Macroeconomics Blanchard Chapter 17
Exam Questions and Answers 100%
Solved | A+
Assume that the price levels in two countries are constant. In this situation,
we know that
A) neither the real nor the nominal exchange rate can change.
B) the real exchange rate can change, while the nominal exc...
Assume that the price levels in two countries are constant. In this situation,
we know that
A) neither the real nor the nominal exchange rate can change.
B) the real exchange rate can change, while the nominal exchange rate is
constant.
C) the nominal exchange rate can change, while the real exchange rate is
constant.
D) the real and nominal exchange rate must move together, changing by
the same percentage.
E) the nominal exchange rate will fluctuate more widely than the real
exchange rate. - ✔✔D
As the economy moves up and to the right along the IS curve, which of the
following will occur when exchange rates are flexible?
,A) investment spending increases
B) consumption increases
C) the domestic currency depreciates
D) all of the above
E) none of the above - ✔✔D
In order for an individual to be indifferent between holding foreign or
domestic bonds,
A) the Marshall-Lerner condition must hold.
B) the foreign and domestic interest rates must be equal.
C) the expected rate of depreciation of the domestic currency is zero.
D) the interest parity condition must hold. - ✔✔D
The interest parity condition indicates that the domestic interest rate must
be equal to
A) the foreign interest rate.
B) the expected rate of depreciation of the domestic currency.
C) the expected rate of appreciation of the domestic currency.
, D) the foreign interest rate minus the expected rate of appreciation of the
foreign currency.
E) none of the above - ✔✔E
Assume that the interest parity condition holds. Also assume that the U.S.
interest rate is 8% while the U.K. interest rate is 6%. Given this information,
financial markets expect the pound to
A) depreciate by 14%.
B) depreciate by 2%.
C) appreciate by 2%.
D) appreciate by 6%.
E) appreciate by 14%. - ✔✔C
Assume that the interest parity holds and that the dollar is expected to
depreciate against the pound. Given this information, we know that
A) U.S. and U.K. interest rates are equal.
B) the U.S. interest rate exceeds the U.K. interest rate.
C) the U.K. interest rate exceeds the U.S. interest rate.
D) individuals will prefer to hold U.S. bonds because the U.S. interest rate
exceeds the U.K. interest rate.
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