A. Is likely to reduce savings
B. Is likely to reduce the external value of the currency
C. Leads to a shift in the MEC schedule
D. Leads to a movement along the MEC schedule
Related Mcqs:
- The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
A. Transactions motive
B. precautionary motive
C. profit motive
D. speculation motive - Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?
A. currency arbitrage
B. interest arbitrage
C. short positions
D. long positions - Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?
A. depreciation
B. appreciation
C. fall
D. devaluation - In the events of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely ?
A. fall
B. increase
C. remain the same
D. fluctuates - When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate ?
A. None of these answers
B. decrease the quantity demanded of money
C. increase the quantity demanded of money
D. decreases the demand for money
E. increases the demand for money - The theory of international exchange that holds that exchange rates adjust to offset differences in countries inflation rates in the ?
A. price feedback theory
B. trade feedback theory
C. J-curve theory
D. purchasing power parity theory - The difference between bid (buying) rates and ask (selling) rates is called the ?
A. profit
B. arbitrage
C. spread
D. forward transaction - Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?
A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
D. decrease in the demand for foreign currency and increase in the supply of foreign currency and a appreciation in the dollar - Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an) ?
A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
D. decrease in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar - Lower interest rates are likely to ?
A. Decrease consumption
B. increase cost of borrowing
C. Encourage saving
D. Increase spending