Quiz 2 Questions Flashcards
What is the best way for a country to avoid suffering a reduction in future living standards after running persistent trade deficits as the US has done?
A.Rapid growth in government spending
B.Rapid GDP growth
C.Rapid growth in consumption spending
D.Rapid growth in the trade deficit
E.Rapid growth in the international debtor position
B. Rapid GDP growth
Which of the following is a major risk affecting a country that is a large creditor country.
A.Foreigners may use funds to spur their own growth
B.Foreigners may repay principal and interest in full
C.Foreigners may default on international loans
D.Foreign investment value may grow rapidly
E.Domestic government may default on foreign loans
C. Foreigners may default on international loans
If a company advertises currency exchanges of dollars for euros with no fees then the following is probably true.
A.The advertisement is false
B.You are dreaming because no company would ever do this
C.The company will try to sell you other services to cover its zero profit on currency exchanges
D.The company will use an exchange rate different from the central exchange rate to make money on the exchanges
E.The company will charge fees on different common currency trades (for example $ for £), using the zero-fee ad to lure customers
D. The company will use an exchange rate different from the central exchange rate to make money on the exchanges
[Indicate whether the Euro would appreciate, depreciate, or stay the same ceter paribus]
an increase in Euro interest rates
appreciate
[Indicate whether the Euro would appreciate, depreciate, or stay the same ceter paribus]
A decrease in US interest rates.
appreciate
[Indicate whether the Euro would appreciate, depreciate, or stay the same ceter paribus]
An increase in expected Euro stock market values
appreciate
[Indicate whether the Euro would appreciate, depreciate, or stay the same ceter paribus]
*A rise in investor expectations of a stronger US dollar in the future. *
depreciate
[Indicate whether the Euro would appreciate, depreciate, or stay the same ceter paribus]
An increase in the tax rate on US investments in the Euro area.
depreciate
