国际金融学复习题

法商学院国际金融复习题

I.Multiple Choice Questions: there is only one correct answer for each of the following

questions. Please choose the correct one and write it down on your answer sheet

. Which of the following statements is the most accurate? The law of one price states:

A.In competitive markets free of transportation costs and official barriers to trade, identical

goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.

B.In competitive markets free of transportation costs and official barriers to trade, identical

goods sold in the same country must sell for the same price when their prices are expressed in terms of the same currency.

C. In competitive markets free of transportation costs and official barrier to trade, identical

goods sold in different countries must sell for the same price.

D.Identical goods sold in different countries must sell for the same price when their prices are

expressed in terms of the same currency.

E.None of the above.

After a permanent increase in the money supply,

A.the exchange rate overshoots in the short run.

B.the exchange rate overshoots in the long run.

C.the exchange rate smoothly depreciates in the short run.

D.the exchange rate smoothly appreciates in the short run.

E.None of the above.

The J-curve illustrates which of the following?

A. The effects of depreciation on the home country's economy

B. The immediate increase in the current account caused by a currency depreciation

C. The gradual adjustment of home prices to a currency depreciation

D. The short-term effects of depreciation on the current account

E. The Keynesian view of international trade dynamics

. An increase in a country’s money supply causes

A.its currency to appreciate in the foreign exchange market, while a reduction in the

money supply causes its currency to depreciate.

B.its currency to depreciate in the foreign exchange market, while a reduction in the

money supply causes its currency to appreciate.

C.no effect on the values of its currency in international markets.

D.its currency to depreciate in the foreign exchange market, while a reduction in the

money supply causes its currency to further depreciate.

E.None of the above.

. Under the monetary approach to the exchange rate theory, money supply growth at a

A.eventually results in ongoing price level deflation at the same rate, but changes in

this long-run deflation rate do not affect the full-employment output level or the

long-run relative prices of goods and services.

B.eventually results in ongoing price level inflation at the same rate, but changes in this

long-run inflation rate do affect the full-employment output level and the long-run

relative prices of goods and services.

C.eventually results in ongoing price level inflation at the same rate, but changes in this

long-run inflation rate do not affect the full-employment output level or the long-run

relative prices of goods and services.

D.eventually results in ongoing price level inflation at the same rate, but changes in this

long-run inflation rate do not affect the full-employment output level, only the

long-run relative prices of goods and services.

E.None of the above statements is true.

. The Marshall-Lerner Condition states that

A. depreciation always has a favorable effect on the current account.

B. import dependency reinforces the effects of depreciation on the current account.

C. high elasticity of exports is sufficient for the favorable effects of depreciation on the

current account to be observed.

D. depreciation has a favorable effect on the current account only if the sum of export

and import elasticities is greater than one.

E. the sum of import and export elasticities must be equal to one in order for

depreciation to occur.

. Under PPP,

A. a rise in a country’s expected inflation rat e will eventually cause a more-than

proportional rise in the interest rate that depositors of its currency offer in order to

accommodate for the higher inflation.

B. a fall in a country’s expected inflation rate will eventually cause an equal rise in the

interest rate that depositors of its currency offer.

C. a rise in a country’s expected inflation rate will eventually cause an equal rise in the

interest rate that depositors of its currency offer.

D. a rise in a country’s expected inflation rate will eventually cau se a less than

proportional rise in the interest rate that depositors of its currency offer to

accommodate the rise in expected inflation.

E.None of the above statements is true.

. Fiscal Expansion under a fixed exchange rate has what effect(s) on the economy?

A.The money supply decreases.

B.Output decreases.

C.The exchange rate increases.

D.The exchange rate decreases initially but then returns to its original point.

E.Output is unchanged.

. Under the monetary approach to the exchange rate theory, money supply growth at a