Please answer all three questions with thesolutions (how you got the answer for all three) 8.Which of the following appears to be a safe assumption when there isno difference between the forward and spot exchange rate between twocurrencies?A. The countries have equal nominal interest rates.B. The spot exchange rate is expected to change.C. Expected inflation is less than the nominal interest rate.D. Both currencies are selling at a premium relative to the other.E. None of the above.What policies would you recommend to the U.S. government to lowerthe current account deficit and decrease net capital inflows?9.A. Allow the U.S. dollar to depreciate significantly.B. Increase national saving relative to investment.C. Eliminate U.S. federal budget deficits.D. Use trade restrictions such as tariffs.E. All of the above.10.Under the Bretton Woods exchange rate system,A. Any foreign country could not devalue its currency against the dollar6in conditions of 'fundamental disequilibrium."B. Any foreign country could devalue its currency against the dollarin conditions of “fundamental disequilibrium," but the system's rulesdid not give the United States the option of devaluing against foreigncurrencies.C. Any foreign country could devalue its currency against the dollar inconditions of “fundamental disequilibrium," and the system's rules didgive the United States the option of devaluing against foreign curren-cies.D. The United States could devalue its currency against the foreigncurrencies in conditions of 'fundamental disequilibrium."E. None of the above.

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Which of the following appears to be a safe assumption when there is no difference between the forward and spot exchange rate between two currencies? 8. A. The countries have equal nominal interest rates. B. The spot exchange rate is expected to change. C. Expected inflation is less than the nominal interest rate. D. Both currencies are selling at a premium relative to the other. E. None of the above.

Which of the following appears to be a safe assumption when there is no difference between the forward and spot exchange rate between two currencies? 8. A. The countries have equal nominal interest rates. B. The spot exchange rate is expected to change. C. Expected inflation is less than the nominal interest rate. D. Both currencies are selling at a premium relative to the other. E. None of the above.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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