Question Details

Economists who a week ago were talking about economic sluggishness 



1. "Bonds were at the mercy of the dollar this week as a mid-week currency slump sent ..........." Complete this clipping. 
a) interest rates higher as the Fed protected the dollar 
b) interest rates lower as the Fed protected the dollar 
c) bond prices higher as the Fed bought dollars on the foreign exchange market 
d) bond prices lower as the Fed sold dollars on the foreign exchange market 
2. "One way to alleviate inflationary pressure is to engineer an upward valuation of your currency against that of your major trading partners. A higher dollar means that imports are cheaper and prices should move lower." A rise in the dollar could be engineered by 
a) taxing exports b) eliminating the budget deficit 
c) having the Fed raise the real interest rate 
d) having the Fed sell dollars on the foreign exchange market 
3. "Nevertheless the finance minister has taken a pre-emptive strike in recent weeks against any pressure on his currency by cutting government spending to slow domestic consumption. That should reduce the trade deficit, but will also slow the economy." The trade deficit will be reduced because falling consumption means 
a) rising imports b) falling imports 
c) rising interest rates which increases capital inflows 
d) falling interest rates which decreases capital inflows 
4. "The dilemma facing the Fed is whether to _____ the discount rate charged to commercial banks to rejuvenate the stalled economy and risk _____ dollar." The blanks are best filled with 
a) lower; lowering b) lower; raising c) raise; lowering d) raise; raising 
5. "Economists who a week ago were talking about economic sluggishness now predict a strong recovery that, coupled with an expansive fiscal package, will _____ the dollar, hurt T-bills and drive market yields ______." Assuming no inflation concerns, the blanks are best filled with 
a) raise; higher b) raise; lower c) lower; higher d) lower; lower



Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help