Question

If a country's current account is $100 billion, its financial/capital account is -$50 billion, and there are zero errors or omissions, then it official reserve transactions must be which means that the central bank's foreign exchange reserves -$50 billion; fell. -$50 billion; rose. impossible to tell; impossible to tell. -$100 billion; rose. Assume that Iceland trades only with Germany and the US. Iceland exports $603 million to Germany, and imports $414 million from Germany. Iceland exports $291 million to the US, and imports $515 million from the US. One US dollar buys 111 Icelandic krona (the local currency). One euro buys 123 Iceland krona. What is Iceland's effective exchange rate? 121 Icelandic krona per foreign currency. 111 Icelandic krona per foreign currency. 118 Icelandic krona per foreign currency. 123 Icelandic krona per foreign currency. You work for a firm that exports cardboard from the US to Japan. Your firm will receive a payment of one million Japanese yen in six months. The current spot rate is 103 yen per dollar. The six month forward rate is 105 yen per dollar. You expect that in six months the spot rate will be 110 yen to the dollar. Given the rates and your expectations, should you advise your firm to lock in the forward rate or not? If your expectations are correct, how many dollars will your advice will save the firm? Yes; more than $400. Yes; less than $400. No; more than $400. No; less than $400.