Question 1

If the U.S.exports passenger jet aircraft, 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

IMF advice to countries such as Russia and Argentina that suffer from exchange rates crises often requires these countries to adopt

Accepted Answer

A)  fixed exchange rates. 
B)  expansionary monetary policies. 
C)  contractionary monetary policies. 
D)  state ownership of industry. 
A)  fixed exchange rates. 
B)  expansionary monetary policies. 
C)  contractionary monetary policies. 
D)  state ownership of industry.

Question 3

The U.S.Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate.The likely outcome of currency speculation in response to this news is that

Accepted Answer

A)  the dollar will depreciate. 
B)  the dollar will appreciate. 
C)  the yen will appreciate. 
D)  both the dollar and yen will appreciate. 
A)  the dollar will depreciate. 
B)  the dollar will appreciate. 
C)  the yen will appreciate. 
D)  both the dollar and yen will appreciate.

Question 4

If Americans decide to buy more South African diamonds, what is the effect in the foreign 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 5

If inflation in the United States is higher than in Japan, what will happen to the exchange rate between the U.S.dollar and the Japanese yen?

Accepted Answer

A)  The dollar and yen will both depreciate. 
B)  The dollar and yen will both appreciate. 
C)  The dollar will depreciate and the yen will appreciate. 
D)  The dollar will appreciate and the yen will depreciate. 
A)  The dollar and yen will both depreciate. 
B)  The dollar and yen will both appreciate. 
C)  The dollar will depreciate and the yen will appreciate. 
D)  The dollar will appreciate and the yen will depreciate.

Question 6

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 7

Purchasing power parity explains how the exchange rate will adjust to differences in price levels between two countries.

Accepted Answer

A) True 
 B)False

Question 8

Stock in a German corporation can be purchased directly with currency from any other country.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

Why is the international financial system today often called a "nonsystem?"

Accepted Answer

There is no grand organizing principle i

Question 12

Who among the following is most likely to favor an appreciation of the U.S.dollar?

Accepted Answer

A)  a German professor visiting Chicago 
B)  an American farmer who depends on exports 
C)  an American professor on a tour of Austrian universities 
D)  Disney World in Orlando, Florida, a popular destination for foreign tourists 
A)  a German professor visiting Chicago 
B)  an American farmer who depends on exports 
C)  an American professor on a tour of Austrian universities 
D)  Disney World in Orlando, Florida, a popular destination for foreign tourists

Question 13

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 14

Figure 19-2
  
-Of the graphs in Figure 19-2, where the broken line represents the fixed exchange rate, which one shows a reduction in the price level in Japan that would reduce a balance of payments deficit?

Accepted Answer

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

Question 15

Figure 19-2
  
-Of the graphs in Figure 19-2, which one shows Japan practicing "dirty" floating to keep an undervalued currency?

Accepted Answer

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

Question 16

Which of the following would cause a decrease in the demand for U.S.dollars?

Accepted Answer

A)  an economic boom in the United States 
B)  an economic boom in Europe 
C)  increased vacations in the United States by Europeans 
D)  a recession in Europe 
A)  an economic boom in the United States 
B)  an economic boom in Europe 
C)  increased vacations in the United States by Europeans 
D)  a recession in Europe

Question 17

If market forces change the exchange rate value of one dollar from 80 yen to 83.25 yen, then the dollar has

Accepted Answer

A)  appreciated. 
B)  depreciated. 
C)  been revalued. 
D)  been devalued. 
A)  appreciated. 
B)  depreciated. 
C)  been revalued. 
D)  been devalued.

Question 18

If exchange rates are determined in a floating rate system, what determines the value of a U.S.dollar in terms of euros?

Accepted Answer

A)  government exchange rate policies 
B)  IMF rules and policies 
C)  demand and supply 
D)  central bank interventions 
A)  government exchange rate policies 
B)  IMF rules and policies 
C)  demand and supply 
D)  central bank interventions

Question 19

To "cure" their balance of payments deficits without altering exchange rates, Southeast Asian countries in 1997 were forced to create

Accepted Answer

A)  more inflation. 
B)  recessions. 
C)  faster economic growth. 
D)  money at an accelerated rate. 
A)  more inflation. 
B)  recessions. 
C)  faster economic growth. 
D)  money at an accelerated rate.

Question 20

On May 12, 2011, it cost U.S.$.04 to buy one Russian ruble.How many Russian rubles would U.S.$1 buy?

Accepted Answer

A)  40 
B)  33 
C)  25 
D)  14 
A)  40 
B)  33 
C)  25 
D)  14

Exam 36: The International Monetary System: Order or Disorder?

If the U.S.exports passenger jet aircraft, what is the effect in the foreign exchange market?

IMF advice to countries such as Russia and Argentina that suffer from exchange rates crises often requires these countries to adopt

The U.S.Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate.The likely outcome of currency speculation in response to this news is that

If Americans decide to buy more South African diamonds, what is the effect in the foreign market?

If inflation in the United States is higher than in Japan, what will happen to the exchange rate between the U.S.dollar and the Japanese yen?

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

Purchasing power parity explains how the exchange rate will adjust to differences in price levels between two countries.

Stock in a German corporation can be purchased directly with currency from any other country.

Under a gold standard, a discovery of gold will

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

Why is the international financial system today often called a "nonsystem?"

Who among the following is most likely to favor an appreciation of the U.S.dollar?

If the dollar appreciates, it can be said that

Figure 19-2 -Of the graphs in Figure 19-2, where the broken line represents the fixed exchange rate, which one shows a reduction in the price level in Japan that would reduce a balance of payments deficit?

Figure 19-2 -Of the graphs in Figure 19-2, which one shows Japan practicing "dirty" floating to keep an undervalued currency?

Which of the following would cause a decrease in the demand for U.S.dollars?

If market forces change the exchange rate value of one dollar from 80 yen to 83.25 yen, then the dollar has

If exchange rates are determined in a floating rate system, what determines the value of a U.S.dollar in terms of euros?

To "cure" their balance of payments deficits without altering exchange rates, Southeast Asian countries in 1997 were forced to create

On May 12, 2011, it cost U.S.$.04 to buy one Russian ruble.How many Russian rubles would U.S.$1 buy?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

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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