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Monetary Economics Final Questions and Answers Grade A+ 2023

1. The exchange rate is ____________________________________________ A) the price of one currency relative to gold. B) the value of a currency relative to inflation. C) the change in the value of m... oney over time. D) the price of one currency relative to other currency - -D -2. When the value of the British pound changes from $1.25 to $1.50, the pound has __________, while the US dollar has ___________ in relative sense. A) appreciated; appreciated B) depreciated; appreciated C) appreciated; depreciated D) depreciated; depreciated - -C -3. Everything else held constant, when a country's currency appreciates, the country's goods exported to foreign countries become __________ expensive and foreign goods imported in that country become _________ expensive. A) more; less B) more; more C) less; less D) less; more - -A -4. According to the theory of purchasing power parity (PPI), exchange rates between any two currencies will adjust to reflect changes in ___________________________________________ A) the trade balances of the two countries. B) the current account balances of the two countries. [Show More]

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