Question 1

Under the gold standard:

Accepted Answer

A) each nations defines the price of gold in terms of its currency and then stands ready to buy and sell any amount of gold at that price 
B) there is a fixed relationship between any two currencies called the mint parity 
C) the exchange rate is determined by demand and supply between the gold points and is prevented from moving outside the gold points by gold shipments 
D) all of the above 
A) each nations defines the price of gold in terms of its currency and then stands ready to buy and sell any amount of gold at that price 
B) there is a fixed relationship between any two currencies called the mint parity 
C) the exchange rate is determined by demand and supply between the gold points and is prevented from moving outside the gold points by gold shipments 
D) all of the above D

Question 2

A depreciation of a nation's currency is:

Accepted Answer

A) inflationary for the nation 
B) deflationary for the nation 
C) deflationary for the trade partner 
D) any of the above 
A) inflationary for the nation 
B) deflationary for the nation 
C) deflationary for the trade partner 
D) any of the above A

Question 3

A depreciation of the nation's currency causes its terms of trade to:

Accepted Answer

A) deteriorate 
B) improve 
C) remain unchanged 
D) any of the above 
A) deteriorate 
B) improve 
C) remain unchanged 
D) any of the above D

Question 4

The United States has a trade problem with China because the U.S.trade deficit with China:

Accepted Answer

A) is very large 
B) has increased very much during the past decade 
C) did not decline when the dollar depreciated with respect to the yuan or renminbi 
D) all of the above 
A) is very large 
B) has increased very much during the past decade 
C) did not decline when the dollar depreciated with respect to the yuan or renminbi 
D) all of the above

Question 5

A currency board refers to the case where:

Accepted Answer

A) the central bank sterilizes changes in the money supply resulting from balance of payments disequilibria 
B) the money supply of the nation is backed by 100 percent international reserves 
C) the nation operates under flexible exchange rates 
D) the nation retains firm control over its money supply 
A) the central bank sterilizes changes in the money supply resulting from balance of payments disequilibria 
B) the money supply of the nation is backed by 100 percent international reserves 
C) the nation operates under flexible exchange rates 
D) the nation retains firm control over its money supply

Question 6

Which of the following statements is not true with regard to the price-specie-flow mechanism:

Accepted Answer

A) relies on the quantity theory of money 
B) requires that nations allow their money supply to rise when the nation has a surplus in its balance of payments and to fall when the nation has a deficit 
C) requires that the price elasticity of demand for imports and exports be equal to zero 
D) it was introduced by David Hume to show the futility of the mercantilists' prescription 
A) relies on the quantity theory of money 
B) requires that nations allow their money supply to rise when the nation has a surplus in its balance of payments and to fall when the nation has a deficit 
C) requires that the price elasticity of demand for imports and exports be equal to zero 
D) it was introduced by David Hume to show the futility of the mercantilists' prescription

Question 7

When a nation's demand curve for imports in terms of the foreign currency is vertical:

Accepted Answer

A) the nation's demand curve for the foreign currency has zero elasticity 
B) the nation's demand for the currency is elastic 
C) the nation's supply of the currency is vertical 
D) the other nation's demand for the nation's currency has zero elasticity 
A) the nation's demand curve for the foreign currency has zero elasticity 
B) the nation's demand for the currency is elastic 
C) the nation's supply of the currency is vertical 
D) the other nation's demand for the nation's currency has zero elasticity

Question 8

The more elastic is a nation's demand and supply of foreign exchange the:

Accepted Answer

A) larger is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments 
B) smaller is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments 
C) less feasible is a flexible exchange rate system 
D) less feasible is a devaluation as a policy to correct a deficit in the nation's balance of 
A) larger is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments 
B) smaller is the devaluation or depreciation required to correct a deficit of a given size in the nation's balance of payments 
C) less feasible is a flexible exchange rate system 
D) less feasible is a devaluation as a policy to correct a deficit in the nation's balance of

Question 9

When a nation's demand curve for exports in terms of the foreign currency is inelastic:

Accepted Answer

A) the nation's supply curve of the foreign currency is negatively inclined 
B) the nation's supply curve of the foreign currency is vertical 
C) the nation's demand curve for the foreign currency is negatively inclined 
D) the other nation's supply curve of the nation's currency is negatively inclined 
A) the nation's supply curve of the foreign currency is negatively inclined 
B) the nation's supply curve of the foreign currency is vertical 
C) the nation's demand curve for the foreign currency is negatively inclined 
D) the other nation's supply curve of the nation's currency is negatively inclined

Question 10

A depreciation of a nation's currency shifts:

Accepted Answer

A) down its supply curve of imports in terms of the foreign currency 
B) up its demand curve of imports in terms of the foreign currency 
C) down its demand curve of imports in terms of the foreign currency 
D) down its demand curve of imports in terms of the domestic currency 
A) down its supply curve of imports in terms of the foreign currency 
B) up its demand curve of imports in terms of the foreign currency 
C) down its demand curve of imports in terms of the foreign currency 
D) down its demand curve of imports in terms of the domestic currency

Question 11

The mint parity refers to the:

Accepted Answer

A) gold export point 
B) gold import point 
C) equilibrium exchange rate 
D) ratio of the price of a unit of gold in terms of the currency of two nations 
A) gold export point 
B) gold import point 
C) equilibrium exchange rate 
D) ratio of the price of a unit of gold in terms of the currency of two nations

Question 12

The foreign exchange market is stable when:

Accepted Answer

A) The demand curve of foreign exchange is negatively inclined and the supply curve of foreign exchange is positively inclined 
B) the supply curve of foreign exchange is negatively inclined and less elastic than the demand curve 
C) the sum of the absolute values of the elasticity of the nation's demand of imports and the foreign demand for the nation's exports is greater than one 
D) all of the above 
A) The demand curve of foreign exchange is negatively inclined and the supply curve of foreign exchange is positively inclined 
B) the supply curve of foreign exchange is negatively inclined and less elastic than the demand curve 
C) the sum of the absolute values of the elasticity of the nation's demand of imports and the foreign demand for the nation's exports is greater than one 
D) all of the above

Question 13

For a small nation:

Accepted Answer

A) the foreign supply of exports is horizontal 
B) the domestic demand for imports is horizontal 
C) the foreign demand for its exports is horizontal 
D) the foreign supply of exports is vertical 
A) the foreign supply of exports is horizontal 
B) the domestic demand for imports is horizontal 
C) the foreign demand for its exports is horizontal 
D) the foreign supply of exports is vertical

Question 14

A depreciation of a nation's currency shifts:

Accepted Answer

A) down its supply curve of exports in terms of the domestic currency 
B) down its supply curve of exports in terms of the foreign currency 
C) down its demand curve for exports in terms of the foreign currency 
D) up its supply curve of imports in terms of the foreign currency 
A) down its supply curve of exports in terms of the domestic currency 
B) down its supply curve of exports in terms of the foreign currency 
C) down its demand curve for exports in terms of the foreign currency 
D) up its supply curve of imports in terms of the foreign currency

Question 15

A nation's demand curve for foreign exchange is derived from the:

Accepted Answer

A) foreign demand curve for the nations' exports 
B) nation's supply curve of exports 
C) domestic demand curve for imports and the foreign supply curve for the nation's imports 
D) foreign demand curve and the domestic supply curve for the nation's exports 
A) foreign demand curve for the nations' exports 
B) nation's supply curve of exports 
C) domestic demand curve for imports and the foreign supply curve for the nation's imports 
D) foreign demand curve and the domestic supply curve for the nation's exports

Under the gold standard:

A depreciation of a nation's currency is:

A depreciation of the nation's currency causes its terms of trade to:

The United States has a trade problem with China because the U.S.trade deficit with China:

A currency board refers to the case where:

Which of the following statements is not true with regard to the price-specie-flow mechanism:

When a nation's demand curve for imports in terms of the foreign currency is vertical:

The more elastic is a nation's demand and supply of foreign exchange the:

When a nation's demand curve for exports in terms of the foreign currency is inelastic:

A depreciation of a nation's currency shifts:

The mint parity refers to the:

The foreign exchange market is stable when:

For a small nation:

A depreciation of a nation's currency shifts:

A nation's demand curve for foreign exchange is derived from the:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters

Exam 16: The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

Under the gold standard:

A depreciation of a nation's currency is:

A depreciation of the nation's currency causes its terms of trade to:

The United States has a trade problem with China because the U.S.trade deficit with China:

A currency board refers to the case where:

Which of the following statements is not true with regard to the price-specie-flow mechanism:

When a nation's demand curve for imports in terms of the foreign currency is vertical:

The more elastic is a nation's demand and supply of foreign exchange the:

When a nation's demand curve for exports in terms of the foreign currency is inelastic:

A depreciation of a nation's currency shifts:

The mint parity refers to the:

The foreign exchange market is stable when:

For a small nation:

A depreciation of a nation's currency shifts:

A nation's demand curve for foreign exchange is derived from the:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters