Question 1

When a nation realizes external balance

Accepted Answer

A)  it can have a current account deficit 
B)  it can have a current account surplus 
C)  it has neither a current account deficit nor a current account surplus 
D)  Both a and b 
A)  it can have a current account deficit 
B)  it can have a current account surplus 
C)  it has neither a current account deficit nor a current account surplus 
D)  Both a and b

Question 2

A nation experiences overall balance if it achieves:

Accepted Answer

A)  Balance-of-payments equilibrium,full employment,and price stability 
B)  Balance-of-payments equilibrium,maximum productivity,and price stability 
C)  Full employment,price stability and no change in its money supply 
D)  Full employment,price stability,and maximum productivity 
A)  Balance-of-payments equilibrium,full employment,and price stability 
B)  Balance-of-payments equilibrium,maximum productivity,and price stability 
C)  Full employment,price stability and no change in its money supply 
D)  Full employment,price stability,and maximum productivity

Question 3

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Accepted Answer

A)  Plaza Agreement of 1985 
B)  Louvre Accord of 1987 
C)  Bonn Summit of 1978 
D)  Tokyo Summit of 1962 
A)  Plaza Agreement of 1985 
B)  Louvre Accord of 1987 
C)  Bonn Summit of 1978 
D)  Tokyo Summit of 1962

Question 4

Refer to Exhibit 16.1.To help drive the dollar's exchange value downward,the Federal Reserve would:

Accepted Answer

A)  Reduce taxes 
B)  Increase taxes 
C)  Decrease the money supply 
D)  Increase the money supply 
A)  Reduce taxes 
B)  Increase taxes 
C)  Decrease the money supply 
D)  Increase the money supply

Question 5

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

Accepted Answer

A) True 
 B)False

Question 6

Given an open economy with high capital mobility,all of the following statements are true except:

Accepted Answer

A)  fiscal policy is strengthened under fixed exchange rates 
B)  monetary policy is weakened under fixed exchange rates 
C)  monetary policy is strengthened under floating exchange rates 
D)  fiscal policy is strengthened under floating exchange rates 
A)  fiscal policy is strengthened under fixed exchange rates 
B)  monetary policy is weakened under fixed exchange rates 
C)  monetary policy is strengthened under floating exchange rates 
D)  fiscal policy is strengthened under floating exchange rates

Question 7

Suppose that Brazil faces domestic inflation and a current account deficit.Should Brazil devalue its currency,one would expect the:

Accepted Answer

A)  Inflation to become more severe--deficit to become less severe 
B)  Inflation to become more severe--deficit to become more severe 
C)  Inflation to become less severe--deficit to become less severe 
D)  Inflation to become less severe--deficit to become more severe 
A)  Inflation to become more severe--deficit to become less severe 
B)  Inflation to become more severe--deficit to become more severe 
C)  Inflation to become less severe--deficit to become less severe 
D)  Inflation to become less severe--deficit to become more severe

Question 8

Was the Plaza Agreement of 1985 a success?

Accepted Answer

The Plaza Agreement was generally viewed

Question 9

Fiscal and monetary policies are generally used to combat domestic recession and inflation and have secondary effects on the balance of payments.

Accepted Answer

A) True 
 B)False

Question 10

What happens to the balance of payments under a fixed exchange rate system,when expansionary or contractionary monetary policy is used?

Accepted Answer

Under a fixed exchange rate system,the b

Question 11

With a fixed exchange rate system,internal balance is most effectively achieved by using

Accepted Answer

A)  Expansionary monetary policy to combat recession 
B)  Expansionary fiscal policy to combat inflation 
C)  Contractionary monetary policy to combat recession 
D)  Contractionary fiscal policy to combat recession 
A)  Expansionary monetary policy to combat recession 
B)  Expansionary fiscal policy to combat inflation 
C)  Contractionary monetary policy to combat recession 
D)  Contractionary fiscal policy to combat recession

Question 12

The Bonn Summit of 1978 and Plaza Accord of 1985 are examples of international policy coordination.

Accepted Answer

A) True 
 B)False

Question 13

Changes in a country's net exports,investment spending,or government spending will cause its aggregate demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 14

The goals of the Plaza Agreement of 1985 were to combat protectionism in the U.S.Congress,promote world economic expansion by stimulating demand in Germany and Japan,and to ease the burden of the U.S.debt service.

Accepted Answer

A) True 
 B)False

Question 15

An expenditure-reducing policy would consist of a decrease in:

Accepted Answer

A)  The par value of a currency 
B)  Government expenditures 
C)  Import duties 
D)  Business or household taxes 
A)  The par value of a currency 
B)  Government expenditures 
C)  Import duties 
D)  Business or household taxes

Question 16

What is international economic policy coordination?

Accepted Answer

International economic policy coordinati

Question 17

Direct controls may take the form of

Accepted Answer

A)  Tariffs 
B)  Export subsidies 
C)  Export quotas 
D)  All of the above 
A)  Tariffs 
B)  Export subsidies 
C)  Export quotas 
D)  All of the above

Question 18

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

Accepted Answer

A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy 
A)  Expansionary fiscal policy 
B)  Expansionary monetary policy 
C)  Contractionary fiscal policy 
D)  Contractionary monetary policy

Question 19

Currency devaluation and revaluation are considered to be expenditure-changing policies since they alter a country's aggregate demand for goods and services.

Accepted Answer

A) True 
 B)False

Question 20

What policy instrument should be used when demand-pull inflation exists?

Accepted Answer

With demand-pull inflation,int

When a nation realizes external balance

A nation experiences overall balance if it achieves:

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Refer to Exhibit 16.1.To help drive the dollar's exchange value downward,the Federal Reserve would:

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

Given an open economy with high capital mobility,all of the following statements are true except:

Suppose that Brazil faces domestic inflation and a current account deficit.Should Brazil devalue its currency,one would expect the:

Was the Plaza Agreement of 1985 a success?

Fiscal and monetary policies are generally used to combat domestic recession and inflation and have secondary effects on the balance of payments.

What happens to the balance of payments under a fixed exchange rate system,when expansionary or contractionary monetary policy is used?

With a fixed exchange rate system,internal balance is most effectively achieved by using

The Bonn Summit of 1978 and Plaza Accord of 1985 are examples of international policy coordination.

Changes in a country's net exports,investment spending,or government spending will cause its aggregate demand curve to shift.

The goals of the Plaza Agreement of 1985 were to combat protectionism in the U.S.Congress,promote world economic expansion by stimulating demand in Germany and Japan,and to ease the burden of the U.S.debt service.

An expenditure-reducing policy would consist of a decrease in:

What is international economic policy coordination?

Direct controls may take the form of

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

Currency devaluation and revaluation are considered to be expenditure-changing policies since they alter a country's aggregate demand for goods and services.

What policy instrument should be used when demand-pull inflation exists?

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

Exchange-Rate Systems and Currency Crises

International Banking: Reserves, Debt, and Risk

Filters

Exam 16: Macroeconomic Policy in an Open Economy

When a nation realizes external balance

A nation experiences overall balance if it achieves:

At the ____,the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the U.S.dollar's exchange value.

Refer to Exhibit 16.1.To help drive the dollar's exchange value downward,the Federal Reserve would:

When the economy is in deep recession or depression,it is operating on that portion of its aggregate supply curve that is horizontal.

Given an open economy with high capital mobility,all of the following statements are true except:

Suppose that Brazil faces domestic inflation and a current account deficit.Should Brazil devalue its currency,one would expect the:

Was the Plaza Agreement of 1985 a success?

Fiscal and monetary policies are generally used to combat domestic recession and inflation and have secondary effects on the balance of payments.

What happens to the balance of payments under a fixed exchange rate system,when expansionary or contractionary monetary policy is used?

With a fixed exchange rate system,internal balance is most effectively achieved by using

The Bonn Summit of 1978 and Plaza Accord of 1985 are examples of international policy coordination.

Changes in a country's net exports,investment spending,or government spending will cause its aggregate demand curve to shift.

The goals of the Plaza Agreement of 1985 were to combat protectionism in the U.S.Congress,promote world economic expansion by stimulating demand in Germany and Japan,and to ease the burden of the U.S.debt service.

An expenditure-reducing policy would consist of a decrease in:

What is international economic policy coordination?

Direct controls may take the form of

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

Currency devaluation and revaluation are considered to be expenditure-changing policies since they alter a country's aggregate demand for goods and services.

What policy instrument should be used when demand-pull inflation exists?

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

Exchange-Rate Systems and Currency Crises

International Banking: Reserves, Debt, and Risk

Filters