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LOS p: Identify and interpret the major approaches to forecasting exchange rates.
Q1. The savings-investment imbalances approach would most likely project a strong domestic currency during which phase of the economy?
A) Late recession.
B) Early expansion.
C) Slowdown.
Q2. Which of the following statements regarding the relationship between a domestic currency value and interest rates is most accurate?
A) An increase in short-term interest rates decreases the value of the domestic currency.
B) An increase in short-term interest rates may increase or decrease the value of the domestic currency.
C) An increase in short-term interest rates increases the value of the domestic currency.
Q3. Suppose the U.S. has a persistent current account deficit. Which of the following approaches to forecasting currencies best explains why the U.S. dollar will be strong during this time period?
A) The savings-investment imbalances approach.
B) The capital flows approach.
C) The relative economic strength approach.
Q4. Which of the following approaches to forecasting currencies states that long-term investors will affect the values of currencies?
A) The PPP.
B) The savings-investment imbalances approach.
C) The capital flows approach. | 
发表于 2009-3-5 13:32
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