Originally Posted by ATB1

1. If inflation is low and a Central Bank is concerned about recession, what would the expected monetary policy response be?

A:1 If inflation is low and the economy is scared of a recession, central banks are expected to decerease interest rates.

2. If inflation and growth are both high what would the expected monetary policy response be?

A:2 it is expected that the central banks will increase interest rates to maintain inflation.

3. If a central bank raises interest rates, what affect if any is this expected to have on the currency of that country, all else being equal?

A:3 If interest rates rise then the currency of that currency rises as well as well as the foreign investors.

4. If a central bank lowers interest rates, what affect if any is this expected to have on the currency of that country, all else being equal?

A:4 it would affected the currency negetivly the value of that currency would fall and and foreign investors would leave to find better opportunities elsewhere.

5. If a country's imports grow and all other trade and capital flows remain equal, what affect would this have on the current account and what would be the expected affect on the currency if any?

A:5 if imports grow then the value of the currency falls, because of deficit in the current account of that country

6. If a country's exports grow and all other trade and capital flows remain equal, what affect would this have on the current account and what would be the expected affect on the currency if any?

A:6 If a countries exports grow then it would affect the value of the currency positivly and the value would rise,in the currount account the outcome would be positive because exports have grown over imports.

7. If a country is a major exporter of gold and the price of gold moves up by 50% over the course of a year, what would be the expected affect if any on that country's currency all else being equal?

A:7 The affect on the countries currency value is that it would rise since their an exporter of gold over that period of time.

8. Japan is a major importer of oil and Canada is a major exporter of oil. If the price of oil goes up by 50% over the course of a year, then what affect if any should this have on the CAD/JPY currency pair all else being equal?

A:8 The effect on the CAD/JPY would be a rise for the CAD and a fall for the JPY since there would be a deficit in their account would cause them to fall. On the other hand the CAD would rise since their an exporter of oil.

9. Traders who follow US Dollar fundamentals pay particular attention to any numbers which reflect the overall health of the consumer. Why?

A:9 since there a very high rate for health insuarance in the US the tax payed to the goverment would increase or decrease since health insuarence is a must for every citizen.That would either affect the GDP positivly or negetivly depending on the results and since GDP and since it is very important the to the fundemental investors they are expected to pay special attention to it.


10. The US Economy in the past was referred to as an Industrial Economy, now it is referred to more as a ________________ Economy.

A:10 high tech