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Learn POLICE SI MCQs with answers [Page 15 of Department 121]

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Ram Sharma • 188.81K Points
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141) Which example of market expectations causes the dollar to appreciate against the yen? Expectations that the U.S. economy will have:

(A) Faster economic growth tan Japan
(B) Higher future interest rates than Japan
(C) More rapid money supply growth tan Japan
(D) Higher inflation rates than Japan
Correct Answer - Option (B)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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142) Starting at the point of equilibrium between the money supply and the money demand, an increase in the domestic money supply causes the value of the home currency to:

(A) Depreciate relative to other currencies
(B) Appreciate relative to other currencies
(C) Not change relative to other currencies
(D) None of the above
Correct Answer - Option (A)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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143) An Exchange rate is said to __________ when its short-run response to a change in market Fundamentals is greater than its long-run response. a

(A) Overshoot
(B) Undershoot
(C) Depreciate
(D) Appreciate
Correct Answer - Option (A)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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144) Concerning exchange-ratedetermination, “market fundamentals” include all of the Following except:

(A) Monetary policy and fiscal policy
(B) Profitability and riskiness of investments
(C) Speculative opinion about future Exchange rates
(D) Productivity changes affecting production costs
Correct Answer - Option (C)

No Explanation found. Add Explanation and get +2 points.

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R

Ram Sharma • 188.81K Points
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145) In the short run, Exchange rates respond tomarketforcessuch as:

(A) Inflation rates
(B) Expectations of future Exchange rates
(C) Investment profitability
(D) Government trade policy
Correct Answer - Option (B)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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146) Long-run Exchange ratemovements are governed by all of the following except:

(A) National productivity levels
(B) Consumer tastes and preferences
(C) Rates of inflation
(D) Interest rate levels
Correct Answer - Option (D)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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147) That identical godos should cost the same in all nations, assuming tis costless to ship godos between nations and there are no barriers to trade, is a reflection of the:

(A) Monetary approach to exchange-rate determination
(B) Law of one price
(C) Fundamentalist approach to exchange-ratedetermination
(D) Exchange-rate-overshooting principle
Correct Answer - Option (B)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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148) The quantity of dollars supplied to the foreign Exchange market would increase if, other things remaining equal:

(A) Incomerises in Canada
(B) Manufacturing productivity increases in Canada
(C) Prices decrease in Canada
(D) Import tariffs rise in Canada
Correct Answer - Option (A)

No Explanation found. Add Explanation and get +2 points.

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Ram Sharma • 188.81K Points
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150) If there is an increase in the trade deficit, there must be

(A) An increase in the current account.
(B) An increase in the capital account.
(C) a decrease in the capital account.
(D) An increase in net transfers in the current account.
Correct Answer - Option (B)

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