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1) A comparison of the average growth rates for the periods 1970-2006 and 1996-2006 for Australia indicates that:
a. the average growth rates have decreased.
b. the average growth rate has increased in the more recent period.
c. the recent increase in average growth rates is due to the fact that Australia is a lucky country.
d. the recent increase in average growth rates is due to large increases in capital formation.
e. the average growth rates are basically the same.
2)Which of the following will cause a real appreciation?
a. a decrease in P *
b. a decrease in E
c. a decrease in P
d. None of the above.
3)A number of situations can arise that will cause individuals to believe that policy makers might change the pegged value of a fixed exchange rate. Suppose financial market participants expect a devaluation in the future. The interest rate parity condition will be maintained if which of the following policy actions are taken in the current period?
a. a reduction in the pegged value of the domestic currency
b. a reduction in i
c. an increase in taxes
d. an increase in i
e. a reduction in government spending