problem1. If buying power parity applied to Big Macs, and a Big Mac cost $2.50 in the United States while the British pound cost $1.50 and €0.90 euros could be received for $1.00, (a) how much would the Big Mac cost in Britain and (b) Germany respectively?
problem2. Compute the gross profit that an underpreparer would make if it sold $10 million worth of bonds at par (face value) and paid the firm that sold the bonds 99.25% of par.
problem3. An expansion in U.S. money supply
a. will raise domestic interest rates
b. will cause the exchange value of the dollar to increase.
c. will cause U.S. exports to raise.
d. will cause U.S. imports to raise.
problem4. Which Fed action does not directly raise total reserves in banking system?
a. Lowering the Discount Rate
b. Lowering reserve requirements
c. Buying U.S. Government securities on the open market
d. None of the above
problem5. If the cost of yen per dollar changes from 100 to 110 yen per dollar,
a. The yen has appreciated against the dollar.
b. The dollar has depreciated against yen.
c. The dollar has appreciated against yen.
d. The cost of a yen has increased in terms of dollars.