Question 1

The exchange rate observed in the market is known as what?

Accepted Answer

A)  real exchange rate 
B)  financial account 
C)  current account 
D)  absolute purchasing power parity 
E)  nominal exchange rate 
A)  real exchange rate 
B)  financial account 
C)  current account 
D)  absolute purchasing power parity 
E)  nominal exchange rate E

Question 2

A record of the difference between the holding of foreign assets by domestic residents and domestic assets by foreign residents is known as:

Accepted Answer

A)  financial account 
B)  current account 
C)  Bretton Woods system 
D)  official reserve assets 
E)  real exchange rate 
A)  financial account 
B)  current account 
C)  Bretton Woods system 
D)  official reserve assets 
E)  real exchange rate A

Question 3

Which of the following is associated with fixed exchange rates?

Accepted Answer

A)  intervention in the foreign exchange market 
B)  exchange controls 
C)  black markets 
D)  all of the above 
E)  none of the above 
A)  intervention in the foreign exchange market 
B)  exchange controls 
C)  black markets 
D)  all of the above 
E)  none of the above B

Question 4

Exchange controls plus high inflation tends to produce:

Accepted Answer

A)  sterilization. 
B)  intervention. 
C)  an undervalued exchange rate. 
D)  a black market in foreign exchange. 
E)  none of the above 
A)  sterilization. 
B)  intervention. 
C)  an undervalued exchange rate. 
D)  a black market in foreign exchange. 
E)  none of the above

Question 5

If Bolivia decides to fix their exchange rate but does not have enough foreign exchange (dollars) to intervene in the foreign exchange market, then they might institute a system of:

Accepted Answer

A)  exchange controls. 
B)  white markets. 
C)  nominal markets. 
D)  an MTN. 
E)  all of the above 
A)  exchange controls. 
B)  white markets. 
C)  nominal markets. 
D)  an MTN. 
E)  all of the above

Question 6

It is common for Latin American countries to have a _____ for their balances of trade, and a _____ for their current account balance.

Accepted Answer

A)  surplus, surplus 
B)  surplus , deficit 
C)  deficit, deficit 
D)  deficit. surplus 
E)  surplus, surplus. 
A)  surplus, surplus 
B)  surplus , deficit 
C)  deficit, deficit 
D)  deficit. surplus 
E)  surplus, surplus.

Question 7

Describe Latin America's history of exchange rate systems.

Accepted Answer

Latin America has a complex history of e

Question 8

If there is a black market in foreign exchange, then what is likely to be the case?

Accepted Answer

A)  There is no intervention in the foreign exchange market. 
B)  There are no exchange controls. 
C)  There is a free market in foreign exchange market. 
D)  all of the above 
E)  none of the above 
A)  There is no intervention in the foreign exchange market. 
B)  There are no exchange controls. 
C)  There is a free market in foreign exchange market. 
D)  all of the above 
E)  none of the above

Question 9

In a fixed exchange rate system, a country would accumulate reserves when the current account is in _____ and use these reserves during period when the country has a current account balance in ______.

Accepted Answer

A)  surplus, surplus 
B)  surplus, deficit 
C)  deficit, deficit 
D)  deficit, surplus 
E)  balanced, surplus 
A)  surplus, surplus 
B)  surplus, deficit 
C)  deficit, deficit 
D)  deficit, surplus 
E)  balanced, surplus

Question 10

The theory that exchange rates are related to difference in the level of prices between countries is known as:

Accepted Answer

A)  contagion. 
B)  exchange rate regime. 
C)  purchasing power parity. 
D)  law of two prices. 
E)  relative parity. 
A)  contagion. 
B)  exchange rate regime. 
C)  purchasing power parity. 
D)  law of two prices. 
E)  relative parity.

Question 11

Central bank buying and selling of foreign exchange to influence the exchange rate is known as:

Accepted Answer

A)  sterilization. 
B)  manipulation. 
C)  intervention. 
D)  PPP. 
E)  none of the above 
A)  sterilization. 
B)  manipulation. 
C)  intervention. 
D)  PPP. 
E)  none of the above

Question 12

What is not included in the current account?

Accepted Answer

A)  transactions involving goods 
B)  investment income 
C)  FDI 
D)  transactions involving services 
E)  unilateral transfers 
A)  transactions involving goods 
B)  investment income 
C)  FDI 
D)  transactions involving services 
E)  unilateral transfers

Question 13

Which of the following would be the most volatile component of the current account in Latin America?

Accepted Answer

A)  imports of goods 
B)  imports of services 
C)  income on foreign assets 
D)  unilateral transfers 
E)  exports of goods 
A)  imports of goods 
B)  imports of services 
C)  income on foreign assets 
D)  unilateral transfers 
E)  exports of goods

Question 14

Attempting to influence the exchange rate by buying or selling foreign exchange is known as _____ in the foreign exchange market.

Accepted Answer

A)  sterilization 
B)  stabilization 
C)  intervention 
D)  monetarization 
E)  amelioration 
A)  sterilization 
B)  stabilization 
C)  intervention 
D)  monetarization 
E)  amelioration

Question 15

Buying and selling of foreign exchange to influence the exchange rate is referred to as:

Accepted Answer

A)  capital controls 
B)  a managed float. 
C)  exchange controls. 
D)  sterilization. 
E)  intervention. 
A)  capital controls 
B)  a managed float. 
C)  exchange controls. 
D)  sterilization. 
E)  intervention.

Question 16

Higher commodity prices show up in:

Accepted Answer

A)  the merchandise trade balance. 
B)  the balance on goods and services. 
C)  the current account balance. 
D)  all of the above 
E)  none of the above 
A)  the merchandise trade balance. 
B)  the balance on goods and services. 
C)  the current account balance. 
D)  all of the above 
E)  none of the above

Question 17

Which of the following would be related to a surplus in the current account balance?

Accepted Answer

A)  low commodity prices 
B)  large payments on debt 
C)  low tourism revenues 
D)  high commodity prices 
E)  low remittances 
A)  low commodity prices 
B)  large payments on debt 
C)  low tourism revenues 
D)  high commodity prices 
E)  low remittances

Question 18

Why would a black market or foreign exchange exist?

Accepted Answer

A black market or foreign exchange might

Question 19

Which nation uses the U.S. dollar as its currency?

Accepted Answer

A)  Mexico 
B)  Guatemala 
C)  Brazil 
D)  Chile 
E)  Ecuador 
A)  Mexico 
B)  Guatemala 
C)  Brazil 
D)  Chile 
E)  Ecuador

Question 20

Describe the "fear of floating". How does it apply to Latin America?

Accepted Answer

The "fear of floating" refers to the rel

The exchange rate observed in the market is known as what?

A record of the difference between the holding of foreign assets by domestic residents and domestic assets by foreign residents is known as:

Which of the following is associated with fixed exchange rates?

Exchange controls plus high inflation tends to produce:

If Bolivia decides to fix their exchange rate but does not have enough foreign exchange (dollars) to intervene in the foreign exchange market, then they might institute a system of:

It is common for Latin American countries to have a _ for their balances of trade, and a _ for their current account balance.

Describe Latin America's history of exchange rate systems.

If there is a black market in foreign exchange, then what is likely to be the case?

In a fixed exchange rate system, a country would accumulate reserves when the current account is in _ and use these reserves during period when the country has a current account balance in __.

The theory that exchange rates are related to difference in the level of prices between countries is known as:

Central bank buying and selling of foreign exchange to influence the exchange rate is known as:

What is not included in the current account?

Which of the following would be the most volatile component of the current account in Latin America?

Attempting to influence the exchange rate by buying or selling foreign exchange is known as _____ in the foreign exchange market.

Buying and selling of foreign exchange to influence the exchange rate is referred to as:

Higher commodity prices show up in:

Which of the following would be related to a surplus in the current account balance?

Why would a black market or foreign exchange exist?

Which nation uses the U.S. dollar as its currency?

Describe the "fear of floating". How does it apply to Latin America?

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Latin American Trade Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

Exam 8: Exchange-Rate Policy

The exchange rate observed in the market is known as what?

A record of the difference between the holding of foreign assets by domestic residents and domestic assets by foreign residents is known as:

Which of the following is associated with fixed exchange rates?

Exchange controls plus high inflation tends to produce:

If Bolivia decides to fix their exchange rate but does not have enough foreign exchange (dollars) to intervene in the foreign exchange market, then they might institute a system of:

It is common for Latin American countries to have a _____ for their balances of trade, and a _____ for their current account balance.

Describe Latin America's history of exchange rate systems.

If there is a black market in foreign exchange, then what is likely to be the case?

In a fixed exchange rate system, a country would accumulate reserves when the current account is in _____ and use these reserves during period when the country has a current account balance in ______.

The theory that exchange rates are related to difference in the level of prices between countries is known as:

Central bank buying and selling of foreign exchange to influence the exchange rate is known as:

What is not included in the current account?

Which of the following would be the most volatile component of the current account in Latin America?

Attempting to influence the exchange rate by buying or selling foreign exchange is known as _____ in the foreign exchange market.

Buying and selling of foreign exchange to influence the exchange rate is referred to as:

Higher commodity prices show up in:

Which of the following would be related to a surplus in the current account balance?

Why would a black market or foreign exchange exist?

Which nation uses the U.S. dollar as its currency?

Describe the "fear of floating". How does it apply to Latin America?

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Latin American Trade Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

It is common for Latin American countries to have a _ for their balances of trade, and a _ for their current account balance.

In a fixed exchange rate system, a country would accumulate reserves when the current account is in _ and use these reserves during period when the country has a current account balance in __.