10 TRUE or FALSE questions on National Income Accounting, Current Accounts, Financial Account, Balance of Payments, Exchange rate overshooting, inflation, vehicle currencies, Covered Interest Parity, Purchasing Power Parity

1. In National Income Accounting, foreign savings play no role. 2. Current account deficits are always worse than current account surpluses. 3. An import of U.S. treasury bills shows up only in the financial account. 4. Canada's net balance of payment position with the U.S. will always fall if the volume of our imports from the U.S. falls. 5. Exchange rate undershooting explains daily variation in exchange rates. 6. Higher Canadian inflation explains current strength of our currency 7. Vehicle currencies are driven by their value as a medium of exchange and a unit of account. 8. A tourist from New York buys a meal in Toronto paying with travelers cheques. This shows up in the bal... click for more

Explanation and proof of the interest parity condition.

Everyone pays a tax of 10 percent on interest and capital gains. Does this tax alter the analysis of the interest parity condition?

How an aging populating changes the economy's aggregate demand.

How do you expect an aging population will alter an economy's aggregate money demand function? Does it matter if there is simultaneous growth to the proportion of infants in the country?

Describe the three main factors that determine aggregate money demand.

Describe the three main factors that determine aggregate money demand. Illustrate, with examples, how changes in these factors alter aggregate money demand.

Assess whether the statement is true or false and provide a brief explanation why?

1.An increase in Canada's exports will always lead to an improvement in our current account. (true/false) 2.If a Canadian purchases shares in Microsoft, this shows up in the Balance of Payments Financial Account as a debit item only. (true/false) 3.Purchasing power parity cannot hold if the law of one price does not hold. (true/false) 4.A real depreciation of the canadian dollar increases aggregate demand for canadian output.(true/false) 5.The difference between the short run and the long run is the prices are less flexible in the long run. (true/false) 6.There is little empirical support for the Purchasing power parity theory because the assumptions behind PPP do not usually ... click for more