Exam 13: Exchange Rates and the Open Economy

In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the __ and affects net exports by changing the _.

(Multiple Choice)

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Question 21

Tight monetary policy ___ interest rates which _ the demand for a currency and ___ the fundamental value of the exchange rate.

(Multiple Choice)

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Question 22

Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $0.50 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either _ domestic interest rates, or ____the supply of international reserves by purchasing New Pesos

(Multiple Choice)

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Question 23

Suppose the price of gold is $300 per ounce in the United States and 2,400 pesos per ounce in Mexico. If purchasing power parity holds then, if the price of oil is $25 per barrel in the United States, the price of oil is ______ pesos per barrel in Mexico.

(Multiple Choice)

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Question 24

Holding all else constant, an increase in the real interest rate on Mexican assets will the supply for dollars in the foreign exchange market and the equilibrium Mexican peso/U.S. dollar exchange rate.

(Multiple Choice)

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Question 25

Based on this figure, if the krone exchange rate is fixed at $0.09 dollars per krone, the krone is ______.

(Multiple Choice)

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Question 26

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

(Multiple Choice)

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Question 27

A country will have a balance-of- payments surplus when its exchange rate:

(Multiple Choice)

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Question 28

If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it:

(Multiple Choice)

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Question 29

If the nominal exchange rate is 4 Israeli shekels per U.S. dollar, and 0.178 Jordanian dinars per Israeli shekel, then there are ______ Jordanian dinars per U.S. dollar.

(Multiple Choice)

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Question 30

The demand for the Franconian franc in the foreign exchange market equals 14,000 - 3,000e and the supply of francs in the foreign exchange market equals 2,000 + 2,000e, where e is the nominal exchange rate expressed in U.S. dollars per franc. If the franc is fixed at 2 U.S. dollars per franc, then to maintain this fixed rate Franconia's international reserves must:

(Multiple Choice)

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Question 31

U.S. firms wishing to purchase European goods and services are ______ the foreign exchange market.

(Multiple Choice)

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Question 32

Holding all else constant, if the U.S. government restricts capital outflows, then the equilibrium value of the U.S. dollar will:

(Multiple Choice)

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Question 33

A currency depreciation is a(n):

(Multiple Choice)

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Question 34

The gold standard is an example of a ______ exchange rate system.

(Multiple Choice)

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Question 35

A decrease in the value of a currency relative to other currencies is called a(n):

(Multiple Choice)

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Question 36

A decrease in the real exchange rate will tend to exports and to imports.

(Multiple Choice)

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Question 37

The net decline in a country's stock of international reserves over a year is called a(n):

(Multiple Choice)

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Question 38

Based on this figure, in order to maintain an exchange rate of $0.15 dollars per Norwegian krone, the Norwegian government will have to spend (in dollars)_____ worth of international reserves per period.

(Multiple Choice)

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Question 39

Based on this figure, if the official fixed value of krone is fixed at $0.15 per krone, then the Norwegian krone is and the international reserves of Norway will __ krone per period.

(Multiple Choice)

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Question 40

Showing 21 - 40 of 168

In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the __ and affects net exports by changing the _.

Tight monetary policy ___ interest rates which _ the demand for a currency and ___ the fundamental value of the exchange rate.

Suppose the price of gold is $300 per ounce in the United States and 2,400 pesos per ounce in Mexico. If purchasing power parity holds then, if the price of oil is $25 per barrel in the United States, the price of oil is ______ pesos per barrel in Mexico.

Holding all else constant, an increase in the real interest rate on Mexican assets will the supply for dollars in the foreign exchange market and the equilibrium Mexican peso/U.S. dollar exchange rate.

Based on this figure, if the krone exchange rate is fixed at $0.09 dollars per krone, the krone is ______.

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

A country will have a balance-of- payments surplus when its exchange rate:

If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it:

If the nominal exchange rate is 4 Israeli shekels per U.S. dollar, and 0.178 Jordanian dinars per Israeli shekel, then there are ______ Jordanian dinars per U.S. dollar.

U.S. firms wishing to purchase European goods and services are ______ the foreign exchange market.

Holding all else constant, if the U.S. government restricts capital outflows, then the equilibrium value of the U.S. dollar will:

A currency depreciation is a(n):

The gold standard is an example of a ______ exchange rate system.

A decrease in the value of a currency relative to other currencies is called a(n):

A decrease in the real exchange rate will tend to exports and to imports.

The net decline in a country's stock of international reserves over a year is called a(n):

Based on this figure, in order to maintain an exchange rate of $0.15 dollars per Norwegian krone, the Norwegian government will have to spend (in dollars)_____ worth of international reserves per period.

Based on this figure, if the official fixed value of krone is fixed at $0.15 per krone, then the Norwegian krone is and the international reserves of Norway will __ krone per period.

Thinking Like an Economist

Supply and Demand

International Trade and Trade Policy

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: GDP, Unemployment, and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money, The Federal Reserve, and Global Financial Markets

Short-Term Economic Fluctuations and Fiscal Policy

Stabilizing the Economy: The Role of the Fed

Inflation and Aggregate Supply

Filters

Exam 13: Exchange Rates and the Open Economy

In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the ______ and affects net exports by changing the _____.

Tight monetary policy _____ interest rates which _____ the demand for a currency and _____ the fundamental value of the exchange rate.

Suppose the price of gold is $300 per ounce in the United States and 2,400 pesos per ounce in Mexico. If purchasing power parity holds then, if the price of oil is $25 per barrel in the United States, the price of oil is ______ pesos per barrel in Mexico.

Holding all else constant, an increase in the real interest rate on Mexican assets will ______ the supply for dollars in the foreign exchange market and ______ the equilibrium Mexican peso/U.S. dollar exchange rate.

Based on this figure, if the krone exchange rate is fixed at $0.09 dollars per krone, the krone is ______.

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

A country will have a balance-of- payments surplus when its exchange rate:

If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it:

If the nominal exchange rate is 4 Israeli shekels per U.S. dollar, and 0.178 Jordanian dinars per Israeli shekel, then there are ______ Jordanian dinars per U.S. dollar.

U.S. firms wishing to purchase European goods and services are ______ the foreign exchange market.

Holding all else constant, if the U.S. government restricts capital outflows, then the equilibrium value of the U.S. dollar will:

A currency depreciation is a(n):

The gold standard is an example of a ______ exchange rate system.

A decrease in the value of a currency relative to other currencies is called a(n):

A decrease in the real exchange rate will tend to ______ exports and to ______ imports.

The net decline in a country's stock of international reserves over a year is called a(n):

Based on this figure, in order to maintain an exchange rate of $0.15 dollars per Norwegian krone, the Norwegian government will have to spend (in dollars)_____ worth of international reserves per period.

Based on this figure, if the official fixed value of krone is fixed at $0.15 per krone, then the Norwegian krone is ____ and the international reserves of Norway will ______ krone per period.

Thinking Like an Economist

Supply and Demand

International Trade and Trade Policy

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: GDP, Unemployment, and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money, The Federal Reserve, and Global Financial Markets

Short-Term Economic Fluctuations and Fiscal Policy

Stabilizing the Economy: The Role of the Fed

Inflation and Aggregate Supply

Filters

In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the __ and affects net exports by changing the _.

Tight monetary policy ___ interest rates which _ the demand for a currency and ___ the fundamental value of the exchange rate.

Holding all else constant, an increase in the real interest rate on Mexican assets will the supply for dollars in the foreign exchange market and the equilibrium Mexican peso/U.S. dollar exchange rate.

A decrease in the real exchange rate will tend to exports and to imports.

Based on this figure, if the official fixed value of krone is fixed at $0.15 per krone, then the Norwegian krone is and the international reserves of Norway will __ krone per period.