Exam 13: Automatic Adjustments With Flexible and Fixed Exchange Rates

With a fixed exchange rate system,a nation cannot conduct effective monetary policy.

Which exchange system operated from the end of World War II to 1971?

The _____ effect explains that,after a depreciation of a nation's currency,the trade balance will worsen for a period of time and then improve.

The gold standard was operated in the US until 1971.

A depreciation of the US dollar makes US products __________________ for European residents,because European residents need _______ euros to purchase each dollar.

_____________ represents the fixed exchange rates defined by the gold content of each nation's currency.

When a(n)___________________ condition is present,a disturbance from the equilibrium exchange rate gives rise to automatic forces that push the exchange rate back toward the equilibrium rate.

Assume £1 (pounds sterling)gold coin in the United Kingdom contains 113.0016 grains of pure gold,while the $1 gold coin in the US contains 23.22 grains.If the cost of shipping £1 from London to New York was 3 cents,the gold export point of the UK pound is _____,and the gold import point is ________.

The ________________ explains why it may take up to two years for a currency depreciation to make significant reductions in a nation's trade deficit.

In a closed economy without a government sector,the equilibrium level of income is found where income is equal to

The closed economy multiplier is equal to _____________.

Suppose a £1 gold coin in the UK contained 115 grains of pure gold,while a $1 gold coin in the US contained 25 grains.What is the mint parity exchange rate between pounds and dollars?

The US demand for euros is always___________.

When depreciation of the US dollar occurs compared to the euro,US residents will find European imports __________,because US residents need _________ dollars to purchase each euro.

The increase in imports induced by a dollar increase in income is called the ________________.