Question 1

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Accepted Answer

A)  Plaza Agreement of 1985 
B)  Louvre Accord of 1987 
C)  Bonn Summit of 1978 
D)  Tokyo Summit of 1962 
A)  Plaza Agreement of 1985 
B)  Louvre Accord of 1987 
C)  Bonn Summit of 1978 
D)  Tokyo Summit of 1962

Question 2

Assume a system of floating exchange rates.In response to relatively high domestic interest rates,suppose that foreign investors place their funds in domestic capital markets.The result would be

Accepted Answer

A)  a depreciation of the domestic currency and a rise in net exports 
B)  a depreciation of the domestic currency and a fall in net exports 
C)  an appreciation of the domestic currency and a rise in net exports 
D)  an appreciation of the domestic currency and a fall in net exports 
A)  a depreciation of the domestic currency and a rise in net exports 
B)  a depreciation of the domestic currency and a fall in net exports 
C)  an appreciation of the domestic currency and a rise in net exports 
D)  an appreciation of the domestic currency and a fall in net exports

Question 3

Policy coordination is complicated by

Accepted Answer

A)  Different economic objectives 
B)  Different national institutions 
C)  Different phases in the business cycle 
D)  All of the above 
A)  Different economic objectives 
B)  Different national institutions 
C)  Different phases in the business cycle 
D)  All of the above

Question 4

Exchange rate management policies require international policy coordination because a depreciation of one nation's currency implies an appreciation of its trading partner's currency.

Accepted Answer

A) True 
 B)False

Question 5

The appropriate expenditure-switching policy to correct a current account deficit is:

Accepted Answer

A)  Contractionary monetary policy 
B)  Expansionary fiscal policy 
C)  Currency devaluation 
D)  Currency revaluation 
A)  Contractionary monetary policy 
B)  Expansionary fiscal policy 
C)  Currency devaluation 
D)  Currency revaluation

Question 6

A system of floating exchange rates and high capital mobility strengthens which policy in combating a recession:

Accepted Answer

A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy 
A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy

Question 7

Suppose Brazil faces domestic recession and a current account surplus.Should Brazil revalue its currency,one would expect the:

Accepted Answer

A)  Recession to become less severe--surplus to become less severe 
B)  Recession to become more severe--surplus to become more severe 
C)  Recession to become more severe--surplus to become less severe 
D)  Recession to become less severe--surplus to become more severe 
A)  Recession to become less severe--surplus to become less severe 
B)  Recession to become more severe--surplus to become more severe 
C)  Recession to become more severe--surplus to become less severe 
D)  Recession to become less severe--surplus to become more severe

Question 8

Which policies are expenditure-changing policies?

Accepted Answer

A)  Currency devaluation and revaluation 
B)  Import quotas and tariffs 
C)  Monetary and fiscal policy 
D)  Wage and price controls 
A)  Currency devaluation and revaluation 
B)  Import quotas and tariffs 
C)  Monetary and fiscal policy 
D)  Wage and price controls

Question 9

With a fixed exchange rate system,internal balance is most effectively achieved by using

Accepted Answer

A)  Expansionary monetary policy to combat recession 
B)  Expansionary fiscal policy to combat inflation 
C)  Contractionary monetary policy to combat recession 
D)  Contractionary fiscal policy to combat recession 
A)  Expansionary monetary policy to combat recession 
B)  Expansionary fiscal policy to combat inflation 
C)  Contractionary monetary policy to combat recession 
D)  Contractionary fiscal policy to combat recession

Question 10

A nation realizes overall balance when it achieves full employment and current account equilibrium.

Accepted Answer

A) True 
 B)False

Question 11

Currency devaluation and revaluation primarily affect the economy's current account and have secondary effects on domestic employment and inflation.

Accepted Answer

A) True 
 B)False

Question 12

Given an open economy with high capital mobility,monetary policy is strengthened under fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 16.1 
At the Plaza Accord of 1985,the Group-of-Five nations agreed to drive the value of the dollar downward (i.e.,depreciation) so as to help reduce the U.S.trade deficit.Answer the following question(s) on the basis of this information.
-Refer to Exhibit 16.1.The Federal Reserve might refuse to support the accord on the grounds that when helping to drive the dollar's exchange value downward,it promotes an increase in the U.S.:

Accepted Answer

A)  Rate of inflation 
B)  Budget deficit 
C)  Unemployment level 
D)  Economic growth rate 
A)  Rate of inflation 
B)  Budget deficit 
C)  Unemployment level 
D)  Economic growth rate

Question 14

Expenditure-switching policies include fiscal policy and monetary policy.

Accepted Answer

A) True 
 B)False

Question 15

Economic policymakers have typically adopted expenditure-increasing policies to combat inflation and expenditure-reducing policies to combat recession.

Accepted Answer

A) True 
 B)False

Question 16

Given fixed exchange rates,assume Mexico initiates contractionary monetary and fiscal policies to combat inflation.These policies will also:

Accepted Answer

A)  Reduce a balance-of-payments surplus 
B)  Reduce a balance-of-payments deficit 
C)  Increases both imports and exports 
D)  Decrease both imports and exports 
A)  Reduce a balance-of-payments surplus 
B)  Reduce a balance-of-payments deficit 
C)  Increases both imports and exports 
D)  Decrease both imports and exports

Question 17

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

Accepted Answer

A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy 
A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy

Question 18

Exhibit 16.1 
At the Plaza Accord of 1985,the Group-of-Five nations agreed to drive the value of the dollar downward (i.e.,depreciation) so as to help reduce the U.S.trade deficit.Answer the following question(s) on the basis of this information.
-Refer to Exhibit 16.1.To help drive the dollar's exchange value downward,the Federal Reserve would:

Accepted Answer

A)  Reduce taxes 
B)  Increase taxes 
C)  Decrease the money supply 
D)  Increase the money supply 
A)  Reduce taxes 
B)  Increase taxes 
C)  Decrease the money supply 
D)  Increase the money supply

Question 19

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

Accepted Answer

A) True 
 B)False

Question 20

What is international economic policy coordination?

Accepted Answer

International economic policy coordinati

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Assume a system of floating exchange rates.In response to relatively high domestic interest rates,suppose that foreign investors place their funds in domestic capital markets.The result would be

Policy coordination is complicated by

Exchange rate management policies require international policy coordination because a depreciation of one nation's currency implies an appreciation of its trading partner's currency.

The appropriate expenditure-switching policy to correct a current account deficit is:

A system of floating exchange rates and high capital mobility strengthens which policy in combating a recession:

Suppose Brazil faces domestic recession and a current account surplus.Should Brazil revalue its currency,one would expect the:

Which policies are expenditure-changing policies?

With a fixed exchange rate system,internal balance is most effectively achieved by using

A nation realizes overall balance when it achieves full employment and current account equilibrium.

Currency devaluation and revaluation primarily affect the economy's current account and have secondary effects on domestic employment and inflation.

Given an open economy with high capital mobility,monetary policy is strengthened under fixed exchange rates.

Expenditure-switching policies include fiscal policy and monetary policy.

Economic policymakers have typically adopted expenditure-increasing policies to combat inflation and expenditure-reducing policies to combat recession.

Given fixed exchange rates,assume Mexico initiates contractionary monetary and fiscal policies to combat inflation.These policies will also:

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

What is international economic policy coordination?

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 Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

International Banking: Reserves, Debt, and Risk

Filters

Exam 16: Macroeconomic Policy in an Open-economy

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Assume a system of floating exchange rates.In response to relatively high domestic interest rates,suppose that foreign investors place their funds in domestic capital markets.The result would be

Policy coordination is complicated by

Exchange rate management policies require international policy coordination because a depreciation of one nation's currency implies an appreciation of its trading partner's currency.

The appropriate expenditure-switching policy to correct a current account deficit is:

A system of floating exchange rates and high capital mobility strengthens which policy in combating a recession:

Suppose Brazil faces domestic recession and a current account surplus.Should Brazil revalue its currency,one would expect the:

Which policies are expenditure-changing policies?

With a fixed exchange rate system,internal balance is most effectively achieved by using

A nation realizes overall balance when it achieves full employment and current account equilibrium.

Currency devaluation and revaluation primarily affect the economy's current account and have secondary effects on domestic employment and inflation.

Given an open economy with high capital mobility,monetary policy is strengthened under fixed exchange rates.

Expenditure-switching policies include fiscal policy and monetary policy.

Economic policymakers have typically adopted expenditure-increasing policies to combat inflation and expenditure-reducing policies to combat recession.

Given fixed exchange rates,assume Mexico initiates contractionary monetary and fiscal policies to combat inflation.These policies will also:

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

What is international economic policy coordination?

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 Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

International Banking: Reserves, Debt, and Risk

Filters