Sunday, December 09, 2007

Quiz 10 - Due Dec 11

Intro to Macroeconomics - Quiz 10
Professor Matthew Festa
Due in class Tues, Dec 11
Balance of Payments and the exchange rate

1) (5 points) - Tell me whether the following will go in the current, capital or reserve account and whether it is a positive or a negative in its account.
a) A European purchase of a US Dell laptop
b) A US purchase of a Swiss watch
c) A Japanese purchase of Cisco Systems, a US company
d) A US citizen purchase of a Nokia Cell phone, a Swedish company
e) US receipt of interest income from a German bond

2) (5 points) Tell me whether the following would cause an appreciation or depreciation in the US dollar (USD)
a) The new Dell one machine, a US based company, catches fire around the world and is heavily demanded by foreigners.
b) Income among US citizens rises and the demand for foreign produced Cashmere sweaters increases
c) The US housing market is strong and there is good profit to be made by investing in US real estate, even if you don't live in the US
d) Smoogle, the next best Internet search engine, catches on and issues stock. The company is based out of Britain.
e) The federal reserve cuts the Fed funds rate and this causes a general decline in overall rates among US bonds.

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