10 Which of the following can explain the situation in which the expected return on foreign assets equals that on domestic assets?
(A) No-Ponzi-game condition.
(B) Marshall-Lerner condition.
(C) Purchasing Power Parity hypothesis.
(D) Uncovered Interest Rate Parity hypothesis.

6 Which of the following refers to the unbiased predictor for future spot exchange rate? (A) Current spot exchange rate. (B) The average of current and previous spot exchange rates. (C) Forward exchange rate. (D) The average of current spot exchange rate and forward exchange rate.

7 Which of the following statements regarding the International Monetary Fund is not true? (A) It was established in 1968. (B) It created Special Drawing Rights in 1969. (C) Its headquarter is located in Washington, D.C., U.S.A. (D) It is an affiliation of the United Nations.

8 Sterilized intervention is a monetary policy tool used by central banks to influence the exchange rate of a currency without impacting the _________. (A) money supply (B) interest rate (C) money value (D) output

9 Which of the following factors would cause an appreciation of the domestic currency? (A) An increase in the foreign real interest rate. (B) An increase in the domestic real interest rate. (C) A reduction in tariffs by the domestic government. (D) An expectation of depreciation of the domestic currency.

11 According to the covered interest parity, if interest rate in UK is 1%, interest rate in Japan is 3%, and spot exchange rate is 145 JPY/GBP, which of the following is the 1-year forward rate? (A) 142.2 JPY/GBP. (B) 150.8 JPY/GBP. (C) 140.8 JPY/GBP. (D) 147.9 JPY/GBP.

12 _________ is a legal agreement among many countries, whose purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. (A) GATT (B) WHO (C) IMF (D) World Bank

13 The discovery of natural resources in a country leads to a surge in exports of those resources. This leads to a balance of payment surplus and an appreciation of the domestic currency under a floating exchange rate system, thus reducing the competitiveness of other export industries. This phenomenon is called _________. (A) Rational bubble (B) Tequila effect (C) Pass-through effect (D) Dutch disease

14 Which of the following statements regarding Exchange Rates Target Zone is not true? (A) It combines characteristics of both fixed and floating exchange rate systems. (B) The 1976 Jamaica Agreement is an example of such a system. (C) When the exchange rate deviates and exceeds the central parity, the premium of forward exchange rate becomes negative. (D) The monetary authorities still retain partial policy autonomy.

15 Based on partial equilibrium analysis, if a small country imposes a specific import tariff, which of the following is true? (A) The international price of the imported good falls. (B) The domestic price of the imported good remains unchanged. (C) The country’s terms of trade improves. (D) The country’s consumer surplus decreases.

16 Which of the following is correct when a large country adopts an export subsidy policy? (A) Terms of trade improves. (B) Net social welfare increases. (C) Consumer surplus increases. (D) Producer surplus increases.