Exam 14: Exchange Rate Adjustments and the Balance of Payments

Under a system of managed floating exchange rates, central banks intervene in the foreign exchange market to

If Ecuador adopts the U.S.dollar as its official currency, the country loses its seigniorage.

A potential limitation of freely floating exchange rates is that

In recent years, the United States has accused China of manipulating the yuan so as to gain an unfair competitive advantage in global trade.Thus, proposals have been made that the United States should offset China's currency manipulation by

Figure 15.1 shows the market for the Swiss franc. In the figure, the initial demand for marks and supply of marks are depicted by D0 and S0 respectively. Figure 15.1. The Market for the Swiss Franc ? -Refer to Figure 15.1.With a system of floating exchange rates, the equilibrium exchange rate is

In a managed floating exchange rate system, temporary stabilization of the dollar's exchange value requires the Federal Reserve to adopt a (an) ____ monetary policy when the dollar is appreciating and a (an) ____ policy when the dollar is depreciating.

Hong Kong essentially has fixed the exchange value of its currency to the

Given a two-country world, assume Canada and Sweden devalue their currencies by 20 percent.Other things equal, this would result in

The Bretton Woods Agreement of 1944 established a monetary system based on

Under a system of fixed exchange rates, other things equal, if the par value of the fixed exchange rate is overvalued, then its central bank's effort to prevent the currency from ______ will lead to a (an) ______.

By maintaining a strong commitment to fixed exchange rates, a currency board hopes that domestic inflation will slow down and the possibility of a speculative attack against its currency will be reduced.

Sources of currency crisis for emerging countries have included all of the following except

Which of the following is an example of the reasons that other countries have accused the U.S.of currency manipulation?

The result of devaluations of the dollar in the early 1970s was to

In order to stabilize a currency, a currency board needs to

Under a system of fixed exchange rates, the purpose of currency devaluation is to cause the exchange value of a currency to ______, thus counteracting a balance-of-payments ______.

If Argentina adopts the U.S.dollar as its official currency, it seeks to eliminate the possibility of a speculative attack against its currency.

Since 1974, the major industrial countries have operated under a system of fixed exchange rates based on the gold standard.

Proponents of a fixed exchange rate system maintain that it is superior to a floating exchange rate system because

Unlike floating exchange rates, fixed exchange rates are not characterized by par values and central bank intervention in the foreign exchange market.