During Periods of rising inflation and rising interest rates we expect the demand for real cash to ?

Related Mcqs:

1. When real income increases other things equal we can expect the demand for real money holdings to ?

   A. fall
   B. not change
   C. increase
   D. None of these

2. 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

3. Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

   A. H
   B. c
   C. d
   D. F

4. Refer to Exhibit 6.If People in the economy expect inflation to be 3 percent and inflation is 3 percent the economy is operating at point ?

   A. b
   B. I
   C. a
   D. H

5. For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

   A. the United States to Switzerland causing the dollar to depreciate
   B. the United States to Switzerland causing the dollar to appreciate
   C. Switzerland to the United States causing the franc to depreciate
   D. Switzerland to the United States causing the franc to appreciate

6. For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?

   A. The United States to Japan causing the dollar to depreciate
   B. The United States to Japan causing the dollar to appreciate
   C. The Japan to United States, causing the dollar to depreciate
   D. The Japan to United States, causing the dollar to appreciate

7. If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?

   A. appreciate
   B. depreciate
   C. revalue
   D. be in short supply

8. If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be ?

   A. 3/8 percent
   B. 5 percent
   C. 11 percent
   D. 24 percent

9. If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?

   A. 4 percent
   B. 10 percent
   C. -4 percent
   D. 3 percent
   E. 21 percent

10. 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