5 Questions
What is the difference between nominal and real exchange rates?
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
What does PPP assume about the cost of living in different countries?
The cost of living is the same everywhere when expressed in different currencies
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
What is the Uncovered Interest Rate Parity?
Domestic interest rate equals foreign interest rate plus expected capital gain
What is the trilemma in international macroeconomics?
The idea that a country cannot have fixed exchange rates, independent monetary policy, and free capital flows all at the same time
Study Notes
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.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
