FIN 600 - meeting 1, quiz 2

(a)   increases when the value of the currency decreases, leading to a downward sloping demand schedule

Real interest rate = ____________________ MINUS ________________

(a)  

if the spot rate is $1.55 and the 30day forward rate is 1.58, then you have the forward rate ________________

• premium

• discount

• parity

• forward rate parity

In (a)   rate exchange system, Central bank can reset a fixed exchange rate by devaluing or reducing the value of the currency against other currencies.

When “flooding the market with dollars”, the Fed puts downward pressure on the dollar... this move by the government is called ________________________

• direct intervention

• indirect intervention

• non goverment intervention

• agency intervention

draw the new DEMAND line as a result of Rising U.S. Inflation on the Equilibrium Value of the British Pound