speculation in the 1990s was

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

The U.S. economic bubble burst after the attacks of September 11, 2001. Which of the following could be considered a contributing factor to the U.S. economic downturn?

Corporate socialism in the Asian markets could be contributed in part

Which of the following is NOT a current account activity?

Which of the following did NOT contribute to the exchange rate collapse in emerging markets in the 1990s?

A currency board is

In the years immediately preceding 1998 the Russian Ruble operated under a ________ type of exchange rate regime.

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

Which of the following is NOT a factor in determining exchange rate equilibrium?

The ________ argues that exchange rates are determined by the supply and demand for a wide variety of financial assets

The ________ is the Argentine currency unit.

Assume your country has a balance of payments surplus. How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?

The Asian Currency crisis appeared to begin in ________.

It is safe to say that the Russian transition from a communist economy to a capitalist economy has been smooth for the Russian people