Everything else equal, when domestic currency appreciates against a foreign curr
ID: 1212201 • Letter: E
Question
Everything else equal, when domestic currency appreciates against a foreign currency:
A. the nominal exchange rate goes up. B. there is no change in the real exchange rate. C. there is no change in the nominal exchange rate. D. the nominal exchange rate goes down.
To carry out an optimization analysis:
A. all costs are required to be converted to the same unit of measurement. B. different types of costs are measured in different units. C. only direct costs incurred in a project are to be estimated. D. only indirect costs incurred in a project are to be estimated.
If project A has a cost of $2, and provides a benefit of $3, and project B has a cost of $5 and provides a benefit of $8, which of the following statements is true?
A. A shift from project A to project B increases the net benefit by $1. B. An individual can optimize by choosing Project B. C. Project A has a higher net benefit than project B. D. The net benefit of project A is $5.
The slope of the supply curve of reserves can be attributed to the fact that:
A. quantity supplied of reserves decreases with the federal funds rate. B. the supply of reserves is arbitrarily set by the World Bank. C. quantity supplied of reserves increases with the federal funds rate. D. the Fed fixes the supply of reserves.
When the yuan per dollar real exchange rate depreciates:
A. both the U.S. net exports to China and the Chinese net exports to U.S. decrease. B. the U.S. net exports to China decrease while the Chinese net exports to U.S. increase. C. both the U.S. net exports to China and the Chinese net exports to U.S. increase. D. the U.S. net exports to China increase while the Chinese net exports to U.S. decrease.
Explanation / Answer
1) the nominal exchange rate goes down
2) An individual can optimize by choosing Project B.
(8-5 = 3) and in A (3-2 = 1) Therefore $2 higher benefit.
3) D. the Fed fixes the supply of reserves.
4) the U.S. net exports to China decrease while the Chinese net exports to U.S. increase
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