53

1. The following table summarizes a country's balance of payments. Answer the next 2 questions based on the information.
3. Billions of US dollars
4. Current account balance
5. -300
6. Capital account balance
7. 5
8. Financial account balance
9. 270
10. Net errors and omissions
11. 7
12. Reserves and related items
13. 18
14. Is this country experiencing a net capital inflow or outflow? By how much?
15. outflow by $300outflow by $275outflow by $25inflow by $275inflow by $575

1 points

QUESTION 54

1. Has this country's official reserve increased or decreased? By how much?
2. increase by $18increase by $25increase by $30decrease by $18decrease by $25

1 points

QUESTION 55

1. The following information holds for the next three problems:
2. Suppose the following information is available for a country in a given year.
4. Billions of US dollars
5. S(Private Savings)
6. $1200
7. I (Private Domestic Investment)
8. $800
9. G (Government Spending)
10. $800
11. T (Tax Revenues)
12. $600
13. How much is the budget deficit of the country?
14. $-400billion$-200billion$200billion$400 billion$600billion

1 points

QUESTION 56

1. How much is the current account balance of the country?
2. $-400billion$-200billion$200billion$400 billion$600billion

1 points

QUESTION 57

1. What is the percentage of the domestic savings that were used to support the net exports?
2. 20%25%40%45%50%

1 points

QUESTION 58

1. The following information holds for the next two problems:
2. The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.35.
3. What is the forward premium (discount) of the dollar against SF for delivery in 180 days?
4. 11.25% premium14.81% premium11.25% discount14.81% discount17.67% discount

1 points

QUESTION 59

1. What is the forward premium (discount) of SF against the dollar SF delivery in 180 days?
2. 12.35% premium16% premium18.12% premium12.35% discount16% discount

1 points

QUESTION 60

1. If according to the law of one price the current exchange rate of dollars per British pound is $1.43/, then at an exchange rate of $1.35/, the pound is over/under-valued by _________%.
2. undervalued by 5.59%undervalued by 7.23%overvalued by 5.59%overvalued by 7.23%overvalued by 9.33%

1 points

QUESTION 61

1. One year ago the spot rate of U.S. dollars for Canadian dollars was $1.2/C$. Since that time the rate of inflation in the U.S. has been 4% lower than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately ____.
2. $0.95/C$$1.05/C$$1.15/C$$1.20/C$$1.25/C$

1 points

QUESTION 62

1. The following information holds for the next three problems:
2. Sony of Japan produces LCD monitors and exports them to the United States. Last year the exchange rate was 120/$ and Sony charged $150 per LCD monitor. Currently the spot exchange rate is 100/$ and Sony is charging $160 per LCD monitor.
3. What is the rate of appreciation of the Japanese yen when the exchange rate changed from 120/$ to 100/$.
4. 10%15%20%22..5%25%

1 points

QUESTION 63

1. What is the implied exchange rate that was applied when Sony is charging $160 per LCD monitor? Assume the yen cost of a LCD monitor stays the same.
2. 100/$105/$
3. 112.5/$115/$120/$

1 points

QUESTION 64

1. What is the degree of pass through by Sony of Japan on their LCD monitors?
2. 23.33%25%33.33%42.5%66.67%

1 points

QUESTION 65

1. The following information holds for the next three problems:
2. Suppose that the annual interest rate is 5% in the US and 3% 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. Assume that an arbitrager can borrow up to $2,000,000 and taking a covered interest arbitrage position.
3. If the arbitrager borrows $2,000,000, converts in into euro and invest in the German market, how much euro will she have at the end of the year?
4. 1,526,6671,633,3331,666,6671,716,6671,945,667

1 points

QUESTION 66

1. How much is the net profit in dollar in one year based on the covered interest arbitrage?
2. $100,000$131,667$145,321$167,667$233,333

1 points

QUESTION 67

1. 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.)
2. 6.35%7.67%8.25%10.25%11.58%