Question 1

During the 1990s Argentina's exports became some of the least expensive in all of South America thanks in part to the pegging of the Argentine peso to the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 2

Corporate socialism in the Asian markets could be contributed in part

Accepted Answer

A) to the relatively short and stable post-WWII history of capitalism in their markets. 
B) a belief by the owners of Asian companies that their governments would not allow them to fail. 
C) the practice of lifetime employment at many corporations. 
D) all of the above.

Question 3

Describe the Russian ruble collapse through August of 1998.

Accepted Answer

The answer of Describe the Russian ruble collapse through August...

Question 4

The Russian Ruble crisis of 1998 was a complex combination of speculative pressures best explained by ________ to exchange rate determination.

Accepted Answer

A) parity conditions approach 
B) asset approach 
C) balance of payments approach 
D) PPP approach

Question 5

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

Accepted Answer

A) balance of payments 
B) parity conditions 
C) managed float 
D) asset market

Question 6

The authors claim that the theories of international currency values hold better for less liquid and poorly capitalized markets.

Accepted Answer

A) True 
 B)False

Question 7

________ is the alteration of economic or financial fundamentals which are thought to be drivers of capital to flow in and out of specific currencies.

Accepted Answer

A) Proportional intervention 
B) Direct intervention 
C) Indirect intervention 
D) Hopeless intervention

Question 8

Assume your country has a balance of payments surplus.How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?

Accepted Answer

The answer of Assume your country has a balance of...

Question 9

A country's Central Bank may have the policy to ________.

Accepted Answer

A) fight inflation 
B) fight slow economic growth 
C) either A or B 
D) none of the above

Question 10

The authors compromise as to the key factors for exchange rate determination.They conclude that ________ are important in the short run,but that ________ determines long run exchange rates.

Accepted Answer

A) Fisher effect; PPP 
B) asset markets, interest rates, and expectations; PPP 
C) PPP; Fisher effect 
D) Fisher effect; asset prices, interest rates, and expectations

Question 11

The authors did not identify which of the following as a root of the Asian currency crisis?

Accepted Answer

A) the collapse of some Asian currencies 
B) the rate of inflation in the United States 
C) corporate socialism 
D) banking stability and management

Question 12

"Overshooting" exchange rate changes in response to an action of the Federal Reserve would be an example of

Accepted Answer

A) a market inefficiency. 
B) a market efficiency. 
C) the Fisher Effect. 
D) none of the above.

Question 13

Short-term forecasts are typically motivated by a desire to hedge a receivable,payable,or dividend for perhaps a period of three months.

Accepted Answer

A) True 
 B)False

Question 14

In the years immediately preceding 1998 the Russian Ruble operated under a ________ type of exchange rate regime.

Accepted Answer

A) fixed 
B) free floating (market determined) 
C) managed floating 
D) pegged (to the U.S. dollar)

Question 15

The important thing to remember about foreign exchange rate determination is that parity conditions,asset approach,and balance of payments approaches are ________ theories rather than ________ theories.

Accepted Answer

A) competing; complementary 
B) competing; contemporary 
C) complementary; contiguous 
D) complementary; competing

Question 16

The authors refer to the practice of many Asian firms being largely controlled by families of groups related to the governing body of the country as ________.

Accepted Answer

A) illegal 
B) insider trading 
C) cronyism 
D) not in my backyard

Question 17

The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

Accepted Answer

A) banking liquidity 
B) shareholder's wealth 
C) reestablishing fixed currency exchange rates in Asia 
D) dollarization of Asian currencies

Question 18

In 1991 the Argentine peso was fixed to the value of the U.S.dollar on a one-to-one basis.

Accepted Answer

A) True 
 B)False

Question 19

It is safe to say that the Russian transition from a communist economy to a capitalist economy has been smooth for the Russian people

Accepted Answer

A) True 
 B)False

Question 20

The authors claim that random events,institutional frictions,and technical factors may cause currency values to deviate significantly from their long-term fundamental path.

Accepted Answer

A) True 
 B)False

Exam 9: Foreign Exchange Rate Determination and Forecasting

During the 1990s Argentina's exports became some of the least expensive in all of South America thanks in part to the pegging of the Argentine peso to the U.S.dollar.

Corporate socialism in the Asian markets could be contributed in part

Describe the Russian ruble collapse through August of 1998.

The Russian Ruble crisis of 1998 was a complex combination of speculative pressures best explained by ________ to exchange rate determination.

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

The authors claim that the theories of international currency values hold better for less liquid and poorly capitalized markets.

________ is the alteration of economic or financial fundamentals which are thought to be drivers of capital to flow in and out of specific currencies.

Assume your country has a balance of payments surplus.How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?

A country's Central Bank may have the policy to ________.

The authors compromise as to the key factors for exchange rate determination.They conclude that are important in the short run,but that determines long run exchange rates.

The authors did not identify which of the following as a root of the Asian currency crisis?

"Overshooting" exchange rate changes in response to an action of the Federal Reserve would be an example of

Short-term forecasts are typically motivated by a desire to hedge a receivable,payable,or dividend for perhaps a period of three months.

In the years immediately preceding 1998 the Russian Ruble operated under a ________ type of exchange rate regime.

The important thing to remember about foreign exchange rate determination is that parity conditions,asset approach,and balance of payments approaches are theories rather than theories.

The authors refer to the practice of many Asian firms being largely controlled by families of groups related to the governing body of the country as ________.

The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

In 1991 the Argentine peso was fixed to the value of the U.S.dollar on a one-to-one basis.

It is safe to say that the Russian transition from a communist economy to a capitalist economy has been smooth for the Russian people

The authors claim that random events,institutional frictions,and technical factors may cause currency values to deviate significantly from their long-term fundamental path.