ECO 320 Ashford 4 Week 3 Quiz Solution (Latest Update)

1. Which of the following is a precondition for economic growth? (Points : 1)

4. The production function: (Points : 1)

Question 5. 5. The rule of law is important to economic growth as it is necessary for the
enforcement of _____ . (Points : 1)

6. Which of the following statements is false? (Points : 1)

Question 7. 7. A record of all economic transactions between residents of one country with the
rest of the world is called: (Points : 1)

Question 8. 8. Which of the following is not one of the components of GDP? (Points : 1)

Gross private domestic investment
Consumption by the public
Government spending on goods and services
Foreign direct investment by U.S. corporations

9. The value of final output measured in current prices is: (Points : 1)

Question 10. 10. When GDP is larger than the sum of C, I, and G, then: (Points : 1)

Question 11. 11. The foreign exchange market is composed of: (Points : 1)

12. One of the most important interest rates in the world economy is: (Points : 1)

Question 13. 13. A _____ is when two parties agree to exchange different currencies over a
specified period of time. (Points : 1)

futures contract
option
currency swap
XR contract

Question 14. 14. If an importer wants to protect a transaction against exchange rate fluctuations
he/she can use the: (Points : 1)

spot rate.
forward rate.
strike price.
future spot rate.

15. The principle of _____ states that if the returns on various assets do not move
together identically, then holding a portfolio of assets will be less risky than holding a
single asset. (Points : 1)

Question 16. 16. An example of depreciation of the dollar would be if the number of Mexican pesos a dollar would purchase went from _____ to _____. (Points : 1)

100, 125
125, 150
150, 180
200, 180

Question 17. 17. As the Mexican peso appreciates, exports from Mexico become_____ and imports
into Poland become _____. (Points : 1)

18. As the dollar depreciates: (Points : 1)

the quantity supplied of foreign exchange increases.
the quantity supplied of foreign exchange decreases.
the supply of foreign exchange decreases.
the supply of foreign exchange increases.

Question 19. 19. If the initial exchange rate is 120 yen per dollar and then falls to 110 yen per
dollar, we would say that the yen has: (Points : 1)

Question 20. 20. Import competing industries in the U.S. are likely to resist: (Points : 1)