Exam 14: Exchange Rate Adjustments and the Balance of Payments

Other things equal, under a floating exchange rate system, if American exports increase and American imports decrease, the value of the dollar will likely

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Question 1

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When the United States abandoned the Bretton Woods system in 1973, it adopted a system of

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Question 2

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How can currency boards and dollarization prevent currency crises?

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A currency board is a monetary authority that issues notes and coins convertible into a foreign currency at a fixed exchange rate. The most vital contribution a currency board can make to exchange rate stability is to impose discipline on the process of money creation. This results in greater stability on domestic prices, which, in turn, stabilizes the value of the domestic currency. Dollarization occurs when residents of a county use the U.S. dollar alongside or instead of their own currency. Dollarization is seen as a way to protect a country's growth and prosperity from bouts of inflation, currency depreciation, and speculative attacks against the local currency.

Figure 15.2 Market for the British Pound -Refer to Figure 15.2.Suppose the United States decreases financial investment in England.Other things equal, under a floating exchange rate system the new equilibrium exchange rate would be

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Question 4

Under a system of floating exchange rates, other things equal, a U.S.trade deficit with Japan will cause

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Question 5

Which exchange rate mechanism is intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions?

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Question 6

Why can't a nation adopt free capital flows, a fixed exchange rate, and an independent monetary policy at the same time?

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Question 7

To defend a pegged exchange rate that overvalues its currency, a country could

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Question 8

Under managed floating exchange rates, other things equal, the Federal Reserve could offset an appreciation of the dollar against the yen by

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Question 9

According to the Bretton Woods system of 1944-1973, the United States was designated as the

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Question 10

A ______ is a type of a fixed exchange rate system in which the commitment to the fixed exchange rate is very firm

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Question 11

Pegging to a single currency is generally done by developing nations whose trade and financial relationships are mainly with a single industrial-country partner.

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Question 12

Small nations, such as Angola and Barbados, peg their currencies to the U.S.dollar since the prices of many of their traded goods are determined in markets in which the dollar is the key currency.

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Question 13

With fixed exchange rates, assume that the home currency becomes undervalued relative to its par value.Other things equal, to maintain the fixed exchange rate, the home country's central bank must

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Question 14

In recent years, the United States has accused China of manipulating the yuan so as to gain an unfair competitive advantage in global trade.The United States has argued that the central bank of China has

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Question 15

For developing countries, efforts to prevent speculation and currency crises have included

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Question 16

Today, special drawing rights (SDRs) represent the most important currency basket against which developing countries maintain pegged exchange rates.

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Question 17

If Mexico fully dollarizes its economy, it agrees to

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Question 18

Although controls on the outflow of capital for developing countries may be appealing, they tend to suffer from people finding ways to evade the controls and move funds out of the country.

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Question 19

A currency board is a type of a floating exchange rate system in which the commitment to the floating exchange rate is very strong.

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Question 20

Showing 1 - 20 of 162

Other things equal, under a floating exchange rate system, if American exports increase and American imports decrease, the value of the dollar will likely

When the United States abandoned the Bretton Woods system in 1973, it adopted a system of

How can currency boards and dollarization prevent currency crises?

Figure 15.2 Market for the British Pound -Refer to Figure 15.2.Suppose the United States decreases financial investment in England.Other things equal, under a floating exchange rate system the new equilibrium exchange rate would be

Under a system of floating exchange rates, other things equal, a U.S.trade deficit with Japan will cause

Which exchange rate mechanism is intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions?

Why can't a nation adopt free capital flows, a fixed exchange rate, and an independent monetary policy at the same time?

To defend a pegged exchange rate that overvalues its currency, a country could

Under managed floating exchange rates, other things equal, the Federal Reserve could offset an appreciation of the dollar against the yen by

According to the Bretton Woods system of 1944-1973, the United States was designated as the

A ______ is a type of a fixed exchange rate system in which the commitment to the fixed exchange rate is very firm

Pegging to a single currency is generally done by developing nations whose trade and financial relationships are mainly with a single industrial-country partner.

Small nations, such as Angola and Barbados, peg their currencies to the U.S.dollar since the prices of many of their traded goods are determined in markets in which the dollar is the key currency.

With fixed exchange rates, assume that the home currency becomes undervalued relative to its par value.Other things equal, to maintain the fixed exchange rate, the home country's central bank must

In recent years, the United States has accused China of manipulating the yuan so as to gain an unfair competitive advantage in global trade.The United States has argued that the central bank of China has

For developing countries, efforts to prevent speculation and currency crises have included

Today, special drawing rights (SDRs) represent the most important currency basket against which developing countries maintain pegged exchange rates.

If Mexico fully dollarizes its economy, it agrees to

Although controls on the outflow of capital for developing countries may be appealing, they tend to suffer from people finding ways to evade the controls and move funds out of the country.

A currency board is a type of a floating exchange rate system in which the commitment to the floating exchange rate is very strong.

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Systems and Currency Crises

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