国际金融习题10
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International Finance: by Elinor Tao Qingmei
1
I MULTIPLE CHOICE
Identify the letter of the choice that best completes the statement or answers the question. Each
question is worth 2 points.
1. Any central bank sale of assets automatically causes ( ).
A higher money demand
B the money supply to decline
C current account surplus
D the foreign exchange market equilibrium
2. The central bank can negate the money supply effect of intervention though ( )
A sterilization
B devaluation
C fiscal policy
D revaluation
3. If exports and imports adjust gradually to real exchange rate changes, the current account may
follow a ( ) pattern after a real currency depreciation.
A XX schedule
B AA schedule
C J-curve
D IS-LM
4. Expansionary fiscal policy ( ) the CA balance.
A maintains
B reduces
C improves
D is not relevant to
5. The Fisher effect states that a rise (fall) in a country’s expected inflation rate will eventually
cause an equal rise (fall) in the ( )
A exchange rate B interest rate C output D money demand
6. In ( ) the owner has the right to buy or sell a specified amount of foreign currency at a specified
price at any time up to a specified expiration date.
A future
B forward
C swap
D option
7. BOP=( )
A CA+FA+KA
B G+C+I+CA
C EX-IM International Finance: by Elinor Tao Qingmei
2 D Y-T
8. Which of the following is not right in the interest parity condition( )
A The expected returns on deposits of any two currencies are equal when measured in the same
currency.
B It implies that potential holders of foreign currency deposits view them all as equally desirable
assets.
C The expected rates of return are equal when R=R*+(Ee-E)/E
D It makes the risk an essential factor for interest rate determination
9. If the central bank intends to mollify the impact of the increased foreign assets on the domestic
money supply, it need ( )
A sell out domestic assets
B devaluate currency
C offer higher interest rate
D issue more money
10. DD schedule stands for the equilibrium of ( )
A output market
B foreign exchange market
C domestic money market
D whole economy
II TRUE-FALSE QUESTION
Indicate whether the statement or sentence is true or false. Put T if you think it is true, F for false.
Each question is worth 2 point.
1. An economy’s long-run equilibrium is reached if prices were perfectly flexible and always
adjusted immediately to preserve full employment. ( )
2. The theory of PPP explains movements in exchange rates between two countries’ currencies
by changes in the countries’ price level.( )
3. Fisher Effect shows the long run relationship between inflation and exchange rate.( )
4. The real exchange q is an explanation for the deviation from PPP.( )
5. The AA schedule has a negative slope.( )
6. If the economy starts at long-run equilibrium, a permanent change in fiscal policy increases
output. ( )
7. Any central bank purchase of assets results in an increase in the domestic money supply( )
8. Under fixed exchange rate, fiscal policy is fruitless. ( )
9. Expansionary fiscal policy makes domestic currency appreciate.( )
10. The risk premium depends positively on the stock of domestic government debt. ( )
III MATCHING
Match the proper word or words with the statements by writing the appropriate letter in the space
provided next to the statement. Please note that there may be more words than statements, so be
careful and choose the best statement. Each question is worth 2 point. International Finance: by Elinor Tao Qingmei
3 1. When bookkeeping balance sheet of one country, put those items into the proper blanks.
credit debit
A Exports of goods and services
B Transfers to abroad
C Imports of goods and services
D Increases in external liabilities
E Decreases in external assets
F Income payable abroad
2. What will an individual consider if he decides to hold his wealth as cash?( )
A risk of holding money
B interest rate
C education background
D the average daily value of transactions
3. According to the fundamental equation of the monetary approach the government is able to
depreciate the domestic currency by( )
A issuing more money
B offering higher interest rate
C selling out foreign reserves
D increase output
4. The Fisher Effect ( )
A shows a rise in a country’s expected inflation rate, π, will eventually cause an equal rise in the
exchange rate, E.
B shows that purely monetary developments should have no effect on an economy’s relative prices
C is consistent with Neutrality of Money
D shows a rise in a country’s expected inflation rate, π, will eventually cause an equal rise in the
interest rate, R, that deposits of its currency offer.
