Podcast
Questions and Answers
What is the difference between nominal and real exchange rates?
What is the difference between nominal and real exchange rates?
- Nominal exchange rate is determined by income, interest rates, inflation, expectations, tastes, relative prices, tariffs, political risks and business profits, while real exchange rate is determined by the quantity theory of money
- Nominal exchange rate is the cost of living in one country divided by the cost of living in another, while real exchange rate is the price of one currency in terms of another
- Nominal exchange rate is determined by the quantity theory of money, while real exchange rate is determined by income, interest rates, inflation, expectations, tastes, relative prices, tariffs, political risks and business profits
- Nominal exchange rate is the price of one currency in terms of another, while real exchange rate is the cost of living in one country divided by the cost of living in another (correct)
What does PPP assume about the cost of living in different countries?
What does PPP assume about the cost of living in different countries?
- The cost of living is irrelevant when determining exchange rates
- The cost of living is the same everywhere when expressed in different currencies (correct)
- The cost of living is different everywhere when expressed in the same currency
- The cost of living is only relevant when determining real exchange rates
What is the Quantity Theory of Money used for in relation to exchange rates?
What is the Quantity Theory of Money used for in relation to exchange rates?
- It predicts the relationship between the money supply and the price level (correct)
- It predicts the relationship between the exchange rate and the price level in two countries
- It predicts the relationship between the growth in the exchange rate and the growth of the price level
- It predicts the relationship between the money supply and the exchange rate
What is the Uncovered Interest Rate Parity?
What is the Uncovered Interest Rate Parity?
What is the trilemma in international macroeconomics?
What is the trilemma in international macroeconomics?
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Description
Test your knowledge on the exchange rate market with this informative quiz. Learn about the factors that affect the demand for different currencies, including income, inflation, and political risks. Explore the differences between nominal and real exchange rates and understand how they impact international trade. Brush up on your understanding of currency swaps and become an expert in the world of foreign exchange.
