QUESTION 11

Other things equal an increase in tax rates will tend to reduce the trade deficit.

		TRUE
		FALSE.

1 points

QUESTION 12

Which of the following will not help to reduce the U.S. trade deficit?

		an increase in savings
		an increase in taxes
		a decrease in government spending
		an increase in exports
		an increase in government spending.

1 points

QUESTION 13

A stronger euro benefits:

		U. S. exporters
		European consumers
		European exporters
		both (a) and (b)
		both (b) and (c). Information for questions 14 through 20. Today, a U.S. importer places an order for machine tools that will arrive in Houston in 60 days, when he must pay 3,000,000 euros to the German exporter. Assume that the price of at-the-money, 60-days, euro calls is $0.03, and the price of 60-days, at-the-money euro puts is $0.04. Please note that the spot rate today is $1.22. All prices are per euro.

1 points

QUESTION 14

The U.S. importer is long euros.

		TRUE
		FALSE.

1 points

QUESTION 15

Unhedged, he will suffer a loss if the dollar appreciates.

		TRUE
		FALSE.