Question 1

With exchange controls, the government becomes _____ with respect to foreign exchange.

Accepted Answer

A)  a monopsonist 
B)  a monopolist 
C)  only a buyer 
D)  only a seller 
E)  indifferent 
A)  a monopsonist 
B)  a monopolist 
C)  only a buyer 
D)  only a seller 
E)  indifferent

Question 2

Exchange rate shocks are much more common in developed countries.

Accepted Answer

A) True 
 B)False

Question 3

Expansionary monetary and fiscal policies may be optimal for internal balance but might create:

Accepted Answer

A)  an overvalued exchange rate. 
B)  a balance of payments surplus. 
C)  low inflation and a trade surplus. 
D)  low unemployment and a trade surplus. 
E)  exchange rate appreciaton. 
A)  an overvalued exchange rate. 
B)  a balance of payments surplus. 
C)  low inflation and a trade surplus. 
D)  low unemployment and a trade surplus. 
E)  exchange rate appreciaton.

Question 4

An exchange rate shock will tend to cause a _____ shift of the _____ curve.

Accepted Answer

A)  rightward, AS 
B)  leftward, AS 
C)  increase, AD 
D)  large, AD 
E)  small, AD 
A)  rightward, AS 
B)  leftward, AS 
C)  increase, AD 
D)  large, AD 
E)  small, AD

Question 5

If selling foreign exchange is not sterilized, then the money supply could fall.

Accepted Answer

A) True 
 B)False

Question 6

Capital will tend to move from capital-abundant countries to capital-scarce countries.

Accepted Answer

A) True 
 B)False

Question 7

The Bretton Woods system broke up in the:

Accepted Answer

A)  early 1940s. 
B)  late 1950s. 
C)  early 1960s. 
D)  early 1970s. 
E)  early 1980s. 
A)  early 1940s. 
B)  late 1950s. 
C)  early 1960s. 
D)  early 1970s. 
E)  early 1980s.

Question 8

If outflows of foreign exchange exceed inflows, then the stock of foreign reserves will rise.

Accepted Answer

A) True 
 B)False

Question 9

An exchange rate shock is usually caused by a _____ in the _____ of foreign exchange.

Accepted Answer

A)  decrease, supply 
B)  increase, supply 
C)  decrease, demand 
D)  consistency, demand 
E)  disruption, demand 
A)  decrease, supply 
B)  increase, supply 
C)  decrease, demand 
D)  consistency, demand 
E)  disruption, demand

Question 10

Any country that has foreign debt eventually will default.

Accepted Answer

A) True 
 B)False

Question 11

Increases in the price level (P) and real GDP (Y) would tend to decrease the demand for foreign exchange.

Accepted Answer

A) True 
 B)False

Question 12

An exchange rate shock usually leads to the depreciation of the currency.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a method of fixing the exchange rate?

Accepted Answer

A)  nonintervention in the foreign exchange market 
B)  exchange controls 
C)  sterilization 
D)  monetization 
E)  None of the above 
A)  nonintervention in the foreign exchange market 
B)  exchange controls 
C)  sterilization 
D)  monetization 
E)  None of the above

Question 14

If a country does not have adequate amounts of foreign exchange to support intervention in the foreign exchange market then it may borrow foreign exchange and increase the country's:

Accepted Answer

A)  equity. 
B)  debt. 
C)  sterilization. 
D)  FDI. 
E)  money supply. 
A)  equity. 
B)  debt. 
C)  sterilization. 
D)  FDI. 
E)  money supply.

Question 15

What factors influence the ability of a country to pay its foreign debt?

Accepted Answer

Several factors can influence a country'

Question 16

A MNC building a plant in a developing country is an example of debt.

Accepted Answer

A) True 
 B)False

Question 17

The breakup of the Bretton Woods system made it much clearer what the mission of the IMF was.

Accepted Answer

A) True 
 B)False

Question 18

The total stock of debt for developing countries is:

Accepted Answer

A)  $100 billion. 
B)  $500 billion. 
C)  $1 trillion. 
D)  $1.5 trillion. 
E)  $2.7 trillion. 
A)  $100 billion. 
B)  $500 billion. 
C)  $1 trillion. 
D)  $1.5 trillion. 
E)  $2.7 trillion.

Question 19

The IMF is a very popular institution in developing countries.

Accepted Answer

A) True 
 B)False

Question 20

If intervention in the foreign exchange market is not _____ then the intervention could affect the domestic money supply.

Accepted Answer

A)  sterilized 
B)  monetized 
C)  controlled 
D)  sanctioned 
E)  flexible 
A)  sterilized 
B)  monetized 
C)  controlled 
D)  sanctioned 
E)  flexible

With exchange controls, the government becomes _____ with respect to foreign exchange.

Exchange rate shocks are much more common in developed countries.

Expansionary monetary and fiscal policies may be optimal for internal balance but might create:

An exchange rate shock will tend to cause a _ shift of the _ curve.

If selling foreign exchange is not sterilized, then the money supply could fall.

Capital will tend to move from capital-abundant countries to capital-scarce countries.

The Bretton Woods system broke up in the:

If outflows of foreign exchange exceed inflows, then the stock of foreign reserves will rise.

An exchange rate shock is usually caused by a _ in the _ of foreign exchange.

Any country that has foreign debt eventually will default.

Increases in the price level (P) and real GDP (Y) would tend to decrease the demand for foreign exchange.

An exchange rate shock usually leads to the depreciation of the currency.

Which of the following is a method of fixing the exchange rate?

If a country does not have adequate amounts of foreign exchange to support intervention in the foreign exchange market then it may borrow foreign exchange and increase the country's:

What factors influence the ability of a country to pay its foreign debt?

A MNC building a plant in a developing country is an example of debt.

The breakup of the Bretton Woods system made it much clearer what the mission of the IMF was.

The total stock of debt for developing countries is:

The IMF is a very popular institution in developing countries.

If intervention in the foreign exchange market is not _____ then the intervention could affect the domestic money supply.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Filters

Exam 20: Capital Flows and the Developing Countries

With exchange controls, the government becomes _____ with respect to foreign exchange.

Exchange rate shocks are much more common in developed countries.

Expansionary monetary and fiscal policies may be optimal for internal balance but might create:

An exchange rate shock will tend to cause a _____ shift of the _____ curve.

If selling foreign exchange is not sterilized, then the money supply could fall.

Capital will tend to move from capital-abundant countries to capital-scarce countries.

The Bretton Woods system broke up in the:

If outflows of foreign exchange exceed inflows, then the stock of foreign reserves will rise.

An exchange rate shock is usually caused by a _____ in the _____ of foreign exchange.

Any country that has foreign debt eventually will default.

Increases in the price level (P) and real GDP (Y) would tend to decrease the demand for foreign exchange.

An exchange rate shock usually leads to the depreciation of the currency.

Which of the following is a method of fixing the exchange rate?

If a country does not have adequate amounts of foreign exchange to support intervention in the foreign exchange market then it may borrow foreign exchange and increase the country's:

What factors influence the ability of a country to pay its foreign debt?

A MNC building a plant in a developing country is an example of debt.

The breakup of the Bretton Woods system made it much clearer what the mission of the IMF was.

The total stock of debt for developing countries is:

The IMF is a very popular institution in developing countries.

If intervention in the foreign exchange market is not _____ then the intervention could affect the domestic money supply.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Filters

An exchange rate shock will tend to cause a _ shift of the _ curve.

An exchange rate shock is usually caused by a _ in the _ of foreign exchange.