Question 1: What are your thoughts on the below scenarios?

Which of the following phrases is false:

A confidence interval is a useful technique to illustrate the implications of exchange rate volatility for business transactions.

Exchange rates are more volatile than stock returns and commodity prices.

The yearly volatility of spot exchange rates is on average 10 percent for most currencies.

The normal distribution is a reasonable description of changes in exchange rates.

A simple way to hedge a foreign currency liability is:

To buy dollars forward.

To buy foreign currency forward..

To sell foreign currency forward.

To buy dollars spot.

The best way to forecast the exchange rate for horizons up to two years is

Use the current spot exchange rate as a forecast of the future spot exchange rate.

Use economic models of the nominal exchange rate.

Use statistical models that regress the exchange rate on past the exchange rate as well as other relevant variables such as the trade balance and the growth rate of the economy.

Use the forecasts of professional forecasters.

Which of the following statements is true.

Relative PPP holds in the short run.

Relative PPP holds in the long run.

Absolute PPP holds in the long run.

Relative PPP holds in the short and in the long run.

Which of the following statements is true

The RER is a good predictor of the nominal exchange rate for countries with high, volatile inflation.

The RER predicts the nominal exchange rate at horizons shorter than 2 years.

The RER predicts the nominal exchange rate at horizons longer than 2 years in countries that grow at the same rate and have inflation under control.

The RER helps predict the nominal exchange rate in countries with capital controls.

Which of the following phrases is false:

It is easier to forecast in the sample than out of sample.

Bank forecasts are generally more accurate than the random walk.

It is very difficult to beat the random walk method in forecasting exchange rates at horizons up to two years.

The random walk forecasting method makes large forecasting errors.

The most important form of exchange rate exposure is:

Translation exposure.

Transaction and translation exposures.

Transaction exposure.

Economic exposure.

Question 2: Answer all questions below

- Show your work. Keep two decimal places to the ratios ~ Utilizing the income statement and balance sheet provided for the month ended December 31, 2017, calculate the 11 ratios to determine the financial strength of Grand Hotel. Revenues: Rooms 780,000 Food 430,000 Telecommunications 40.000 Total Revenues Cost of Sales: Rooms Food 142,000 Telecommunications 30.000 Total Cost of Sales Gross Profit: Rooms 780.000 Food 288,000 Telecommunications 10,000 Total Gross Profit Operating (Controllable) Expenses: ain ann Doumall and Eminlnunn Banafite MUse the following to answer questions 8-9: Table: Balance Sheet Assets Liabilities Reserves $20,000 Deposits Loans 8. (Table: Balance Sheet) Refer to the information in the balance sheet. If the reserve ratio is 25%, deposits are: A) $5,000. B) $15,000. C) $60,000. D) $80,000. 9. (Table: Balance Sheet) Refer to the information in the balance sheet. If the reserve ratio is 25%, loans are: A) $5,000. $15,000. C) $60,000. D) $80,000.QUESTION 14 Which of the following is a goal of monetary policy? A. Maintain full employment. OB. Promote faster long-term economic growth. O C. Keep inflation in check. O D. All of the choices are correct.Question 35 (1 point) What do we know about regulation of a firm in a monopolistically competitive market? It usually implies a very small administrative burden. It will lower the firm's costs. It is commonly used to enhance market efficiency. It is unlikely to improve market efficiency. Question 36 (1 point) What type of externalities accompany the entry of new firms into a monopolistically competitive market? the product-variety externality as a positive externality and the business-stealing externality as a negative externality the product-variety externality as a negative externality and the business-stealing externality as a positive externality the business-variety externality as a positive externality and the product-stealing externality as a negative externality O the business-variety externality as a negative externality and the product-stealing externality as a positive externalityQuestion 2 Complete the following table for a given country and show how can you determine if the country faces an inflation in 2018? Nominal GOP2017 Nominal GDP 2014 Real GDPXD18 P P Q P C 2 A I 3 3 3 R GOP Question 3 - What is the purchasing power of (1000) Rails after (7) years if the inflation rate is (4%) per year? What are the similarity and difference between "Minimum Wage Laws" and "Theory Of Efficiency Wages"? Question 4 A theatre that sells a ticket for a comedy show. The ticket price is 3 Rials to have a seat and watch the show. There is a snack to be given to each ticket buyer that cost 1 Rial. Now, consider this scenario: There are about 50 seats that are not sold and the show is few minutes to start and there is a standby customer willing to buy the ticket by price less than 3. What is the minimum price the theater can offer? Explain the logic about your answer. Question 5 A government is trying to reduce inflation but this has led to higher unemployment. Explain the role of the prices stickiness in causing this tradeoffs