Question 1

To defend a pegged exchange rate that overvalues its currency,a country could:

Accepted Answer

A)  Discourage commodity exports 
B)  Encourage commodity imports 
C)  Purchase its own currency in international markets 
D)  Sell its own currency in international markets 
A)  Discourage commodity exports 
B)  Encourage commodity imports 
C)  Purchase its own currency in international markets 
D)  Sell its own currency in international markets

Question 2

Under adjustable pegged exchange rates,if the rate of inflation in the United States exceeds the rate of inflation of its trading partners:

Accepted Answer

A)  U.S.exports tend to rise and imports tend to fall 
B)  U.S.imports tend to rise and exports tend to fall 
C)  U.S.foreign exchange reserves tend to rise 
D)  U.S.foreign exchange reserves remain constant 
A)  U.S.exports tend to rise and imports tend to fall 
B)  U.S.imports tend to rise and exports tend to fall 
C)  U.S.foreign exchange reserves tend to rise 
D)  U.S.foreign exchange reserves remain constant

Question 3

Suppose Sweden's inflation rate is less than that of its trading partner.Under a floating exchange rate system,Sweden would experience a:

Accepted Answer

A)  Appreciation in its currency 
B)  Depreciation in its currency 
C)  Fall in the level of its exports 
D)  Rise in the level of its imports 
A)  Appreciation in its currency 
B)  Depreciation in its currency 
C)  Fall in the level of its exports 
D)  Rise in the level of its imports

Question 4

The exchange-rate system that best characterizes the present international monetary arrangement used by industrialized countries is:

Accepted Answer

A)  Freely fluctuating exchange rates 
B)  Adjustable pegged exchange rates 
C)  Managed floating exchange rates 
D)  Pegged or fixed exchange rates 
A)  Freely fluctuating exchange rates 
B)  Adjustable pegged exchange rates 
C)  Managed floating exchange rates 
D)  Pegged or fixed exchange rates

Question 5

Figure 15.1 shows the market for the Swiss franc.In the figure,the initial demand for marks and supply of marks are depicted by DS1U1B10S1U1B0 and SS1U1B10S1U1B0 respectively.
Figure 15.1.The Market for the Swiss Franc  
-Refer to Figure 15.1.Suppose that the United States increases its imports from Switzerland,resulting in a rise in the demand for francs from D0 to D1.Under a floating exchange rate system,the new equilibrium exchange rate would be:

Accepted Answer

A)  $0.40 per franc 
B)  $0.50 per franc 
C)  $0.60 per franc 
D)  $0.70 per franc 
A)  $0.40 per franc 
B)  $0.50 per franc 
C)  $0.60 per franc 
D)  $0.70 per franc

Question 6

To temporarily offset a depreciation in the dollar's exchange value,the Federal Reserve could ____ the U.S.money supply which would promote a (an)____ in U.S.interest rates and a (an)____ in investment flows to the United States.

Accepted Answer

A)  Increase,decrease,decrease 
B)  Increase,increase,increase 
C)  Decrease,decrease,increase 
D)  Decrease,increase,increase 
A)  Increase,decrease,decrease 
B)  Increase,increase,increase 
C)  Decrease,decrease,increase 
D)  Decrease,increase,increase

Question 7

The Bretton Woods Agreement of 1944 established a monetary system based on:

Accepted Answer

A)  Gold and managed floating exchange rates 
B)  Gold and adjustable pegged exchange rates 
C)  Special Drawing Rights and managed floating exchange rates 
D)  Special Drawing Rights and adjustable pegged exchange rates 
A)  Gold and managed floating exchange rates 
B)  Gold and adjustable pegged exchange rates 
C)  Special Drawing Rights and managed floating exchange rates 
D)  Special Drawing Rights and adjustable pegged exchange rates

To defend a pegged exchange rate that overvalues its currency,a country could:

Under adjustable pegged exchange rates,if the rate of inflation in the United States exceeds the rate of inflation of its trading partners:

Suppose Sweden's inflation rate is less than that of its trading partner.Under a floating exchange rate system,Sweden would experience a:

The exchange-rate system that best characterizes the present international monetary arrangement used by industrialized countries is:

To temporarily offset a depreciation in the dollar's exchange value,the Federal Reserve could the U.S.money supply which would promote a (an) in U.S.interest rates and a (an) in investment flows to the United States.

The Bretton Woods Agreement of 1944 established a monetary system based on:

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 15: Exchange-Rate Systems and Currency Crises

To defend a pegged exchange rate that overvalues its currency,a country could:

Under adjustable pegged exchange rates,if the rate of inflation in the United States exceeds the rate of inflation of its trading partners:

Suppose Sweden's inflation rate is less than that of its trading partner.Under a floating exchange rate system,Sweden would experience a:

The exchange-rate system that best characterizes the present international monetary arrangement used by industrialized countries is:

To temporarily offset a depreciation in the dollar's exchange value,the Federal Reserve could ____ the U.S.money supply which would promote a (an)____ in U.S.interest rates and a (an)____ in investment flows to the United States.

The Bretton Woods Agreement of 1944 established a monetary system based on:

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

To temporarily offset a depreciation in the dollar's exchange value,the Federal Reserve could the U.S.money supply which would promote a (an) in U.S.interest rates and a (an) in investment flows to the United States.