35. The essential feature of a ________ is that it immediately fixes the rate at which a specified amount of one currency is to be delivered in exchange for a specific amount of another at a future date:

a.Forward contract

b.Spot contract

c.Money contract

d.Bid contract

e.Financial contract

36. The formation of a customs union that leads only to trade creation and all economic resources of member nations are fully employed before and after the formation of the customs union leads to an:

a.Increase in the welfare of member and non-member nations

b.Increase in the welfare of member nations only

c.Increase in the welfare of non-member nations only

d.Increase or decrease in the welfare of member and non-member nations

e.None of the above

37. The most common type of transaction in the foreign exchange market is a:

a.Forward transaction.

b.Spot transaction.

c.Swap transaction.

d.Arbitrage transaction

e.None of the above.

38. The payment of a dividend by an Australian company to a foreign stockholder represents:

a.A debit in Australia's capital account.

b.A credit in Australia's current account.

c.A credit in Australia's official reserve account.

d.A debit in Australia's current account.

e.None of the above.

39. The relationship that says that the forward premium or discount is equal to the interest differential is:

a.Interest rate parity

b.Purchasing power parity

c.The Fisher equation

d.The term structure of interest rates

e.a. and c. only

40. The relative PPP theory gives better results:

a.In the long run than in the short run.

b.When structural changes take place.

c.The greater is the level of commodity aggregation.

d.In tests including developed and developing countries.

e.All of the above.