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 ?

Related Mcqs:

1. 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

2. Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should ?

   A. Increase government spending and decrease taxes
   B. decrease the money supply
   C. decrease government spending and increase taxes
   D. decrease interest rates

3. Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?

   A. decrease government spending Which the shifts the aggregate demand curve to the left
   B. decrease taxes, which shifts the aggregate demand curve to the right
   C. decrease taxes, which shifts the aggregate demand curve to the left
   D. decrease government spending which shifts the aggregate demand curve to the right

4. In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?

   A. decrease; depreciate
   B. decrease; appreciate
   C. increase; depreciate
   D. increase; appreciate

5. 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

6. With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ?

   A. increased
   B. unaffected
   C. reduced
   D. None of these

7. 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

8. The booming of North Seas’ gas export revenues in the 1970s that appreciated the guilder, making industrial export more costly in foreign currencies and increasing foreign competition and unemployment is known as ?

   A. Trade deficit
   B. Blind river disease
   C. Dutch disease
   D. Economic turmoil

9. All currencies other than the domestic currency of a given country are referred to as ?

   A. hard currency
   B. foreign exchange
   C. reserve currencies
   D. near monies

10. Bank issued a document that authorizes the bearer to receive money from one of its foreign branches or from another bank abroad. What such document is called ?

    A. letter of Credit
    B. Letter of expression
    C. Demand draft
    D. Letter of intent