Question 1

How did the gold standard help countries rectify the balance of payment problem? What were the problems associated with the gold standard?

Accepted Answer

Under gold standard all currencies were

Question 2

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

Accepted Answer

A) True 
 B)False

Question 3

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

Accepted Answer

A)  0.56 
B)  0.61 
C)  1.64 
D)  2.64 
A)  0.56 
B)  0.61 
C)  1.64 
D)  2.64

Question 4

When a government intentionally lowers the value of its currency,that is called depreciation.

Accepted Answer

A) True 
 B)False

Question 5

From Table 19-1,what is the exchange rate between the dollar and the pound?

Accepted Answer

A)  One dollar is worth two pounds. 
B)  One pound is worth two dollars. 
C)  One pound is worth one dollar. 
D)  One pound is worth 50 cents. 
A)  One dollar is worth two pounds. 
B)  One pound is worth two dollars. 
C)  One pound is worth one dollar. 
D)  One pound is worth 50 cents.

Question 6

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

Accepted Answer

A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration. 
A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration.

Question 7

The Big Mac index is a measure of how well the purchasing power parity theory works.

Accepted Answer

A) True 
 B)False

Question 8

A strong dollar helps U.S.exporters and hurts importers.

Accepted Answer

A) True 
 B)False

Question 9

Adhering to a strict fixed exchange rate system means that

Accepted Answer

A)  no country will experience inflation or recession. 
B)  each nation improves control over its money supply. 
C)  each nation loses some control of its monetary policy and its domestic economy. 
D)  each nation improves control over its fiscal policy and aggregate demand. 
A)  no country will experience inflation or recession. 
B)  each nation improves control over its money supply. 
C)  each nation loses some control of its monetary policy and its domestic economy. 
D)  each nation improves control over its fiscal policy and aggregate demand.

Question 10

The ability of a government to fix its currency's exchange rate is limited by the size of its reserves.

Accepted Answer

A) True 
 B)False

Question 11

If the dollar depreciates relative to other currencies,which of the following is true?

Accepted Answer

A)  It takes more foreign currency to buy a dollar. 
B)  It takes more dollars to buy a foreign currency. 
C)  U.S.exports will decrease. 
D)  Foreign purchases of U.S.goods will decrease. 
A)  It takes more foreign currency to buy a dollar. 
B)  It takes more dollars to buy a foreign currency. 
C)  U.S.exports will decrease. 
D)  Foreign purchases of U.S.goods will decrease.

Question 12

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

Accepted Answer

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

Question 13

Speculators play an important role in a system of floating exchange rates because

Accepted Answer

A)  to make a profit,they must buy a currency when its value is low and sell it when its value is high. 
B)  their purchases and sales lead to wild gyrations in exchange rates and thus increase instability. 
C)  they place additional risks on businesses that need to purchase and sell foreign currency. 
D)  All of the above are correct. 
A)  to make a profit,they must buy a currency when its value is low and sell it when its value is high. 
B)  their purchases and sales lead to wild gyrations in exchange rates and thus increase instability. 
C)  they place additional risks on businesses that need to purchase and sell foreign currency. 
D)  All of the above are correct.

Question 14

The principal result of the rising value of the U.S.dollar in the mid-1990s was the

Accepted Answer

A)  lower foreign inflation. 
B)  lower U.S.interest rates. 
C)  opportunities for currency speculation. 
D)  attractive investments in U.S.technology. 
A)  lower foreign inflation. 
B)  lower U.S.interest rates. 
C)  opportunities for currency speculation. 
D)  attractive investments in U.S.technology.

Question 15

The term "dirty float" is used to describe a

Accepted Answer

A)  black market in foreign currencies. 
B)  floating currency that is "managed" by central bank authorities. 
C)  nation that switches from free to fixed exchange rates. 
D)  currency system used only in inflationary periods. 
A)  black market in foreign currencies. 
B)  floating currency that is "managed" by central bank authorities. 
C)  nation that switches from free to fixed exchange rates. 
D)  currency system used only in inflationary periods.

Question 16

Under a gold standard,a discovery of gold will

Accepted Answer

A)  decrease the general price level. 
B)  increase the general price level. 
C)  cause increased unemployment. 
D)  cause decreased rates of economic growth. 
A)  decrease the general price level. 
B)  increase the general price level. 
C)  cause increased unemployment. 
D)  cause decreased rates of economic growth.

Question 17

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

Accepted Answer

A)  has a balance of payments surplus. 
B)  has an undervalued currency. 
C)  has an overvalued currency. 
D)  need not fear a "run" on its currency. 
A)  has a balance of payments surplus. 
B)  has an undervalued currency. 
C)  has an overvalued currency. 
D)  need not fear a "run" on its currency.

Question 18

In the current international monetary system,what is the role for gold?

Accepted Answer

A)  The system is a gold-exchange standard,based on a fixed value for a key currency. 
B)  Gold backs each currency,and therefore,the system as a whole. 
C)  It serves as the principal reserve asset. 
D)  It has no role. 
A)  The system is a gold-exchange standard,based on a fixed value for a key currency. 
B)  Gold backs each currency,and therefore,the system as a whole. 
C)  It serves as the principal reserve asset. 
D)  It has no role.

Question 19

If a currency increases in value as a result of government decree rather than market forces,the 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 20

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

Accepted Answer

The International Monetary Fund (IMF)exa

How did the gold standard help countries rectify the balance of payment problem? What were the problems associated with the gold standard?

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

When a government intentionally lowers the value of its currency,that is called depreciation.

From Table 19-1,what is the exchange rate between the dollar and the pound?

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

The Big Mac index is a measure of how well the purchasing power parity theory works.

A strong dollar helps U.S.exporters and hurts importers.

Adhering to a strict fixed exchange rate system means that

The ability of a government to fix its currency's exchange rate is limited by the size of its reserves.

If the dollar depreciates relative to other currencies,which of the following is true?

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

Speculators play an important role in a system of floating exchange rates because

The principal result of the rising value of the U.S.dollar in the mid-1990s was the

The term "dirty float" is used to describe a

Under a gold standard,a discovery of gold will

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

In the current international monetary system,what is the role for gold?

If a currency increases in value as a result of government decree rather than market forces,the process is known as

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

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

How did the gold standard help countries rectify the balance of payment problem? What were the problems associated with the gold standard?

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

When a government intentionally lowers the value of its currency,that is called depreciation.

From Table 19-1,what is the exchange rate between the dollar and the pound?

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

The Big Mac index is a measure of how well the purchasing power parity theory works.

A strong dollar helps U.S.exporters and hurts importers.

Adhering to a strict fixed exchange rate system means that

The ability of a government to fix its currency's exchange rate is limited by the size of its reserves.

If the dollar depreciates relative to other currencies,which of the following is true?

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

Speculators play an important role in a system of floating exchange rates because

The principal result of the rising value of the U.S.dollar in the mid-1990s was the

The term "dirty float" is used to describe a

Under a gold standard,a discovery of gold will

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

In the current international monetary system,what is the role for gold?

If a currency increases in value as a result of government decree rather than market forces,the process is known as

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

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