Chapter 6, Problem 1CT

Why do governments intervene in the foreign exchange market?   Check all that apply:   To maintain exchange rate boundaries   To reduce fear in financial markets To smooth out the business cycle To smooth out exchange rate movements To earn a profit for the government

Exchange Rates What is the difference between fixed and floating exchange rates? How – using which policies and instruments - does Central Bank regulate exchange rates? Turkish Lira has been depreciating rapidly in the past two years. How this depreciation affects Turkish economy? Discuss using theory

Shortly after the invasion of Ukraine, sanctions impeded the ability of the Russian central bank to use its international reserves to stabilize the ruble. The Russian central bank would have liked to do this by:   A. selling rubles to buy yuan   B. selling rubles to buy dollars   C. selling other currencies to buy rubles   D. all of these

A short-term financial decision based on an MNC management's expectation that the local foreign currency will appreciate may be A) increasing local customers' accounts receivable and increasing local notes payable. B) decreasing local notes receivable and decreasing accruals. C) increasing local inventories and increasing local notes payable. D) increasing local accounts receivable and decreasing local accounts payable.

Which of the following items is a "debit" item in a country's balance-of payments accounts? a. exports of services b. increased holdings of domestic bonds by foreigners c. exports of merchandise  d. an increase in a domestic citizen's bank aaccount in a foreign bank

INTERNATIONAL BUSINESS AND TRADE   Mini-Case Synopsis and Questions   In 2008 and 2009, international financial markets suffered large declines in stock, bond, and real estate prices. Due to excessive government spending and related borrowing, Greece experienced a debt crisis that worsened after the introduction of the euro. To head off default, the Troika provided Greece a bailout in 2012. Some experts believe Greece should exit the euro entirely, but others argue that if other countries follow Greece, the euro and the EU itself could be seriously damaged.   Questions: How did Greece get into trouble with its government debt? Did joining the Eurozone help them pay rising government debts? Explain your answers.   Should Greece exit the euro? How would it benefit? What could go wrong? Explain your answers.

What are some of the implications of the new currencies or forms of money (e.g. mobile money, cryptocurrencies, credit cards) on the conduct of monetary policy   An investor wishing to invest in Bonds is unsure on whether to invest in bonds of the same tenor or not. They are also unsure if they should invest locally in Zambia’s currency assets or South African currency assets. Using your knowledge of Money and Banking how would you advise the investor?[

Finance The US and Australia operate floating exchange regimes, and they trade with each other. Early this month, the RBA increased the cash rate and, as a result, the AUD is appreciating. Explain in detail why the AUD is appreciating in reaction to higher cash rate. Your explanation must emphasise the actions of US residents and Australian residents in relation financial assets.