What-Determines-ExchangeRates1

What Determines Exchange Rates
1.The __________ approach to exchange rates emphasizes the role of
portfolio repositioning by international financial investors.
a.Currency market
b.Asset market
c.Monetary
d.Balance of payments
2.The asset market approach to exchange rate determination seeks to
predict:
a.Exchange rate premiums.
b.Long-run trends in exchange rates.
c.Medium-term trends in exchange rates.
d.Short-term pressures on exchange rates.
3.The exchange rate value of a foreign currency is __________ in the short
run by a rise in the expected future spot exchange rate.
a.Raised
b.Lowered
c.Forced to zero
d.Unchanged
4. A decrease in the foreign interest rate relative to the domestic
interest rate ___________ the exchange rate value of a foreign currency in the short run.
a.Raises
b.Lowers
c.Does not affect
d.Pegs
5. A shift to expecting depreciation in the euro will lead to:
a.An inflow of capital to Europe.
b.An increase in the demand for euro-denominated financial assets.
c.Uncovered interest rate parity.
d. A decrease in the demand for euro-denominated financial assets.
6.If the domestic interest rate decreases, with the foreign interest rate
and the expected future spot rate remaining unchanged, the value of the domestic currency is expected to:
a.Increase.
b.Decrease.
c.Remain unchange
d.
d.Converge to its PPP valu
e.
7.If the expected future spot exchange rate value of the foreign currency
decreases, with the interest rate differential unchanged, the current spot exchange rate value of the domestic currency:
a.Increases.
b.Decreases.
c.Remains unchange
d.
d.Converges to zero.
8.An increase in interest rates in the United States will lead to:
a.Depreciation of the dollar.
b.Outflows of capital from the United States.
c.Capital inflows into the United States.
d. A decrease in the demand for dollar-denominated financial assets.
9.Which of the following is NOT linked together by uncovered interest
parity?
a.The domestic interest rate.
b.The foreign interest rate.
c.The current spot exchange rate.
d.The current forward exchange rat
e.
10.If investors expect a depreciation of the Thai baht, their actions
will:
a.Drive down Thai interest rates.
b.Cause that expected depreciation to occur very quickly.
c.Cause the Thai baht to appreciate immediately.
d.Cause a large inflow of foreign capital into Thailand.
11.The __________ effect can sometimes be destabilizing because it moves
the exchange rate away from its long-run equilibrium value.
a.Bandwagon
b.Bubble
c.Exchange rate
d.Arbitrage
12.The law of __________ states that a product that is easily and freely
traded in a perfectly competitive global market should have the same price everywhere.
a.International trade
b.One price
c.Diminishing returns
d.Relative PPP
13.The law of one price works well for __________ traded commodities.
a.All
b.Lightly
c.Heavily
d.Domestically
14.The law of one price works better if:
a.There are no transaction costs.
b.There is complete information.
c.There are many buyers and sellers.
d.All of the abov
e.
15.___________ purchasing power parity states that the difference between
changes over time in product-price levels in two countries will be offset by the change in the exchange rate over this time.
a.Full
b.Partial
c.Relative
d.Absolute
16.Suppose the average price of a Big Mac in the United States is $3.50
while in Japan the average price is 400 yen. If the price of a dollar is 100 yen per dollar, the purchasing power parity model of exchange rate determination suggests:
a.The yen is overvalued.
b.The yen is undervalued.
c.The price of a Big Mac in Japan will rise.
d.The dollar will depreciate against the yen.
17.Domestic currency ___________ when the domestic money supply increases
relative to the foreign money supply.
a. Depreciates in the long-run
b.Appreciates in the long-run
c.Remains unchanged in the long-run.
d.Appreciates in the short-run but depreciates in the long-run.
18.Which of the following statements is true?
I.If the domestic interest rate rises, there will be international
financial repositioning toward domestic-currency assets thereby causing the domestic currency to appreciate.
II.If the expected future spot exchange rate value of the foreign currency decreases, there will be international financial
repositioning toward foreign-currency assets thereby causing the domestic currency to depreciate.
III.If foreign interest rates increase, there will be international financial repositioning toward domestic-currency assets and the domestic currency will appreciate.
a.I
b.I and II
c.II and III
d.I, II, and III
19.Based on PPP and the quantity theory of money, if Japan’s real income
rises relative to real income in the US, there should be a(n):
a.Appreciation of the dollar.
b.Appreciation of the yen.
c.Interest rate parity.
d.Depreciation of the yen.
20.Overshooting occurs when:
a.Exchange rates change suddenly.
b.National growth rates diverge.
c.Exchange rates adjust more in the long-run than they do in the
short-run.
d.Exchange rates adjust more in the short-run than they do in the
long-run.
21.According to the overshooting model, an unexpected increase in the
money supply of 10% will cause the short-run exchange rate value of this country’s currency to :
a.Depreciate by more than 10%.
b.Depreciate by less than 10%.
c.Appreciate by more than 10%.
d.Appreciate by less than 10%.
22.The __________ exchange rate is a weighted average of the market rates
across a number of foreign currencies.
a.Nominal bilateral
b.Real bilateral
c.Nominal effective
d.Real effective
23.The __________ exchange rate is a weighted average of the real
bilateral exchange rates across a number of foreign countries.
a.Nominal bilateral
b.Real unilateral
c.Nominal effective
d.Real effective
24.If the movement in the exchange rate appears to be simply inconsistent
with any form of economic fundamentals, it is called:
a.Exchange rate parity.
b. A speculative bubble.
c.Overshooting.
d.Uncovered speculation.
25.Absolute purchasing power parity applied to all products in the economy
does not perform well in the real world because of:
a.Non-traded products.
b.Different bundles of products used to measure inflation in
different countries.
c.Productivity differences between countries.
d.All of the abov
e.
26.Exchange rate overshooting occurs:
a.Because interest rates are sticky.
b.Because product prices are slow to change.
c.Only if investors and speculators react irrationally to news.
d.Both (b) and (c)
（注：可编辑下载，若有不当之处，请指正，谢谢!）。