7. A weak peso is most likely to cause hint: Mexico economy depends on export

a) added employment and inflation in Mexico

b) less unemployment but more inflation in Mexico

c) more unemployment but less inflation in Mexico

d) less unemployment and less inflation in Mexico

8. Assume the expected inflation rate is 3% and the real interest rate is 5%, then the Fisher effect says that the nominal interest rate should be around

a) 2%

b) 3%

c) 5%

d) 8%

9. The current exchange rate system of the world can best be characterized as a ___ system.

a) free float

b) managed float

c) fixed-rate

d) hybrid (e.g. all of above a,b,c)

10. What exchange rate system that Hong Kong currently operates with ?

a) clean float

b) pegged/fixed

c) target-zone arrangement

d) dollarization