QUESTION 1 Which is true? In countries with CA > 0 in the HC FOREX: Which is true? In countries with CA > 0

QUESTION 1

Which is true?  In countries with CA > 0 in the HC FOREX:
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1. Which is true?  In countries with CA > 0 in the HC FOREX:

   		HC > FC
   		FC > HC

2.5 points  

QUESTION 2

The best description of the USA balance of payment position is:
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1. The best description of the USA balance of payment position is:

   		The USA is a net importer of goods and foreign financial capital
   		The USA is a net exporter of goods and domestic financial capital.

2.5 points  

QUESTION 3

When the central bank of a country wants to boost the value of HC at FOREX it has to:
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1. When the central bank of a country wants to boost the value of HC at FOREX it has to:

   		Fix the currency and stop it from falling
   		Sell reserves of FC below the market (R above the current rate).

2.5 points  

QUESTION 4

Given that i - interest rates or bond rates, when  i USA  >  i Eurozone, we can expect that:
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1. Given that i - interest rates or bond rates, when  i USA  >  i Eurozone, we can expect that:

   		US investors will borrow home to invest in Euro bonds and dollar will depreciate spot (R rises)
   		Eurozone investors will borrow home to invest in US bonds and the dollar will appreciate spot (R decreases).

2.5 points  

QUESTION 5

When the dollar depreciates, which of the following is false:
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1. When the dollar depreciates, which of the following is false:

   		The Yuan (RMB) appreciates.
   		The dollar Rn is rising.
   		The dollar currency value curve has a negative slope.
   		Chinese goods become cheaper in the US.

2.5 points  

QUESTION 6

Under the floating exchange rate regime, which of the following is true?
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1. Under the floating exchange rate regime, which of the following is true?

   		X > M   home currency appreciates over time.
   		Xk  >  Mk
   		Without currency manipulation (intervention) by the central bank, the CA surplus should be reduced by currency appreciation.
   		The sum of all CA surpluses in the world is equal to the sum of all BOPs in the world.

2.5 points  

QUESTION 7

Which is false?  When home currency appreciates:
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1. Which is false?  When home currency appreciates:

   		Our exportables become less expensive for foreigners to buy because their currencies appreciate.
   		Our exportables may become less expensive because our costs are lower in the parts supply chain.
   		Our imports are more expensive.
   		Our imports are less expensive.

2.5 points  

QUESTION 8

When the US foreign subsidiary generates a profit, this is true:
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1. When the US foreign subsidiary generates a profit, this is true:

   		In the USA\'s  CA, the interest income is rising no matter if the profit is transferred home.
   		In the USA\'s CA, the interest income is rising only if the profit is transfered home.