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40) Which of the following is not a Threat of New Entrants according to Porter's Five Forces?
A) economies of scale
B) product differentiation
C) quality of substitutes
D) capital requirements
E) government policies
41) You invest $50,000 in Germany when the exchange rate is $1.35/€. Your investment gains
13%, and you subsequently exchange the euros back into dollars at a rate of $1.40/€. What is
your total percentage return on this investment?
A) 16.48%
B) 16.89%
C) 17.19%
D) 17.35%
E) 17.85%
42) Suppose you want to convert U.S. dollars to Indian rupees. If you have $120,000 and the
exchange rate is $0.0159 per rupee, how many rupees (in millions) will you receive in the
conversion?
A) 6.28 million
B) 6.67 million
C) 7.12 million
D) 7.53 million
E) 7.88 million
43) As a U.S. investor, you decide to invest $110,000 in Switzerland. You do so at a starting
exchange rate of 1.093 SwFr/$. Your Swiss investment gains 7 percent, and the ending exchange
rate is 1.091SwFr/$. What is your total return on this investment?
A) 6.30%
B) 6.85%
C) 7.20%
D) 7.40%
E) 7.55%
44) You invest $250,000 in Japan at a starting exchange rate of 101.50×/$. Your Japanese
investment gains 5.6 percent, and the ending exchange rate is 102.40×/$. What is your total
return on this investment?
A) 3.91%
B) 4.13%
C) 4.67%
D) 4.82%
E) 5.08%
45) Your $785,000 investment in Mexico gained 6 percent. If the exchange rate moves from 13.4
pesos per dollar to 12.5 per dollar over the period, what is your total return on this investment?
A) 12.57%
B) 12.86%
C) 13.12%
D) 13.63%
E) 13.91%
46) You are planning to invest $150,000 in Hong Kong. If your Hong Kong investment gains 7.5
percent while the exchange rate moves from 7.75 Hong Kong dollars (HK$) per U.S. dollar to
7.70 per dollar over the period, what is your total return on this investment?
A) 6.8%
B) 7.1%
C) 7.6%
D) 8.2%
E) 8.4%
47) Suppose you are a U.S. investor who is planning to invest $200,000 in China. Your Chinese
investment gains 7.5 percent. If the exchange rate moves from 5.10 Yuan per dollar to 5.20 per
dollar over the period, what is your total return on this investment?
A) 4.55%
B) 4.71%
C) 4.98%
D) 5.29%
E) 5.43%
48) You invest $150,000 in Germany when the exchange rate is $1.25/€. Your investment gains
10%, and you subsequently exchange the euros back into dollars at a rate of $1.20/€. What is
your total percentage return on this investment?
A) 4.48%
B) 4.89%
C) 5.10%
D) 5.35%
E) 5.60%
49) Assume the CPI increases from 125.9 to 126.4 over the period. What is the inflation rate
implied by this CPI change?
A) 0.10%
B) 0.20%
C) 0.30%
D) 0.40%
E) 0.50%
50) The CPI for this year was reported as 164.9, If inflation was 1.25 percent, what must the CPI
have been last year?
A) 161.21
B) 161.63
C) 162.47
D) 162.65
E) 162.86
51) Consider the following information on GDP and CPI for an economy over the last 3 years.
Calculate nominal GDP growth for 2011.
GDP
CPI
2010
128.6
104.1
2011
132.4
104.9
2012
136.8
105.8
A) 2.15%
B) 2.56%
C) 2.95%
D) 3.15%
E) 3.22%
52) Consider the following information on GDP and CPI for an economy over the last 3 years.
Calculate nominal GDP growth for 2012.
GDP
CPI
2010
128.6
104.1
2011
132.4
104.9
2012
136.8
105.8
A) 2.15%
B) 2.56%
C) 2.95%
D) 3.15%
E) 3.32%
53) Assume the inflation rate in 2016 is 1.2 percent. If the nominal GDP grew 3.3 percent and
nominal wages grew 2.1 percent, what are the approximate real growth rates of GDP and wages?
A) 2.00%; 0.40%
B) 2.05%; 0.50%
C) 2.10%; 0.50%
D) 2.10%; 0.90%
E) 2.15%; 0.60%
54) Assume the inflation rate in 2016 is 1.3 percent. If the nominal GDP grew 3.5 percent and
nominal wages grew 2.6 percent, what are the approximate real growth rates of GDP and wages?
A) 2.00%; 0.80%
B) 3.05%; 0.90%
C) 2.10%; 1.10%
D) 2.20%; 1.20%
E) 2.20%; 1.30%
55) An analyst gathered the following year-end price level data for an economy. What is the
economy's annual inflation rate for 2013?
2011
155.0
2012
163.0
2013
168.0
A) 3.07%
B) 3.32%
C) 3.58%
D) 3.87%
E) 3.92%
56) An analyst gathered the following year-end price level data for an economy. What is the
economy's annual inflation rate for 2016?
2011
190.3
2015
201.2
2016
207.1
A) 2.22%
B) 2.42%
C) 2.68%
D) 2.87%
E) 2.93%
57) An analyst gathered the following year-end price level data for an economy. What is the
economy's annual compounded inflation rate for 2007-2012?
2007
174.0
2011
190.3
2012
196.8
A) 2.22%
B) 2.49%
C) 2.68%
D) 2.87%
E) 2.92%
58) If the nominal GDP was reported at $122.3 billion and real GDP was reported at $120.1
billion, what was the inflation rate for the period?
A) 1.59%
B) 1.83%
C) 2.32%
D) 2.62%
E) 2.88%
59) If the nominal GDP was reported at $1,305.80 billion and inflation was 2.5%, what is the
level of real GDP for the period?
A) $1,179.54
B) $1,191.41
C) $1,212.75
D) $1,255.01
E) $1,273.95
60) Assume there are 475 million people in the United States, 175 million of which make up the
labor force. If 16 million are unemployed, what is the unemployment rate?
A) 8.35%
B) 9.14%
C) 10.91%
D) 11.05%
E) 11.74%
61) If wages grew 3.15 percent in 2013, but inflation was 2.75 percent, what was the
approximate real increase in wages?
A) 0.10%
B) 0.20%
C) 0.30%
D) 0.40%
E) 0.50%
62) If the nominal GDP was reported at $141.8 billion and real GDP was reported at $138.4
billion, what was the inflation rate for the period?
A) 1.54%
B) 1.92%
C) 2.46%
D) 2.67%
E) 2.81%
63) If the nominal GDP was reported at $1,351.90 billion and inflation was 3.8%, what is the
level of real GDP for the period?
A) $1,289.54
B) $1,302.41
C) $1,344.92
D) $1,385.01
E) $1,402.45
64) Assume there are 450 million people in the United States, 165 million of which make up the
labor force. If 18 million are unemployed, what is the unemployment rate?
A) 8.35%
B) 9.58%
C) 10.91%
D) 11.05%
E) 11.74%
65) Assume that the Federal Reserve injects $2.8 billion into the financial system. If the reserve
requirement is 14 percent, what is the maximum increase in money supply (in billions)?
A) $20.00
B) $21.30
C) $21.88
D) $22.10
E) $22.60
66) Assume that the Federal Reserve injects $45 billion into the financial system. If the money
supply increases by a maximum of $300 billion, what must the reserve requirement be?
A) 10%
B) 12%
C) 15%
D) 18%
E) 20%
67) Assume that the Federal Reserve injects $5 billion into the financial system. If the reserve
requirement is 25 percent, what is the maximum increase in money supply (in billions)?
A) $20.00
B) $21.30
C) $21.88
D) $22.10
E) $22.60
68) If the Federal Reserve injects $150 billion into the financial system and the money supply
increases by a maximum of $750 billion, what must the reserve requirement be?
A) 15%
B) 18%
C) 20%
D) 22%
E) 25%
69) You invest $75,000 in Germany when the exchange rate is $1.25/€. Your investment gains
10%, and you subsequently exchange the euros back into dollars at a rate of $1.30/€. What is
your total percentage return on this investment?
A) 13.48%
B) 13.89%
C) 14.19%
D) 14.40%
E) 14.85%
70) Suppose you are a U.S. investor who is planning to invest $100,000 in China. Your Chinese
investment gains 6 percent. If the exchange rate moves from 7.10 Yuan per dollar to 7.15 per
dollar over the period, what is your total return on this investment?
A) 4.52%
B) 4.76%
C) 4.91%
D) 5.26%
E) 5.49%
71) Assume the inflation rate in 2016 is 1.5 percent. If the nominal GDP grew 3.1 percent and
nominal wages grew 2.0 percent, what are the approximate real growth rates of GDP and wages?
A) 1.00%; 0.40%
B) 1.15%; 0.50%
C) 1.20%; 0.50%
D) 1.40%; 0.90%
E) 1.60%; 0.50%
72) If the nominal GDP was reported at $1,677 billion and inflation was 1.25%, what is the level
of real GDP for the period?
A) $1,579.54
B) $1,591.41
C) $1,612.75
D) $1,656.30
E) $1,673.95
73) Assume that the Federal Reserve injects $3.2 billion into the financial system. If the reserve
requirement is 13 percent, what is the maximum increase in money supply (in billions)?
A) $24.00
B) $24.30
C) $24.88
D) $24.10
E) $24.62
