Eco 561 Week 5 Quiz Free

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ECO 561 Week 5 Quiz ------------------------------------------------- ** Important ** … ECO 561 Week 5 “FREE” Quiz w/ answers I see lots of views , but no one comments ….. : ( PLEASE COMMENT(add notes) at this site or .. go to ROGUEPHOENIX.39 fAcEb**K , and LET ME KNOW THAT THIS IS HELPING you . If no comments are made …. This will be my last post . ------------------------------------------------- Good luck …. 1. The Classical Theory of Asset Prices assumes which of the following ideas? Hint : Investors purchase assets based on a rational expectation of a stream of future income. A. The interest rate to use is the nominal rate, assets are the discounted sum of their future values, and expected…show more content…
Businesses, institutions, and individual investors may not be risk tolerate and may seek to place their investments in other countries with a managed exchange rate with less volatility. By the definition of flexible exchange rate, there are little or no government controls or use of active government intervention. ------------------------------------------------- 7. The major advantage to a flexible exchange-rate policy is Hint : When there is a change in the exchange rate, this would automatically alter the prices of all foreign goods to domestic goods, as the domestic prices are intertwined with the foreign prices. Thus, these changes would affect the trade flows between nations. A. automatic adjustments to balance of payments B. relative interest rates between countries are automatically adjusted C. increased foreign investment D. increased overall wealth Changes in exchange rates are the result of changes in demand and supply factors for goods and services, such as changes in tastes, relative incomes, and relative prices. Under a flexible-rate policy, all domestic prices are linked with foreign prices. Any change in the exchange rate automatically alters the prices of all foreign goods to domestic goods. The price change alters the relative attractiveness of imports and exports and maintains equilibrium in each trading partner's balance of

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