Author: Anonymous

Suppose the central bank of Thailand decides to raise its interest rates. Interest rate parity will be re-established at some point because the price of the Baht will __________ now and rates of return to investors (adjusting for currency value changes) will ________.  

Thailand is one country that pegs its currency to the USD. 

A bundle of goods in China cost 45300 Yuan in 2015 and 46570 Yuan in 2016. The inflation rate, as judged by this bundle, is _______%. (round to 2 digits behind the decimal)

The absolute purchasing power parity exchange rate is usually a close approximation of the market exchange rate. 

Assume that the spot exchange rate between China and the USA is originally .16 USD per Yuan. If the USA has 4.1% inflation while China has 2.3% inflation, at the end of the period the relative PPP exchange rate will be ________ USD per Yuan.  **Round to FOUR digits behind the decimal. 

Name the depressed area that the pointer is resting in of the previously named bone. _______

In an embargo, a country:

Assume that country X has a money supply that is 2 times as large as the money supply in country Y. And, country X has a real GDP that is $850,000,000 and country Y has a real GDP that $600,000,000. Using the quantity theory of money, we can estimate an exchange rate of _____ of X’s currency for 1 units of Y’s currency.   

The exchange rate for the Thai Baht moves from 32.75 Baht/$ to 32.99 Baht/$. This tells you that _________ against the dollar.  

Economists debate whether free trade is good or bad for a nation. There is not yet a consensus.