Question 1

Everything else being equal,an appreciation of the dollar against the yuan ________.

Accepted Answer

A)  will not affect the quantity of dollars demanded 
B)  will lead to an increase in the quantity of dollars demanded 
C)  will lead to a decrease in the quantity of dollars demanded 
D)  can either lead to an increase or a decrease in the quantity of dollars demanded, depending on the magnitude of the appreciation 
A)  will not affect the quantity of dollars demanded 
B)  will lead to an increase in the quantity of dollars demanded 
C)  will lead to a decrease in the quantity of dollars demanded 
D)  can either lead to an increase or a decrease in the quantity of dollars demanded, depending on the magnitude of the appreciation C

Question 2

The government of a country sets its long-run exchange rate and intervenes regularly in the foreign exchange market to keep the exchange rate at its fixed level.The country is most likely to have a ________.

Accepted Answer

A)  floating exchange rate system 
B)  real exchange rate system 
C)  fixed exchange rate system 
D)  dirty-float exchange rate system 
A)  floating exchange rate system 
B)  real exchange rate system 
C)  fixed exchange rate system 
D)  dirty-float exchange rate system C

Question 3

Differentiate between the process of defending an undervalued currency and an overvalued currency.

Accepted Answer

If a currency is undervalued against a foreign currency,the quantity supplied of the foreign currency exceeds the quantity demanded of the foreign currency.Hence,to defend the currency,the domestic government has to buy the foreign currency and sell the domestic currency.In contrast,if a currency is overvalued against a foreign currency,the quantity demanded of the foreign currency exceeds the quantity supplied of the foreign currency.Hence,to defend the currency,the domestic government has to sell the foreign currency and buy the domestic currency.

Question 4

What is the foreign exchange market?

Accepted Answer

The foreign exchange market is

Question 5

If the government of a country adopts a contractionary monetary policy,________.

Accepted Answer

A)  the real interest rate falls, followed by a decrease in net exports and a decrease in the exchange rate 
B)  the real interest rate rises, followed by an increase in net exports and a decrease in the exchange rate 
C)  the real interest rate rises, followed by a decrease in net exports and an increase in the exchange rate 
D)  the real interest rate falls, followed by an increase in net exports and a decrease in the exchange rate 
A)  the real interest rate falls, followed by a decrease in net exports and a decrease in the exchange rate 
B)  the real interest rate rises, followed by an increase in net exports and a decrease in the exchange rate 
C)  the real interest rate rises, followed by a decrease in net exports and an increase in the exchange rate 
D)  the real interest rate falls, followed by an increase in net exports and a decrease in the exchange rate

Question 6

If the government of a country does not intervene in the foreign exchange market,then the country is said to have a ________.

Accepted Answer

A)  nominal exchange rate system 
B)  managed exchange rate system 
C)  flexible exchange rate system 
D)  fixed exchange rate system 
A)  nominal exchange rate system 
B)  managed exchange rate system 
C)  flexible exchange rate system 
D)  fixed exchange rate system

Question 7

When Walmart sells toys imported from China,________.

Accepted Answer

A)  the U.S. consumers pay in yuan, while the workers who produce the toys are paid in dollars 
B)  the U.S. consumers pay in dollars, while the workers who produce the toys are paid in yuan 
C)  the U.S. consumers pay in yuan, and the workers who produce the toys are also paid in yuan 
D)  the U.S. consumers pay in dollars, and the workers who produce the toys are also paid in dollars 
A)  the U.S. consumers pay in yuan, while the workers who produce the toys are paid in dollars 
B)  the U.S. consumers pay in dollars, while the workers who produce the toys are paid in yuan 
C)  the U.S. consumers pay in yuan, and the workers who produce the toys are also paid in yuan 
D)  the U.S. consumers pay in dollars, and the workers who produce the toys are also paid in dollars

Question 8

The following figure shows the net exports curve for a country:
  
-Refer to the figure above.When the real exchange rate is below R*,there is a trade surplus.

Accepted Answer

A) True 
 B)False

Question 9

Why is the eurozone called a currency union?

Accepted Answer

Since January 1,1999,some European count

Question 10

When a currency is undervalued relative to the dollar,then its exchange rate with respect to the dollar is ________.

Accepted Answer

A)  at the equilibrium 
B)  above the equilibrium 
C)  below the equilibrium 
D)  said to be flexible 
A)  at the equilibrium 
B)  above the equilibrium 
C)  below the equilibrium 
D)  said to be flexible

Question 11

Are exchange rates and unemployment rates related? If so,how?

Accepted Answer

Yes,exchange rates and unemployment rate

Question 12

The following figure shows the net exports curve for a country:
  
-Refer to the figure above.The net exports of the country are equal to zero ________.

Accepted Answer

A)  at the real exchange rate of R* 
B)  for all real exchange rates 
C)  for real exchange rates above R* 
D)  for real exchange rates below R* 
A)  at the real exchange rate of R* 
B)  for all real exchange rates 
C)  for real exchange rates above R* 
D)  for real exchange rates below R*

Question 13

Judging from the declining foreign exchange reserves,the Chinese authorities no longer undervalue the yuan.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is most likely to cause a leftward shift of the demand curve for the Chinese yuan in exchange for the U.S.dollar?

Accepted Answer

A)  An increase in the demand for U.S. products in China 
B)  A decrease in the demand for U.S. products in China 
C)  An increase in the demand for Chinese products in the United States 
D)  A decrease in the demand for Chinese products in the United States 
A)  An increase in the demand for U.S. products in China 
B)  A decrease in the demand for U.S. products in China 
C)  An increase in the demand for Chinese products in the United States 
D)  A decrease in the demand for Chinese products in the United States

Question 15

The following figure shows the equilibrium in the foreign exchange market where dollars are exchanged for yuan.
  
-Refer to the figure above.If the exchange rate is fixed below E yuan per dollar,________.

Accepted Answer

A)  both the yuan and the dollar are overvalued 
B)  both the yuan and the dollar are undervalued 
C)  the dollar is overvalued and the yuan is undervalued 
D)  the dollar is undervalued and the yuan is overvalued 
A)  both the yuan and the dollar are overvalued 
B)  both the yuan and the dollar are undervalued 
C)  the dollar is overvalued and the yuan is undervalued 
D)  the dollar is undervalued and the yuan is overvalued

Question 16

Consider an economy that is greatly dependent on the U.S.economy for consumer goods and durables.Inflation will increase in the economy if ________.

Accepted Answer

A)  the dollar appreciates with respect to its own currency 
B)  the dollar depreciates with respect to its own currency 
C)  the country adopts the dollar as its official currency 
D)  the United States goes into a recession 
A)  the dollar appreciates with respect to its own currency 
B)  the dollar depreciates with respect to its own currency 
C)  the country adopts the dollar as its official currency 
D)  the United States goes into a recession

Question 17

Everything else being equal,a depreciation of the dollar will cause ________.

Accepted Answer

A)  the U.S. GDP to fall 
B)  the U.S. GDP to increase 
C)  the U.S. inflation rate to decrease 
D)  the net exports of the United States to decrease 
A)  the U.S. GDP to fall 
B)  the U.S. GDP to increase 
C)  the U.S. inflation rate to decrease 
D)  the net exports of the United States to decrease

Question 18

Domestic interest rates influence the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 19

The following figure shows the demand and supply curve for dollars against the rupee.
  
-Refer to the figure above.The equilibrium quantity of dollars traded is ________.

Accepted Answer

A)  $50 
B)  $100 
C)  $300 
D)  $650 
A)  $50 
B)  $100 
C)  $300 
D)  $650

Question 20

Which of the following equations correctly represents the nominal exchange rate?

Accepted Answer

A)  Nominal exchange rate = Units of foreign currency/1 unit of domestic currency 
B)  Nominal exchange rate = Units of foreign currency/100 units of domestic currency 
C)  Nominal exchange rate = 1 unit of domestic currency/100 units of foreign currency 
D)  Nominal exchange rate = 100 units of domestic currency/1 unit of foreign currency 
A)  Nominal exchange rate = Units of foreign currency/1 unit of domestic currency 
B)  Nominal exchange rate = Units of foreign currency/100 units of domestic currency 
C)  Nominal exchange rate = 1 unit of domestic currency/100 units of foreign currency 
D)  Nominal exchange rate = 100 units of domestic currency/1 unit of foreign currency

Everything else being equal,an appreciation of the dollar against the yuan ________.

The government of a country sets its long-run exchange rate and intervenes regularly in the foreign exchange market to keep the exchange rate at its fixed level.The country is most likely to have a ________.

Differentiate between the process of defending an undervalued currency and an overvalued currency.

What is the foreign exchange market?

If the government of a country adopts a contractionary monetary policy,________.

If the government of a country does not intervene in the foreign exchange market,then the country is said to have a ________.

When Walmart sells toys imported from China,________.

The following figure shows the net exports curve for a country: -Refer to the figure above.When the real exchange rate is below R*,there is a trade surplus.

Why is the eurozone called a currency union?

When a currency is undervalued relative to the dollar,then its exchange rate with respect to the dollar is ________.

Are exchange rates and unemployment rates related? If so,how?

The following figure shows the net exports curve for a country: -Refer to the figure above.The net exports of the country are equal to zero ________.

Judging from the declining foreign exchange reserves,the Chinese authorities no longer undervalue the yuan.

Which of the following is most likely to cause a leftward shift of the demand curve for the Chinese yuan in exchange for the U.S.dollar?

The following figure shows the equilibrium in the foreign exchange market where dollars are exchanged for yuan. -Refer to the figure above.If the exchange rate is fixed below E yuan per dollar,________.

Consider an economy that is greatly dependent on the U.S.economy for consumer goods and durables.Inflation will increase in the economy if ________.

Everything else being equal,a depreciation of the dollar will cause ________.

Domestic interest rates influence the real exchange rate.

The following figure shows the demand and supply curve for dollars against the rupee. -Refer to the figure above.The equilibrium quantity of dollars traded is ________.

Which of the following equations correctly represents the nominal exchange rate?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

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Exam 15: Open Economy Macroeconomics

Everything else being equal,an appreciation of the dollar against the yuan ________.

The government of a country sets its long-run exchange rate and intervenes regularly in the foreign exchange market to keep the exchange rate at its fixed level.The country is most likely to have a ________.

Differentiate between the process of defending an undervalued currency and an overvalued currency.

What is the foreign exchange market?

If the government of a country adopts a contractionary monetary policy,________.

If the government of a country does not intervene in the foreign exchange market,then the country is said to have a ________.

When Walmart sells toys imported from China,________.

The following figure shows the net exports curve for a country: -Refer to the figure above.When the real exchange rate is below R*,there is a trade surplus.

Why is the eurozone called a currency union?

When a currency is undervalued relative to the dollar,then its exchange rate with respect to the dollar is ________.

Are exchange rates and unemployment rates related? If so,how?

The following figure shows the net exports curve for a country: -Refer to the figure above.The net exports of the country are equal to zero ________.

Judging from the declining foreign exchange reserves,the Chinese authorities no longer undervalue the yuan.

Which of the following is most likely to cause a leftward shift of the demand curve for the Chinese yuan in exchange for the U.S.dollar?

The following figure shows the equilibrium in the foreign exchange market where dollars are exchanged for yuan. -Refer to the figure above.If the exchange rate is fixed below E yuan per dollar,________.

Consider an economy that is greatly dependent on the U.S.economy for consumer goods and durables.Inflation will increase in the economy if ________.

Everything else being equal,a depreciation of the dollar will cause ________.

Domestic interest rates influence the real exchange rate.

The following figure shows the demand and supply curve for dollars against the rupee. -Refer to the figure above.The equilibrium quantity of dollars traded is ________.

Which of the following equations correctly represents the nominal exchange rate?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Filters