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International Monetary Relationships Unit 03

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International Monetary Relationships Unit 03

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Questions and Answers

What is the spot rate of Exchange?

The rate that applies for future agreed trade

An average of the bilateral RERs between the country and each of its trading partners

The nominal exchange rate times the ratio of prices between two countries

The rate that applies for sight trade (correct)

How is the Real Effective Exchange Rate calculated?

By taking an average of the bilateral RERs between the country and each of its trading partners (correct)

By using the trade-weighted currency index

By multiplying the nominal exchange rate by the ratio of prices between two countries

By applying the rate for future agreed trade

What does depreciation indicate in terms of exchange rates?

A movement in the opposite direction (correct)

A rise in price in terms of other currencies

The rate that applies for sight trade

An average of the bilateral RERs between the country and each of its trading partners

What is the Nominal Effective Exchange Rate based on?

The trade-weighted currency index Signup and view all the answers

What is the Real Exchange Rate defined as?

The nominal exchange rate times the ratio of prices between two countries Signup and view all the answers

In international economics, what is the balance of payments?

The difference between money flowing into and out of a country Signup and view all the answers

What does the current account in the balance of payments reflect?

A country's net income Signup and view all the answers

During which period was international trade heavily regulated and accounted for a relatively small portion compared with national output?

Early 19th century Signup and view all the answers

What was the dominant economic theory influencing European rulers beginning in the 16th century?

Mercantilism Signup and view all the answers

What measures were generally favored under mercantilism to promote a trade surplus?

Tariffs Signup and view all the answers