1.

A rising Australian dollar makes Australian goods:

a.

less expensive abroad and decreases the volume of Australian exports.

b.

more expensive abroad and decreases the volume of Australian exports.

c.

more expensive abroad and increases the volume of Australian exports.

d.

less expensive abroad and increases the volume of Australian exports.

2.

Which of the following statements regarding a cross-currency swap is NOT correct?

a.

The re-exchange at the conclusion of a cross-currency swap usually takes place at the initial exchange rate.

b.

There is an exchange of principal amounts between counterparties at the beginning and end of the swap.

c.

As the cross-currency swap is arranged through a bank, there is no credit risk.

d.

Once the cross-currency swap rate is determined, cash flows are known with certainty.

3.

Under a managed-float exchange rates regime, if the rate of inflation in Australia is less than the rate of inflation of its trading partners, the AUD will likely:

a.

depreciate against foreign currencies.

b.

be officially devalued by the Reserve Bank.

c.

appreciate against foreign currencies.

d.

be officially revalued by the Reserve Bank.

4.

If the value of a currency is determined by market forces, this is regarded as a:

a.

partial floating regime.

b.

managed floating regime.

c.

crawling peg regime.

d.

floating rate regime.

5.

All else being equal, if a central bank buys government bonds from the market it would:

a.

mean savings in the economy are likely to increase.

b.

mean the supply of loanable funds would move to the left.

c.

increase the money supply.

d.

increase interest rates.