In 2008, several of the world’s central bank actively worked together to push down global interest rates. This is an example of()
A. international policy coordination
B. international policy cooperation
C. international policy externalities
D. structural interdependence
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An example of an international policy externality is()
A. the locomotive effect
B. the liquidity effect
C. the monetary effect
D. sterilization
When two countries choose to use a new currency, they are()
A. participating in a monetary union
B. dollarizing
C. forming an optimal currency area
D. increasing their monetary autonomy
If covered interest parity holds then()
A. the difference between two countries’ interest rates should roughly equal the forward discount or premium between their currencies
B. international interest rates should be equal
C. firm should be able to identify opportunities for arbitrage in investments
D. forward rates should equal spot rates
When an investment carries a higher than expect return to compensate an individual for uncertainty, this is known as a()
A. risk premium
B. uncovered interest arbitrage opportunity
C. hedge
D. translation exposure