Question 1

The open economy trilemma is that:

Accepted Answer

A)  fiscal policies, monetary policies, and direct controls cannot manage all macroeconomic problems. 
B)  a fixed exchange rate, unrestricted capital flows, and monetary independence cannot all be achieved at the same time. 
C)  unrestricted capital flows cannot be achieved when fiscal and monetary policies are being implemented. 
D)  monetary shocks, real shocks, and supply shocks all disturb long run macroeconomic equilibrium. 
A)  fiscal policies, monetary policies, and direct controls cannot manage all macroeconomic problems. 
B)  a fixed exchange rate, unrestricted capital flows, and monetary independence cannot all be achieved at the same time. 
C)  unrestricted capital flows cannot be achieved when fiscal and monetary policies are being implemented. 
D)  monetary shocks, real shocks, and supply shocks all disturb long run macroeconomic equilibrium.

Question 2

The policy of intervention in the foreign exchange market to smooth out short-run fluctuations in exchange rates is called:

Accepted Answer

A)  crawling peg 
B)  adjustable peg 
C)  leaning against the wind 
D)  managed float 
A)  crawling peg 
B)  adjustable peg 
C)  leaning against the wind 
D)  managed float

Question 3

Price discipline is:

Accepted Answer

A)  greater under a fixed than under a flexible exchange rate system 
B)  greater under a flexible than under a fixed exchange rate system 
C)  about the same under a fixed as under a flexible exchange rate system 
D)  is unrelated to the type of exchange rate system 
A)  greater under a fixed than under a flexible exchange rate system 
B)  greater under a flexible than under a fixed exchange rate system 
C)  about the same under a fixed as under a flexible exchange rate system 
D)  is unrelated to the type of exchange rate system

Question 4

What is a currency board?

Accepted Answer

Currency boards are the most extreme for

Question 5

A fixed exchange rate system without a band of allowed fluctuation would require the nation's monetary authorities to intervene in the foreign exchange market:

Accepted Answer

A)  never 
B)  seldom 
C)  constantly 
D)  we cannot say 
A)  never 
B)  seldom 
C)  constantly 
D)  we cannot say

Question 6

The most extreme form of an exchange rate peg is a

Accepted Answer

A)  currency board 
B)  flexible rate 
C)  floating rate 
D)  adjustable rate 
A)  currency board 
B)  flexible rate 
C)  floating rate 
D)  adjustable rate

Question 7

Everything else being the same,the volume of trade is likely to be:

Accepted Answer

A)  larger under a flexible than under a fixed exchange rate system 
B)  larger under a fixed than under a flexible exchange rate system 
C)  equal under a flexible and fixed exchange rate system 
D)  any of the above 
A)  larger under a flexible than under a fixed exchange rate system 
B)  larger under a fixed than under a flexible exchange rate system 
C)  equal under a flexible and fixed exchange rate system 
D)  any of the above

Question 8

Most economists believe that under "normal conditions" speculation:

Accepted Answer

A)  is stabilizing 
B)  is destabilizing 
C)  is neither stabilizing nor destabilizing 
D)  seldom occurs 
A)  is stabilizing 
B)  is destabilizing 
C)  is neither stabilizing nor destabilizing 
D)  seldom occurs

Question 9

International macroeconomic policy coordination has become more useful and essential in recent decades because:

Accepted Answer

A)  the interdependence among countries has increased 
B)  the volume of trade has grown more rapidly than GNP 
C)  of the large increase in international capital flows 
D)  all of the above 
A)  the interdependence among countries has increased 
B)  the volume of trade has grown more rapidly than GNP 
C)  of the large increase in international capital flows 
D)  all of the above

Question 10

The following established the conditions under which and European Union member nation could join the currency union:

Accepted Answer

A)  The Treaty of Rome 
B)  The Single European Act 
C)  The Maastricht Treaty 
D)  The Treaty of Paris 
A)  The Treaty of Rome 
B)  The Single European Act 
C)  The Maastricht Treaty 
D)  The Treaty of Paris

The open economy trilemma is that:

The policy of intervention in the foreign exchange market to smooth out short-run fluctuations in exchange rates is called:

Price discipline is:

What is a currency board?

A fixed exchange rate system without a band of allowed fluctuation would require the nation's monetary authorities to intervene in the foreign exchange market:

The most extreme form of an exchange rate peg is a

Everything else being the same,the volume of trade is likely to be:

Most economists believe that under "normal conditions" speculation:

International macroeconomic policy coordination has become more useful and essential in recent decades because:

The following established the conditions under which and European Union member nation could join the currency union:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

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Exam 20: Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The open economy trilemma is that:

The policy of intervention in the foreign exchange market to smooth out short-run fluctuations in exchange rates is called:

Price discipline is:

What is a currency board?

A fixed exchange rate system without a band of allowed fluctuation would require the nation's monetary authorities to intervene in the foreign exchange market:

The most extreme form of an exchange rate peg is a

Everything else being the same,the volume of trade is likely to be:

Most economists believe that under "normal conditions" speculation:

International macroeconomic policy coordination has become more useful and essential in recent decades because:

The following established the conditions under which and European Union member nation could join the currency union:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters