________ permits the producers of each nation to concentrate on the things they do best while trading for those things they do least well.
Answer(s): D
Trade leads to mutual gains because it allows each country to specialize more fully in the production of those things that it does best.
What would the bid-ask spread be for pound sterling quoted at $14419-28?
Percent spread = [(1.4428 - 1.4419)/1.4428] x 100 = 0.062%
An appreciation of the U.S. dollar
Answer(s): B
An appreciation of the U.S. dollar implies that it takes less U.S. dollars to purchase one unit of foreign currency.Thus, a U.S. dollar goes further than it did before. This is an increase in the purchasing power of the U.S.dollar.
Relative to the French franc, the dollar has over the period 1973 to 1993:
Answer(s): C
The U.S. dollar has moved greatly over this period relative to the French franc. The dollar fell from a high of 22.5 francs to the dollar in 1973 to a low of 11.1 francs to the dollar in 1985 and then rose again to 17.6 francs to the dollar in 1993.
Which of the following is/ are true ?
All Central Bank transactions are excluded from the Current and Capital accounts and charged to the Official Reserve account. However, since the Reserve account is part of the BOP account, I is false.Direct foreign investments are Capital account items. However, income associated with these is treated as part of the Current account. Hence, II is false.III is a direct outflow of domestic currency and treated as a debit entry on the Current account.
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