QUESTION 50 The following information holds for the next two problems: Suppose the following information is...

Transcribed Image Text:

QUESTION 50 The following information holds for the next two problems: Suppose the following information is available for a country in a given year, S (Private Savings) I (Private Domestic Investment) G (Government Spending) T (Tax Revenues) How much is the budget deficit of the country? Billions of US dollars $1400 $800 $800 $500 O $-500 billion $-300 billion $300 billion O $500 billion $700 billion QUESTION 51 The following table summarizes a country's balance of payments. Is this country experiencing a net capital inflow or outflow? By how much? Billions of US dollars Current account balance Capital account balance Financial account balance Net errors and omissions -400 5 370 5 Reserves and related items 20 O outflow by $395 outflow by $375 outflow by $25 O inflow by $25 inflow by $375 QUESTION 52 How much is the current account balance of the country? $-500 billion $-300 billion $300 billion $500 billion $700 billion QUESTION 53 Suppose that the annual interest rate is 5% in the US and 2% in Germany, and that the spot exchange rate is $1.2/euro and the forward exchange rate, with one-year maturity, is $1.3/euro. If an equilibrium with no arbitrage opportunities is to be restored, what should be the US interest rate? (Assume all the other numbers remain the same.) 6.33% 7.25% 8.59% 10.50% 12.23% QUESTION 54 If the annual interest rate is 4% in the US and 6% in Germany, then $ is expected to against euro by. 9. O appreciate, 2% O appreciate, 3% O appreciate, 4% depreciate, 2% E)depreciate, 3% QUESTION 55 Suppose that a Big Mac costs $2.5 in the US and 275 yen in Japan today. If the actual exchange rate is yen105/$ in the market. How much is the Big Mac PPP exchange rate? OV100/$ O 107/$ O V110.5/$ 110/$ O 115/$ QUESTION 50 The following information holds for the next two problems: Suppose the following information is available for a country in a given year, S (Private Savings) I (Private Domestic Investment) G (Government Spending) T (Tax Revenues) How much is the budget deficit of the country? Billions of US dollars $1400 $800 $800 $500 O $-500 billion $-300 billion $300 billion O $500 billion $700 billion QUESTION 51 The following table summarizes a country's balance of payments. Is this country experiencing a net capital inflow or outflow? By how much? Billions of US dollars Current account balance Capital account balance Financial account balance Net errors and omissions -400 5 370 5 Reserves and related items 20 O outflow by $395 outflow by $375 outflow by $25 O inflow by $25 inflow by $375 QUESTION 52 How much is the current account balance of the country? $-500 billion $-300 billion $300 billion $500 billion $700 billion QUESTION 53 Suppose that the annual interest rate is 5% in the US and 2% in Germany, and that the spot exchange rate is $1.2/euro and the forward exchange rate, with one-year maturity, is $1.3/euro. If an equilibrium with no arbitrage opportunities is to be restored, what should be the US interest rate? (Assume all the other numbers remain the same.) 6.33% 7.25% 8.59% 10.50% 12.23% QUESTION 54 If the annual interest rate is 4% in the US and 6% in Germany, then $ is expected to against euro by. 9. O appreciate, 2% O appreciate, 3% O appreciate, 4% depreciate, 2% E)depreciate, 3% QUESTION 55 Suppose that a Big Mac costs $2.5 in the US and 275 yen in Japan today. If the actual exchange rate is yen105/$ in the market. How much is the Big Mac PPP exchange rate? OV100/$ O 107/$ O V110.5/$ 110/$ O 115/$