Under the gold standard, when annual goods production outstrips the annual production of gold the following will occur: An expansion of the global money supply A contraction of the global money supply No change in the global money supply None of the above
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- Question If we are using foreign currency for the NPV decision, all we have to do is restate all the in terms of present value and use the current exchange rate. A. domestic incremental cash flow B. foreign incremental cash flow C. salvage value D. None of theseIf a central bank decreases interest rates, then gradually: a. the country's gross domestic product is likely to decrease. b. foreign exchange rate is likely to appreciate. c. demand for exported goods and services is likely to increase. d. flows of investment funds into the country are likely to decrease.H10. Assume that initially, the risk premium, ρ = 0 and that the domestic and foreign interest rates are given by R = .06, R* = .05. Suppose that the risk premium depends linearly on the difference between domestic government debt, B, and domestic assets of the central bank, A, i.e., ρ = ρ (B-A) Find the new domestic interest rate if a sterilized purchase of foreign assets adjusts A s.t. (a) B - A = -.01/ ρ0 (b) B - A = .03/ ρ0
- Choose the correct answer 1.) Which of the following is/are the possible effects of introducing fresh currency?[S1] Increase in money supply with the public [S2] The rise in the nominal income of public [S3] The fall in the general price level A.) Statement 1 only. B.) Statements 1 and 2 only. C.) Statement 2 only. D.) Statements 1, 2, and 3. 2.) If the quantity of money demanded exceeds the quantity of money supplied, then the interest rate will A.) fall B.) remain constant C.) rise D.) change in an uncertain direction 3.) [Case 1] Mortgagor A earns P50,000 a month while Mortgagor B earns P80,000 per month. [Case 2] Mortgagor C is willing to make a down payment of P3,000,000 while Mortgagor D will make a down payment of P5,000,000. Assuming everything else is held constant, who will have a better credit rating A.) A and C B.) A and D C.) B and C D.) B and DAssume that a country, due to speculation in the foreign exchange market, faces a sudden capital outflow (see figure below). If the country has high levels of foreign denominated debt and inadequate foreign reserves answer the following questions, [Questions 17,18,19] e-Exchange Rate Short Run NX NCO, NY, A shift in the NCD curve dae to a sudden capital outflow NCO before NCO her Long Ran NX NX, NCO Question 17: In a free float foreign exchange rate regime the country will experience immediately. a. an increase in NX due to currency devaluation at NX b. business bankruptcies due to currency devaluation e a devaluation of its currency from e to e d. a devaluation of its currency from esto es with no change in NX e all of the aboveA country’s current account position moves from a surplus to a deficit. What will be the result? Pick a,b,c, or d A) an increase in real GDP B) a decrease in unemployment C) an increase in the exchange rate D) a decrease in the money supply
- Question Which of the statements below is FALSE? A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency. B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate. C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value. D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate.Should I hold Worldcoin long-term? Will the Worldcoin currency still rise? Help with analysis!Consider the monetary policy rule under financial frictions. If f >0 the prevailing market real interest rate will be the federal funds rate? equal to lower than higher than
- An expected depreciation in the euro will lead to: An inflow of capital from Europe O An increase in the demand for euro-denominated financial assets. O Uncovered interest rate parity A decrease in the demand for euro-denominated financial assets.D4) Finance If the foreign interest rate is 4%, the risk premium on domestic assets, ρ, is 18%, and the expected rate of depreciation of the domestic currency against the foreign currency is 3%, what is the domestic interest rate in percentage terms, given covered interest parity holds? [All variables have a 1-year time frame.]Suppose the free cash flow at Time 1 is expected to grow at a constant rate of gL forever. If gL < WACC, what is a formula for the present value of expected free cash flows when discounted at the WACC? If the most recent free cash flow is expected to grow at a constant rate of gL forever (and gL < WACC), what is a formula for the present value of expected free cash flows when discounted at the WACC?