EC249 Study Guide - Quiz Guide: Futures Exchange, Spot Contract, Stock Market Index
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A rise in the exchange rate means: it depends on the definition/who is involved. Co(cid:373)pa(cid:396)ed to the (cid:1005)(cid:1013)(cid:1012)(cid:1004)"s, the (cid:448)alue of the canadian dollar against the us dollar over the last 15 years has become more variable. Political risk arises because sovereign governments can change rules and regulations in unexpected ways. Maximizing shareholder wealth may not be the only goal, benefits to other stakeholders in the firm may also matter. Only markets deliver efficient outcomes: no, costs such as transportation and transactions costs, taxation and legal restrictions prevent markets from functioning efficiently, externalities may prevent markets from functioning efficiently. Information asymmetries may prevent market from delivering efficient outcomes. You can only have one foreign exchange rate: false. Gold flows: outflows lead to deflation, inflows lead to inflation. Predatory depreciation: dropping currency to gain advantage in exports. Some countries have faced output declines as great as those during the great depression.
