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 ?

Related Mcqs:

1. For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?

   A. decrease the money supply
   B. increase the money supply
   C. increase the demand for money
   D. decrease the demand for money

2. 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

3. If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

   A. as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall
   B. as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise
   C. as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
   D. as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise

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

   A. rise
   B. fall
   C. not changes
   D. fluctuates

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. 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

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. 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