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 ?

Related Mcqs:

1. 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

2. Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to ?

   A. flow from the United States to foreign countries
   B. flow from foreign countries to the United States
   C. remain totally in foreign countries
   D. remain totally in the United States

3. Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

   A. appreciate by 8 percent against the yen
   B. depreciate by 8 percent against the yen
   C. remain at its existing exchange rate
   None of the above

4. 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

5. Suppose that tomatoes from Mexico face a 20 percent tariff in the United States and a 25 percent tariff in Canada. If the United States and Canada maintain free trade between each other, the these two countries belong to a ?

   A. free-trade area
   B. customs union
   C. common market
   D. monetary union

6. 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

7. Due to Japan’s high saving rate, suppose that the Japanese invest abroad. This investment may result in a/an _______ of the Japanese yen and therefore a for Japan?

   A. appreciation; trade surplus
   B. appreciation; trade deficit
   C. depreciation; trade surplus
   D. depreciation; trade deficit

8. To maintain its economic position, Japan has often limited the number of cars or the quantity of farm products that the United States can sell in Japan Japan has imposed these limits to develop ?

   A. an equality of trade position
   B. a favorable balance of trade
   C. a more open market
   D. a belief system

9. To aid its calculator producers, suppose that the government provides them a subsidy of $10 for each calculator produced The amount of imports now equals _____ and the deadweight loss of the subsidy to the Canadian economy equals _________?

   A. 20 calculator, $50
   B. 20 calculator, $100
   C. 25 calculator, $50
   D. 25 calculator, $100

10. Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ?

    A. appreciates against foreign currencies
    B. depreciates against foreign currencies
    C. be officially revalued by the government
    D. be officially devalued by the government