Exam 30: The International Financial System

Figure 30-2 -Refer to Figure 30-2. Which of the following would cause the change depicted in the figure above?

Among countries that purchased U.S. stocks and bonds in 2017, China was the biggest customer, accounting for over 50 percent of all purchases.

By the late 1950s, dollars held by foreign central banks exceeded the official dollar value of U.S. gold reserves.

Figure 30-7 -Refer to Figure 30-7. Which of the following is true?

The "Big Mac Theory of Exchange Rates" tests the accuracy of purchasing power parity theory. In January 2017, The Economist reported that the average price of a Big Mac in the United States was $4.93. In Switzerland, the average price of a Big Mac at that time was 6.50 Swiss francs. If the exchange rate between the dollar and the Swiss franc was 0.93 Swiss francs per dollar, how would purchasing power parity predict the exchange rate will change in the long run? Support your answer graphically.

Under the Bretton Woods exchange rate system, ________ could sell their dollars to the American government in exchange for gold.

Before 1980, most U.S. corporations raised funds

In a fixed exchange rate system, speculation regarding an expected revaluation or devaluation of a currency makes it more difficult to maintain the existing exchange rate.

The currencies of Poland and Iceland (the zloty and the krona, respectively) declined in value relative to the euro following the financial crisis of 2008. This means that the

In order to maintain an undervalued yuan to encourage a trade surplus, the Chinese government must buy dollars and increase the supply of yuan.

In 2011, a number of Canadians purchased homes in Arizona. Which of the following would not be a logical explanation for this?

In 1991, Argentina decided to peg its currency (the Argentinean peso) to the U.S. dollar. Most of Argentina's trading, however, was with Brazil and Europe, not the United States. What result would pegging the Argentinean peso to the U.S. dollar have on the cost of imports from and exports to Brazil and Europe?

Figure 30-5 -Refer to Figure 30-5. The Chinese government pegs the yuan to the dollar, at one of the specified exchange rates on the graph, such that it overvalues its currency. Using the figure above, this would generate

The central bank of the European Union is called the

The "Big Mac Theory of Exchange Rates" tests the accuracy of purchasing power parity theory. In January 2017, The Economist reported that the average price of a Big Mac in the United States was $4.93. In India, the average price of a Big Mac at that time was 178 rupees. What is the "implied exchange rate" between the rupee and the dollar?

If currencies around the world are based on the gold standard, and the EU lowers the amount of gold for which the euro will trade, then holding all else constant,

Thailand's experience with pegging the baht to the dollar failed because the baht was ________ relative to the dollar, and China's experience with pegging the yuan to the dollar has run into difficulties because the yuan has been ________ relative to the dollar.

From the beginning of 1973 until June 2017, the value of the dollar has ________ relative to the Canadian dollar and ________ relative to the Japanese yen.

Before 1980, U.S. investors rarely invested in foreign capital markets.

Figure 30-11 -Refer to Figure 30-11. The graph above depicts supply and demand for British pounds during a trading day. At a fixed exchange rate of $2.00 per pound, the pound is ________ versus the dollar. A ________ of the pound would correct the fundamental disequilibrium that exists in this market.