Question 1

Holders of each of the following currencies can freely move reserves between countries in extremely fluid, free markets except the

Accepted Answer

A)  pound. 
B)  yuan. 
C)  euro. 
D)  yen. 
E)  dollar. 
A)  pound. 
B)  yuan. 
C)  euro. 
D)  yen. 
E)  dollar. B

Question 2

The Eurozone includes each of the following countries except

Accepted Answer

A)  Italy. 
B)  Luxembourg. 
C)  Portugal. 
D)  Spain. 
E)  Switzerland. 
A)  Italy. 
B)  Luxembourg. 
C)  Portugal. 
D)  Spain. 
E)  Switzerland. E

Question 3

The monetary authority of a country that pursues a fixed exchange rate policy is unable to

Accepted Answer

A)  utilize a Taylor rule. 
B)  respond to output gaps. 
C)  fight inflation increases. 
D)  all of the above. 
E)  only a and c. 
A)  utilize a Taylor rule. 
B)  respond to output gaps. 
C)  fight inflation increases. 
D)  all of the above. 
E)  only a and c. D

Question 4

Researchers including a real exchange rate term in the Taylor rule such that
r = p + dp - p*) + BY^ + R* - aEP/PW) have found that, for the United States, a is

Accepted Answer

A)  positive. 
B)  negative. 
C)  equal to zero. 
D)  impossible to calculate. 
E)  undefined. 
A)  positive. 
B)  negative. 
C)  equal to zero. 
D)  impossible to calculate. 
E)  undefined.

Question 5

All of the following countries except one have had similar inflation experiences during the period from 1960-2000. Which does not belong?

Accepted Answer

A)  Australia 
B)  Canada 
C)  Germany 
D)  United Kingdom 
E)  United States 
A)  Australia 
B)  Canada 
C)  Germany 
D)  United Kingdom 
E)  United States

Question 6

A country defining its monetary units in terms of gold or silver would experience each of the following conditions except

Accepted Answer

A)  flexible exchange rates. 
B)  convertibility. 
C)  restrictions on the flow of capital. 
D)  economic development. 
E)  constant relative currency values. 
A)  flexible exchange rates. 
B)  convertibility. 
C)  restrictions on the flow of capital. 
D)  economic development. 
E)  constant relative currency values.

Question 7

Countries formally agreed to free-floating exchange rates

Accepted Answer

A)  when Nixon took the United States off the gold standard in 1971. 
B)  by agreement at the 1971 Smithsonian negotiations. 
C)  in immediate response to the OPEC oil shock of 1973. 
D)  in immediate response to the U.S. recession of 1975. 
E)  in response to several events, including each of the above. 
A)  when Nixon took the United States off the gold standard in 1971. 
B)  by agreement at the 1971 Smithsonian negotiations. 
C)  in immediate response to the OPEC oil shock of 1973. 
D)  in immediate response to the U.S. recession of 1975. 
E)  in response to several events, including each of the above.

Question 8

The intervention currency of the Bretton Woods system was

Accepted Answer

A)  the West German mark. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  a predetermined mutual fund of major currencies. 
E)  the Special Drawing Rights of the World Bank. 
A)  the West German mark. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  a predetermined mutual fund of major currencies. 
E)  the Special Drawing Rights of the World Bank.

Question 9

We can understand why the early 1990s saw such a restrictive monetary policy in Japan by considering all of the following explanations except

Accepted Answer

A)  a concern over inflation that was too high. 
B)  a concern that the depression was caused by nonmonetary factors. 
C)  a need to counteract inflated asset prices. 
D)  monetary officials who felt that interest rates were already too low. 
E)  none of the above. 
A)  a concern over inflation that was too high. 
B)  a concern that the depression was caused by nonmonetary factors. 
C)  a need to counteract inflated asset prices. 
D)  monetary officials who felt that interest rates were already too low. 
E)  none of the above.

Question 10

When the United States ended its involvement in the Bretton Woods System in 1971, which of the following was not true?

Accepted Answer

A)  The United States was selling gold for $35 an ounce. 
B)  Several governments were buying large quantities of gold from the United States. 
C)  Governments throughout the world denounced President Nixon for leading the United States departure from the gold standard. 
D)  The United States had to essentially force other countries to revalue their currencies against the dollar. 
E)  According to Taylor and Papell's text, all of the above are true. 
A)  The United States was selling gold for $35 an ounce. 
B)  Several governments were buying large quantities of gold from the United States. 
C)  Governments throughout the world denounced President Nixon for leading the United States departure from the gold standard. 
D)  The United States had to essentially force other countries to revalue their currencies against the dollar. 
E)  According to Taylor and Papell's text, all of the above are true.

Question 11

When a country's currency is devalued,

Accepted Answer

A)  its export industries benefit. 
B)  its import industries benefit. 
C)  tight conditions can arise within its trading partners' labor markets. 
D)  it is a sign of strength for the home government. 
E)  none of the above. 
A)  its export industries benefit. 
B)  its import industries benefit. 
C)  tight conditions can arise within its trading partners' labor markets. 
D)  it is a sign of strength for the home government. 
E)  none of the above.

Question 12

Which of the following statements is untrue?

Accepted Answer

A)  Unless a country dollarizes or uses a common currency or a currency board, a successful long-run monetary policy requires flexible exchange rates, inflation targets, and a monetary policy rule. 
B)  The Taylor rule includes an implicit, or indirect, real exchange rate effect on the interest rate. 
C)  Countries adopting a Taylor rule approach to monetary policy experienced reduced real GDP fluctuations. 
D)  Countries adopting a Taylor rule approach to monetary policy experienced constant inflation behavior throughout the 1980s and 1990s. 
E)  Countries utilizing monetary policy rules similar to the Taylor rule experienced improved macroeconomic behavior. 
A)  Unless a country dollarizes or uses a common currency or a currency board, a successful long-run monetary policy requires flexible exchange rates, inflation targets, and a monetary policy rule. 
B)  The Taylor rule includes an implicit, or indirect, real exchange rate effect on the interest rate. 
C)  Countries adopting a Taylor rule approach to monetary policy experienced reduced real GDP fluctuations. 
D)  Countries adopting a Taylor rule approach to monetary policy experienced constant inflation behavior throughout the 1980s and 1990s. 
E)  Countries utilizing monetary policy rules similar to the Taylor rule experienced improved macroeconomic behavior.

Question 13

Central banks in large industrialized nations

Accepted Answer

A)  hold large portfolios of U.S. government Treasury securities. 
B)  hold large portfolios of securities issued by other's governments. 
C)  seldom try to influence each other's exchange rate. 
D)  all of the above. 
E)  only a and b. 
A)  hold large portfolios of U.S. government Treasury securities. 
B)  hold large portfolios of securities issued by other's governments. 
C)  seldom try to influence each other's exchange rate. 
D)  all of the above. 
E)  only a and b.

Question 14

Sterilized intervention

Accepted Answer

A)  works less effectively the more integrated world financial markets become. 
B)  works regardless of the level of foreign reserves held by a country. 
C)  can be effective domestically even if it has perverse international ramifications. 
D)  works essentially by exploiting myopic expectations of world traders. 
E)  works essentially because of the efficiency of markets in a system of rational expectations. 
A)  works less effectively the more integrated world financial markets become. 
B)  works regardless of the level of foreign reserves held by a country. 
C)  can be effective domestically even if it has perverse international ramifications. 
D)  works essentially by exploiting myopic expectations of world traders. 
E)  works essentially because of the efficiency of markets in a system of rational expectations.

Question 15

During the last 25 years, many more countries have chosen to abandon fixed exchange rate systems in favor of

Accepted Answer

A)  monetary unions. 
B)  dollarization. 
C)  currency boards. 
D)  all of the above. 
E)  none of the above. 
A)  monetary unions. 
B)  dollarization. 
C)  currency boards. 
D)  all of the above. 
E)  none of the above.

Question 16

Most countries that dollarized, joined monetary unions, or began using currency boards have done so because they were unable to

Accepted Answer

A)  bring inflation under control. 
B)  effectively pursue monetary policy. 
C)  ensure efficient capital mobility. 
D)  defend a fixed exchange rate. 
E)  none of the above. 
A)  bring inflation under control. 
B)  effectively pursue monetary policy. 
C)  ensure efficient capital mobility. 
D)  defend a fixed exchange rate. 
E)  none of the above.

Question 17

The Bretton Woods system was one of

Accepted Answer

A)  relatively fixed exchange rates set across the world by international agreement. 
B)  extremely flexible exchange rates monitored across the world by international agencies. 
C)  actively managed, floating exchange rates dominated by the major currency markets around the world. 
D)  laissez-faire exchange rate policy that allowed countries to focus entirely on domestic policy issues. 
E)  relatively fixed exchange rates that could be changed only once during a specified week every year. 
A)  relatively fixed exchange rates set across the world by international agreement. 
B)  extremely flexible exchange rates monitored across the world by international agencies. 
C)  actively managed, floating exchange rates dominated by the major currency markets around the world. 
D)  laissez-faire exchange rate policy that allowed countries to focus entirely on domestic policy issues. 
E)  relatively fixed exchange rates that could be changed only once during a specified week every year.

Question 18

The indirect channels) through which exchange rate movements can affect the interest rates set by central banks using a Taylor rule are

Accepted Answer

A)  impacts on output gaps. 
B)  impacts on inflation differentials from targeted inflation. 
C)  impacts on budget deficits. 
D)  all of the above. 
E)  both a and b. 
A)  impacts on output gaps. 
B)  impacts on inflation differentials from targeted inflation. 
C)  impacts on budget deficits. 
D)  all of the above. 
E)  both a and b.

Question 19

Which of the following countries does not have a currency that floats independently?

Accepted Answer

A)  Great Britain 
B)  Japan 
C)  United States 
D)  Germany 
E)  none of the above 
A)  Great Britain 
B)  Japan 
C)  United States 
D)  Germany 
E)  none of the above

Question 20

The indirect channels) through which higher exchange rates can cause the central banks using a Taylor rule to lower interest rates are

Accepted Answer

A)  increased exports. 
B)  increased net exports. 
C)  decreased exports. 
D)  deceased imports. 
E)  both a and d. 
A)  increased exports. 
B)  increased net exports. 
C)  decreased exports. 
D)  deceased imports. 
E)  both a and d.

Holders of each of the following currencies can freely move reserves between countries in extremely fluid, free markets except the

The Eurozone includes each of the following countries except

The monetary authority of a country that pursues a fixed exchange rate policy is unable to

Researchers including a real exchange rate term in the Taylor rule such that ^r⁼^p⁺^d^p^-^p^)⁺^BY^{^}⁺^R^{ -}^a^EP/PW⁾^{have found that, for the United}States, a is

All of the following countries except one have had similar inflation experiences during the period from 1960-2000. Which does not belong?

A country defining its monetary units in terms of gold or silver would experience each of the following conditions except

Countries formally agreed to free-floating exchange rates

The intervention currency of the Bretton Woods system was

We can understand why the early 1990s saw such a restrictive monetary policy in Japan by considering all of the following explanations except

When the United States ended its involvement in the Bretton Woods System in 1971, which of the following was not true?

When a country's currency is devalued,

Which of the following statements is untrue?

Central banks in large industrialized nations

Sterilized intervention

During the last 25 years, many more countries have chosen to abandon fixed exchange rate systems in favor of

Most countries that dollarized, joined monetary unions, or began using currency boards have done so because they were unable to

The Bretton Woods system was one of

The indirect channels) through which exchange rate movements can affect the interest rates set by central banks using a Taylor rule are

Which of the following countries does not have a currency that floats independently?

The indirect channels) through which higher exchange rates can cause the central banks using a Taylor rule to lower interest rates are

Economic Growth, Fluctuation, and Policy

Measuring Economic Performance

Employment, Job Creation, and Job Destruction

Long-Run Economic Growth

Technology and Economic Growth

Growth and the World Economy

Short-Run Fluctuations

Financial Markets and Aggregate Demand

The Economic Fluctuations Model

Consumption Demand

Investment Demand

Foreign Trade and the Exchange Rate

Spending, Taxes, and the Budget Deficit

The Monetary System

The Microeconomic Foundations of Price Rigidity

The Macroeconomic Policy Model

The New Normative Macroeconomics

Filters

Exam 18: Macroeconomic Policy in the World Economy

Holders of each of the following currencies can freely move reserves between countries in extremely fluid, free markets except the

The Eurozone includes each of the following countries except

The monetary authority of a country that pursues a fixed exchange rate policy is unable to

Researchers including a real exchange rate term in the Taylor rule such that r = p + dp - p*) + BY^ + R* - aEP/PW) have found that, for the United States, a is

All of the following countries except one have had similar inflation experiences during the period from 1960-2000. Which does not belong?

A country defining its monetary units in terms of gold or silver would experience each of the following conditions except

Countries formally agreed to free-floating exchange rates

The intervention currency of the Bretton Woods system was

We can understand why the early 1990s saw such a restrictive monetary policy in Japan by considering all of the following explanations except

When the United States ended its involvement in the Bretton Woods System in 1971, which of the following was not true?

When a country's currency is devalued,

Which of the following statements is untrue?

Central banks in large industrialized nations

Sterilized intervention

During the last 25 years, many more countries have chosen to abandon fixed exchange rate systems in favor of

Most countries that dollarized, joined monetary unions, or began using currency boards have done so because they were unable to

The Bretton Woods system was one of

The indirect channels) through which exchange rate movements can affect the interest rates set by central banks using a Taylor rule are

Which of the following countries does not have a currency that floats independently?

The indirect channels) through which higher exchange rates can cause the central banks using a Taylor rule to lower interest rates are

Economic Growth, Fluctuation, and Policy

Measuring Economic Performance

Employment, Job Creation, and Job Destruction

Long-Run Economic Growth

Technology and Economic Growth

Growth and the World Economy

Short-Run Fluctuations

Financial Markets and Aggregate Demand

The Economic Fluctuations Model

Consumption Demand

Investment Demand

Foreign Trade and the Exchange Rate

Spending, Taxes, and the Budget Deficit

The Monetary System

The Microeconomic Foundations of Price Rigidity

The Macroeconomic Policy Model

The New Normative Macroeconomics

Filters

Researchers including a real exchange rate term in the Taylor rule such that ^r⁼^p⁺^d^p^-^p^)⁺^BY^{^}⁺^R^{ -}^a^EP/PW⁾^{have found that, for the United}States, a is