Question

Foreign exchange earn a profit by a bid-ask spread on currencies they purchase and sell. Foreign exchange on the other hand, carn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase brokers; dealers B) speculators; arbitrageurs C) central banks; treasures D) dealers; brokers A) Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods? A) widely divergent national monetary and fiscal policies among member nations B) differential rates of inflation across member nations several unexpected economic shocks to member nations D) all of the above C) The problems that may arise due to the separation of ownership and management in large business organizations is known as the: A) impatient capitalism, B) separation anxiety. C) agency problem D) corporate disconnect theory. A) Two general conclusions can be made from the empirical tests of purchasing power parity (PPP): PPP holds up well over the long run but poorly for the short run, and the theory holds better for countries with relatively low rates of inflation. PPP holds up well over the long run but poorly for the short run, and the theory holds better for countries with relatively high rates of inflation. PPP holds up well over the short run but poorly for the long run, and the theory holds better for countries with relatively low rates of inflation. PPP holds up well over the short run but poorly for the long run, and the theory holds better for countries with relatively high rates of inflation.

Answer 1

12) D) dealers, brokers

13) D) all of the above

14) C) Agency problem

15) B) PPP holds up well over the long run but poorly for the short run and the theory holds better for countries with relatively high rates of inflation