Question

1. Please define A, B, H, N, S shares in the Chinese stock market.

2. What is a volume of China’s interbank bond market in 2014 and 2015.

3. If you put ￥100 in a bank, how much will it be worth in 10 years? Suppose the interest rate is constant at 4%.

4. Suppose you will receive 1000 Yuan in 5 years, what is the present value of this 1000 Yuan if the interest rate is constant at 5%?

5. Give your definition of “risk averse” behavior and ilustrate with an example.

6. Give your definitions of “adverse selection” and “Moral hazard” and discuss briefly the effects of the behavior on the functioning of the financial system.

7. Define the unemployment rate and discuss the factors that may affect the long-term unemployment rate.

8. What are the functions of money? If an economy keeps printing the money how these functions might be affected?

9. Why is money supply related to a country’s balance of payments? If China decides to consumes its stock of foreign exchange reserves, what will happen to China’s money supply and inflation? Explain.

10. Explain how we should measure the openness of an economy. Please compute your country’s trade/GDP ratio an compare that with that of China.

11. Suppose that in 1998 during the Asian Financial Crisis, the RMB-dollar exchange rate was kept unchanged around 8.30 Yuan per dollar, while in 2005, the rate dropped to 8.10 Yuan per dollar. From 1998 to 2005, China’s consumer price index (CPI) increased by 2.0% while the US consumer price index rose by 6%.

(1) Calculate the real exchange rate between the RMB and the dollar for 2005

(2) Has the RMB depreciated or appreciated in real terms against the dollar between 1998 and 2005.

(3) Why has the International Monetary Fund argued that the RMB has been undervalued and thus should be re-valued.

10. Suppose tomato was 4Yuan/jin in China and $1.58/jin in the US. Using the concept of the PPP to calculate tomato exchange rate between the RMB and the dollar.

Time due: April 4, 2019

Answer 1