92) Suppose the following bilateral spot exchange rates are being quoted for the Danish krone (DKK), the US dollar (US$) and the euro: US$/’ = 1.5 DKK/’ = 7.0 DKK/$ = 5.0 If you start with 100’, the most you could end up with in a single

93.33

98.66

103.25

107.14

Answer is:

107.14

Macro Economics MCQ (GK Set-1) with Answers

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Related Macro Economics MCQ (GK Set-1) with Answers

93) (A) ____ interest rate parity involves (B) _ domestic and foreign interest rates and the spot and the (C) ________ exchange rates

(A) Covered; (B) riskless; (C) expected future

(A) Covered; (B) riskless; (C) forward

(A) Uncovered; (B) future; (C) forward

Answer is:

(A) Covered; (B) riskless; (C) forward

94) Over the long run the rate of depreciation of the nominal exchange rate between two countries is approximately equal to the difference in national _________ rates.

real output growth

real interest

productivity growth

inflation

Answer is:

inflation

95) The rational expectations hypothesis does not imply:

People do not make systematic errors

On average the economy will be close to the LAS curve

Policy makers have better information about the economy than other economic actors

Macroeconomic policy changes must come as a surprise in order to have an impact on the real economy

Answer is:

Policy makers have better information about the economy than other economic actors

96) Which of the following would not be a cost of inflation

Higher price levels distort price signals

Higher rates of inflation are associated with higher variability in nominal prices

Unanticipated inflation leads to redistribution of wealth from lenders to borrowers

The loss of value of money in inflation leads to real costs when households engage in efforts to economize on their cash holdings

Answer is:

Higher price levels distort price signals

Macro Economics MCQ (GK Set-1) with Answers

For more MCQ's Click Here

92) Suppose the following bilateral spot exchange rates are being quoted for the Danish krone (DKK), the US dollar (US$) and the euro: US$/’ = 1.5 DKK/’ = 7.0 DKK/$ = 5.0 If you start with 100’, the most you could end up with in a single

107.14

Macro Economics MCQ (GK Set-1) with Answers

Related Macro Economics MCQ (GK Set-1) with Answers

93) (A) ________ interest rate parity involves (B) _______ domestic and foreign interest rates and the spot and the (C) __________ exchange rates

(A) Covered; (B) riskless; (C) forward

94) Over the long run the rate of depreciation of the nominal exchange rate between two countries is approximately equal to the difference in national _________ rates.

inflation

95) The rational expectations hypothesis does not imply:

Policy makers have better information about the economy than other economic actors

96) Which of the following would not be a cost of inflation

Higher price levels distort price signals

Macro Economics MCQ (GK Set-1) with Answers

93) (A) ____ interest rate parity involves (B) _ domestic and foreign interest rates and the spot and the (C) ________ exchange rates