Exam 25: National and Global Choices: Floating Rates and the Alternatives

Which of the following is a characteristic of a currency board?

In 2010, _____ dollarized to escape from hyperinflation.

One way for a country to gain policy independence and provide some ability to reduce exchange-rate variability is to use:

Which of the following is most likely to happen if the demand for money decreases in the domestic economy under floating exchange rates and free capital mobility?

Argentina's experience since 1990 suggests that adopting a currency board imposes strict discipline on the country's fiscal policies.

Intervention to defend a fixed exchange rate can magnify the transmission of a foreign recession into an economy.

A domestic monetary shock is least disruptive:

_____ was established in 1998, and in 1999 it assumed the responsibility for monetary policy in the euro area.

_____ is an adjustable peg that provides substantial leeway for a country's monetary authority to change or abandon the fixed value.

Export demand shocks is likely to be least disruptive to a country with:

Identify the correct statement.

Those who advocate a return to a real gold standard believe that doing so would:

Dollarization will reduce exchange-rate risk for a country.

The strongest argument in favor of fixed exchange-rates is:

With respect to each of the following issues, explain whether floating or fixed exchange-rates would be better and why it would be better. a.Internal monetary shocks b.External macroeconomic shocks c.A need for diversity in macroeconomic goals and policies across countries

Argentina's government established a currency board to:

Which of the following is incorrect?

With dollarization adopted by a country, the "seigniorage profit" from issuing currency in the country goes to a foreign government.

What challenges does the European Central Bank (ECB) face in making monetary policy for the euro zone?

The _____ established the criteria for participation in the European Monetary Union (EMU).