Question 1

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

Accepted Answer

A)  0.69 
B)  1.44 
C)  1.69 
D)  2.44 
A)  0.69 
B)  1.44 
C)  1.69 
D)  2.44

Question 2

The International Monetary Fund was established to manage the Bretton Woods System.

Accepted Answer

A) True 
 B)False

Question 3

Under the Bretton Woods agreements,

Accepted Answer

A)  the IMF was created to punish countries that did not maintain fixed exchange rates. 
B)  a system of fixed exchange rates based on gold was established. 
C)  each country agreed to buy and sell its currency to maintain a fixed exchange rate. 
D)  All of the above are correct. 
A)  the IMF was created to punish countries that did not maintain fixed exchange rates. 
B)  a system of fixed exchange rates based on gold was established. 
C)  each country agreed to buy and sell its currency to maintain a fixed exchange rate. 
D)  All of the above are correct.

Question 4

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

Accepted Answer

A) True 
 B)False

Question 5

To try and stave off a devaluation of its fixed currency,Argentina was required to

Accepted Answer

A)  lower interest rates. 
B)  reduce tax levels. 
C)  increase their money supplies. 
D)  increase interest rates. 
A)  lower interest rates. 
B)  reduce tax levels. 
C)  increase their money supplies. 
D)  increase interest rates.

Question 6

International trade under a floating exchange rate system

Accepted Answer

A)  has been trouble-free owing to the stabilizing role of speculators in the currency markets. 
B)  has suffered from so many problems that the volume of trade has declined significantly. 
C)  exposes businesses to unavoidable risks when exchange rates change. 
D)  has been subject to wild runs on currencies that were on the verge of devaluation. 
A)  has been trouble-free owing to the stabilizing role of speculators in the currency markets. 
B)  has suffered from so many problems that the volume of trade has declined significantly. 
C)  exposes businesses to unavoidable risks when exchange rates change. 
D)  has been subject to wild runs on currencies that were on the verge of devaluation.

Question 7

The Bretton Woods agreements

Accepted Answer

A)  established a system of fixed exchange rates based on the free convertibility of the U.S.dollar into gold. 
B)  established a system of fixed exchange rates based on the gold standard. 
C)  permitted countries with a balance of payments deficit to make regular devaluations of their currencies. 
D)  established GATT to police and manage exchange rates. 
A)  established a system of fixed exchange rates based on the free convertibility of the U.S.dollar into gold. 
B)  established a system of fixed exchange rates based on the gold standard. 
C)  permitted countries with a balance of payments deficit to make regular devaluations of their currencies. 
D)  established GATT to police and manage exchange rates.

Question 8

In the winter of 2001-2002,Argentina's overvalued currency reflected a(n)

Accepted Answer

A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  surplus of exports over imports. 
D)  excess demand for Thai currency. 
A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  surplus of exports over imports. 
D)  excess demand for Thai currency.

Question 9

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

Accepted Answer

A) True 
 B)False

Question 10

Why did the Bretton Woods system ultimately break down?

Accepted Answer

A)  The refusal of OPEC countries to accept payment for oil in gold. 
B)  The refusal of surplus countries to devalue as required by law. 
C)  An inability to devalue the U.S.dollar despite chronic payments deficits. 
D)  An inability to adequately measure balance of payments surpluses and deficits. 
A)  The refusal of OPEC countries to accept payment for oil in gold. 
B)  The refusal of surplus countries to devalue as required by law. 
C)  An inability to devalue the U.S.dollar despite chronic payments deficits. 
D)  An inability to adequately measure balance of payments surpluses and deficits.

Question 11

As the U.S.dollar's foreign exchange value falls,we should expect to see

Accepted Answer

A)  more Americans travelling abroad. 
B)  American import levels rising. 
C)  more foreigners visiting the United States. 
D)  increased foreign investment by American firms. 
A)  more Americans travelling abroad. 
B)  American import levels rising. 
C)  more foreigners visiting the United States. 
D)  increased foreign investment by American firms.

Question 12

An important effect of foreign currency speculators is that

Accepted Answer

A)  they have consistently lost money and have left the market. 
B)  they have pushed exchange rates to wider extremes than most economists predicted. 
C)  they actually limit the volatility of exchange rate movements. 
D)  they have had no effect at all on exchange rate volatility. 
A)  they have consistently lost money and have left the market. 
B)  they have pushed exchange rates to wider extremes than most economists predicted. 
C)  they actually limit the volatility of exchange rate movements. 
D)  they have had no effect at all on exchange rate volatility.

Question 13

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

Accepted Answer

A)  increasing unemployment that accompanies foreign investment. 
B)  rapid outflows of funds that put pressure on exchange rates. 
C)  the deflation that accompanies inflows of foreign capital. 
D)  the inflation that accompanies outflows of foreign capital. 
A)  increasing unemployment that accompanies foreign investment. 
B)  rapid outflows of funds that put pressure on exchange rates. 
C)  the deflation that accompanies inflows of foreign capital. 
D)  the inflation that accompanies outflows of foreign capital.

Question 14

The chief cause of short-run changes in exchange rates is

Accepted Answer

A)  the world's political situation. 
B)  "hot money" chasing high interest rates. 
C)  changes in consumer tastes. 
D)  central bank interventions. 
A)  the world's political situation. 
B)  "hot money" chasing high interest rates. 
C)  changes in consumer tastes. 
D)  central bank interventions.

Question 15

The exchange rate is the price of one currency in terms of another.

Accepted Answer

A) True 
 B)False

Question 16

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Accepted Answer

A)  planned float 
B)  controlled float 
C)  flexible 
D)  dirty float 
A)  planned float 
B)  controlled float 
C)  flexible 
D)  dirty float

Question 17

Lately,the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

Accepted Answer

A)  managed-float; devalued 
B)  currency peg; depreciated 
C)  floating rate; revalued 
D)  currency peg; appreciated 
A)  managed-float; devalued 
B)  currency peg; depreciated 
C)  floating rate; revalued 
D)  currency peg; appreciated

Question 18

Assume that an economic boom occurs in the United States,so that the United States has a much higher growth rate than other nations.What will happen to the exchange rate of the U.S.dollar?

Accepted Answer

The boom in the United States will lead

Question 19

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Accepted Answer

A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium. 
A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium.

Question 20

Discuss the problems associated with the Bretton Woods system.

Accepted Answer

Under the Bretton Woods system,changes i

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

The International Monetary Fund was established to manage the Bretton Woods System.

Under the Bretton Woods agreements,

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

To try and stave off a devaluation of its fixed currency,Argentina was required to

International trade under a floating exchange rate system

The Bretton Woods agreements

In the winter of 2001-2002,Argentina's overvalued currency reflected a(n)

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

Why did the Bretton Woods system ultimately break down?

As the U.S.dollar's foreign exchange value falls,we should expect to see

An important effect of foreign currency speculators is that

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

The chief cause of short-run changes in exchange rates is

The exchange rate is the price of one currency in terms of another.

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Lately,the Chinese authorities seem to be backing away from and the Yuan has relative to the dollar.

Assume that an economic boom occurs in the United States,so that the United States has a much higher growth rate than other nations.What will happen to the exchange rate of the U.S.dollar?

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Discuss the problems associated with the Bretton Woods system.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

Exchange Rates and The Macroeconomy

Filters

Exam 19: The International Monetary System Order Or Disorder

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

The International Monetary Fund was established to manage the Bretton Woods System.

Under the Bretton Woods agreements,

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

To try and stave off a devaluation of its fixed currency,Argentina was required to

International trade under a floating exchange rate system

The Bretton Woods agreements

In the winter of 2001-2002,Argentina's overvalued currency reflected a(n)

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

Why did the Bretton Woods system ultimately break down?

As the U.S.dollar's foreign exchange value falls,we should expect to see

An important effect of foreign currency speculators is that

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

The chief cause of short-run changes in exchange rates is

The exchange rate is the price of one currency in terms of another.

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Lately,the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

Assume that an economic boom occurs in the United States,so that the United States has a much higher growth rate than other nations.What will happen to the exchange rate of the U.S.dollar?

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Discuss the problems associated with the Bretton Woods system.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

Exchange Rates and The Macroeconomy

Filters

Lately,the Chinese authorities seem to be backing away from and the Yuan has relative to the dollar.