Question 1

If the U.S.purchases oil from Venezuela,what is the effect in the foreign exchange market?

Accepted Answer

A)  It will increase demand for U.S.dollars. 
B)  It will decrease demand for U.S.dollars. 
C)  It will increase supply of U.S.dollars. 
D)  It will decrease supply of U.S.dollars. 
A)  It will increase demand for U.S.dollars. 
B)  It will decrease demand for U.S.dollars. 
C)  It will increase supply of U.S.dollars. 
D)  It will decrease supply of U.S.dollars.

Question 2

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Accepted Answer

A)  balance on current account 
B)  balance on capital account 
C)  balance of merchandise trade 
D)  balance on long-term capital 
A)  balance on current account 
B)  balance on capital account 
C)  balance of merchandise trade 
D)  balance on long-term capital

Question 3

Exchange rates in what is termed the "medium run"

Accepted Answer

A)  will be altered by an economic upswing because consumers buy more goods including imports when disposable income goes up. 
B)  will be unaffected by economic changes in personal income or consumption spending. 
C)  will appreciate for a country having an economic boom when others are not. 
D)  All of the above are correct. 
A)  will be altered by an economic upswing because consumers buy more goods including imports when disposable income goes up. 
B)  will be unaffected by economic changes in personal income or consumption spending. 
C)  will appreciate for a country having an economic boom when others are not. 
D)  All of the above are correct.

Question 4

Fixed exchange rates are fixed by

Accepted Answer

A)  international speculators who manipulate the world's currencies. 
B)  international demand and supply. 
C)  national governments. 
D)  All of the above are correct. 
A)  international speculators who manipulate the world's currencies. 
B)  international demand and supply. 
C)  national governments. 
D)  All of the above are correct.

Question 5

If a country has a balance of payments deficit and wishes to maintain the fixed value of its currency,it will generally

Accepted Answer

A)  sell its own currency for foreign currencies. 
B)  buy its own currency with foreign reserves. 
C)  decrease taxes to increase domestic disposable income. 
D)  increase the money supply to keep interest rates down. 
A)  sell its own currency for foreign currencies. 
B)  buy its own currency with foreign reserves. 
C)  decrease taxes to increase domestic disposable income. 
D)  increase the money supply to keep interest rates down.

Question 6

A federal deficit that raises interest rates will,everything else being equal,

Accepted Answer

A)  lead to a dollar depreciation. 
B)  decrease imports. 
C)  reduce exports. 
D)  reduce the balance of trade deficit. 
A)  lead to a dollar depreciation. 
B)  decrease imports. 
C)  reduce exports. 
D)  reduce the balance of trade deficit.

Question 7

Figure 19-2  
-Of the graphs in Figure 19-2,where the broken line represents the fixed exchange rates,which one shows how a balance of payments deficit could be reduced through a recession in Japan?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 8

If a currency increases in value in response to market forces,this process is known as

Accepted Answer

A)  reflation. 
B)  revaluation. 
C)  appreciation. 
D)  value-added. 
A)  reflation. 
B)  revaluation. 
C)  appreciation. 
D)  value-added.

Question 9

Exchange rates vis-a-vis the U.S.dollar have changed little over time.

Accepted Answer

A) True 
 B)False

Question 10

After being introduced in 1999,the euro

Accepted Answer

A)  increased in value through 2008. 
B)  decreased in value through 2008. 
C)  increased in value through 2000 but then decreased in value through 2008. 
D)  decreased in value through 2000 but then increased in value through 2008. 
A)  increased in value through 2008. 
B)  decreased in value through 2008. 
C)  increased in value through 2000 but then decreased in value through 2008. 
D)  decreased in value through 2000 but then increased in value through 2008.

Question 11

If the dollar appreciates,it can be said that

Accepted Answer

A)  foreigners respect the United States more. 
B)  it increases in value within the United States. 
C)  other currencies depreciate. 
D)  it takes more dollars to buy foreign currencies. 
A)  foreigners respect the United States more. 
B)  it increases in value within the United States. 
C)  other currencies depreciate. 
D)  it takes more dollars to buy foreign currencies.

Question 12

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is correct?

Accepted Answer

A)  In the short run,interest rate differentials have the greatest impact on exchange rates. 
B)  In the medium run,differences in growth rates of aggregate demand have the greatest impact on exchange rates. 
C)  In the long run,price and inflation differentials have the greatest impact on exchange rates. 
D)  All of the above are correct. 
A)  In the short run,interest rate differentials have the greatest impact on exchange rates. 
B)  In the medium run,differences in growth rates of aggregate demand have the greatest impact on exchange rates. 
C)  In the long run,price and inflation differentials have the greatest impact on exchange rates. 
D)  All of the above are correct.

Question 14

On May 12,2011,the U.S.dollar was worth 0.61 British pounds.How many dollars did it take to buy one British pound?

Accepted Answer

A)  1.19 
B)  1.61 
C)  1.64 
D)  2.19 
A)  1.19 
B)  1.61 
C)  1.64 
D)  2.19

Question 15

If U.S.securities pay 6 percent interest,and if Great Britain's securities pay 8 percent interest,then

Accepted Answer

A)  pounds depreciate relative to dollars. 
B)  pounds appreciate relative to dollars. 
C)  Great Britain's imports will fall. 
D)  Great Britain's exports will rise. 
A)  pounds depreciate relative to dollars. 
B)  pounds appreciate relative to dollars. 
C)  Great Britain's imports will fall. 
D)  Great Britain's exports will rise.

Question 16

The Bretton Woods agreements in 1944

Accepted Answer

A)  established the International Monetary Fund. 
B)  sanctioned world trade on the gold-exchange system. 
C)  allowed nations to devalue their currencies under certain conditions. 
D)  All of the above are correct. 
A)  established the International Monetary Fund. 
B)  sanctioned world trade on the gold-exchange system. 
C)  allowed nations to devalue their currencies under certain conditions. 
D)  All of the above are correct.

Question 17

The recent experience in Greece,Portugal,and Ireland make the euro

Accepted Answer

A)  seem very unlikely to fail because of decreasing debt levels. 
B)  seem very unlikely to fail because of increasing interest rates. 
C)  seem somewhat likely to fail because of increasing debt levels. 
D)  seem somewhat likely to fail because of increasing interest rates. 
A)  seem very unlikely to fail because of decreasing debt levels. 
B)  seem very unlikely to fail because of increasing interest rates. 
C)  seem somewhat likely to fail because of increasing debt levels. 
D)  seem somewhat likely to fail because of increasing interest rates.

Question 18

A fixed exchange rate system encourages speculators to attack weaker currencies.

Accepted Answer

A) True 
 B)False

Question 19

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

Accepted Answer

A) True 
 B)False

Question 20

If the United States experiences an economic boom,compared to other countries,how will this affect the value of the U.S.dollar?

Accepted Answer

A)  It will fall because other nations would be forced to raise their interest rates. 
B)  It will fall because the United States will import more goods and services,leading to an increased supply of dollars. 
C)  It will rise because U.S.GDP would be rising faster than other countries. 
D)  It will rise because the Fed will have to lower U.S.interest rates. 
A)  It will fall because other nations would be forced to raise their interest rates. 
B)  It will fall because the United States will import more goods and services,leading to an increased supply of dollars. 
C)  It will rise because U.S.GDP would be rising faster than other countries. 
D)  It will rise because the Fed will have to lower U.S.interest rates.

If the U.S.purchases oil from Venezuela,what is the effect in the foreign exchange market?

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Exchange rates in what is termed the "medium run"

Fixed exchange rates are fixed by

If a country has a balance of payments deficit and wishes to maintain the fixed value of its currency,it will generally

A federal deficit that raises interest rates will,everything else being equal,

Figure 19-2 -Of the graphs in Figure 19-2,where the broken line represents the fixed exchange rates,which one shows how a balance of payments deficit could be reduced through a recession in Japan?

If a currency increases in value in response to market forces,this process is known as

Exchange rates vis-a-vis the U.S.dollar have changed little over time.

After being introduced in 1999,the euro

If the dollar appreciates,it can be said that

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

Which of the following statements is correct?

On May 12,2011,the U.S.dollar was worth 0.61 British pounds.How many dollars did it take to buy one British pound?

If U.S.securities pay 6 percent interest,and if Great Britain's securities pay 8 percent interest,then

The Bretton Woods agreements in 1944

The recent experience in Greece,Portugal,and Ireland make the euro

A fixed exchange rate system encourages speculators to attack weaker currencies.

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

If the United States experiences an economic boom,compared to other countries,how will this affect the value of the U.S.dollar?

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

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Exam 19: The International Monetary System Order Or Disorder

If the U.S.purchases oil from Venezuela,what is the effect in the foreign exchange market?

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Exchange rates in what is termed the "medium run"

Fixed exchange rates are fixed by

If a country has a balance of payments deficit and wishes to maintain the fixed value of its currency,it will generally

A federal deficit that raises interest rates will,everything else being equal,

Figure 19-2 -Of the graphs in Figure 19-2,where the broken line represents the fixed exchange rates,which one shows how a balance of payments deficit could be reduced through a recession in Japan?

If a currency increases in value in response to market forces,this process is known as

Exchange rates vis-a-vis the U.S.dollar have changed little over time.

After being introduced in 1999,the euro

If the dollar appreciates,it can be said that

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

Which of the following statements is correct?

On May 12,2011,the U.S.dollar was worth 0.61 British pounds.How many dollars did it take to buy one British pound?

If U.S.securities pay 6 percent interest,and if Great Britain's securities pay 8 percent interest,then

The Bretton Woods agreements in 1944

The recent experience in Greece,Portugal,and Ireland make the euro

A fixed exchange rate system encourages speculators to attack weaker currencies.

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

If the United States experiences an economic boom,compared to other countries,how will this affect the value of the U.S.dollar?

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