Question 1

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 2

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 3

At any given moment, there is one exchange rate

Accepted Answer

A) for currencies in the free world. 
B) between every pair of currencies. 
C) for all the world's currencies. 
D) established by the Federal Reserve Board. 
A) for currencies in the free world. 
B) between every pair of currencies. 
C) for all the world's currencies. 
D) established by the Federal Reserve Board.

Question 4

In the spring of 2002, Argentina was forced to devalue its peso and disband its currency board that was responsible for the fixed exchange rate between the peso and the U.S.dollar.Explain the origin of this crisis and the painful remedies that Argentina has had to endure.

Accepted Answer

Argentina was maintaining a fixed exchan

Question 5

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 6

If gold and the dollar are substitutes, a cut in the Japanese discount rate can be expected to

Accepted Answer

A) appreciate the dollar and decrease the price of gold. 
B) depreciate the dollar and increase the price of gold. 
C) depreciate the dollar and decrease the price of gold. 
D) appreciate the dollar and increase the price of gold. 
A) appreciate the dollar and decrease the price of gold. 
B) depreciate the dollar and increase the price of gold. 
C) depreciate the dollar and decrease the price of gold. 
D) appreciate the dollar and increase the price of gold.

Question 7

On May 12, 2011, it cost U.S.$.04 to buy 1 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

Question 8

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 9

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 10

Figure 19-1
​  
-Of the graphs in Figure 19-1, which one shows the effects of an economic boom in the United States and a depreciation of the dollar?

Accepted Answer

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

Question 11

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

Accepted Answer

A) balance of payments deficit. 
B) balance of payments surplus. 
C) increase in the rate of inflation. 
D) increase in the unemployment rate. 
A) balance of payments deficit. 
B) balance of payments surplus. 
C) increase in the rate of inflation. 
D) increase in the unemployment rate.

Question 12

What is the euro and why has it been created? How has its value changed relative to the U.S.dollar since its inception?

Accepted Answer

The euro is the currency created by the

Question 13

The current account balance includes international purchases and sales of goods and services, cross-border interest and dividend payments, and cross-border gifts to and from both private individuals and governments.It is approximately the same as net exports.

Accepted Answer

A) True 
 B)False

Question 14

Floating exchange rates are rates determined in free markets by the law of supply and demand.

Accepted Answer

A) True 
 B)False

Question 15

On June 3, 2005, it cost 1.22 U.S.dollars to buy 1 euro.How many euros did it take to buy 1 U.S.dollar?

Accepted Answer

A) 0.82 euros 
B) 0.88 euros 
C) 1.22 euros 
D) 88 euros 
A) 0.82 euros 
B) 0.88 euros 
C) 1.22 euros 
D) 88 euros

Question 16

If a Mexican pension fund decides to purchase U.S.government bonds, 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 17

Figure 19-1
​  
-Of the graphs in Figure 19-1, which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?

Accepted Answer

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

Question 18

If nations erect tariffs and quotas to restrict trade, what is likely to happen to predicted values of currencies drawn from the purchasing power parity theory?

Accepted Answer

A) They will be understated for tariffs and overstated for quotas. 
B) They will be overstated for tariffs and understated for quotas. 
C) They will be the correct values. 
D) They will be incorrect. 
A) They will be understated for tariffs and overstated for quotas. 
B) They will be overstated for tariffs and understated for quotas. 
C) They will be the correct values. 
D) They will be incorrect.

Question 19

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 20

The current role of the International Monetary Fund is one of

Accepted Answer

A) supervising a system of fixed exchange rates. 
B) providing assistance to countries with currency or debt problems. 
C) setting exchange rates based on a gold-exchange standard. 
D) acting as a lender of last resort to central banks. 
A) supervising a system of fixed exchange rates. 
B) providing assistance to countries with currency or debt problems. 
C) setting exchange rates based on a gold-exchange standard. 
D) acting as a lender of last resort to central banks.

Exam 35: The International Monetary System: Order or Disorder

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

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

At any given moment, there is one exchange rate

In the spring of 2002, Argentina was forced to devalue its peso and disband its currency board that was responsible for the fixed exchange rate between the peso and the U.S.dollar.Explain the origin of this crisis and the painful remedies that Argentina has had to endure.

After being introduced in 1999, the euro

If gold and the dollar are substitutes, a cut in the Japanese discount rate can be expected to

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

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

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 19-1 ​ -Of the graphs in Figure 19-1, which one shows the effects of an economic boom in the United States and a depreciation of the dollar?

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

What is the euro and why has it been created? How has its value changed relative to the U.S.dollar since its inception?

The current account balance includes international purchases and sales of goods and services, cross-border interest and dividend payments, and cross-border gifts to and from both private individuals and governments.It is approximately the same as net exports.

Floating exchange rates are rates determined in free markets by the law of supply and demand.

On June 3, 2005, it cost 1.22 U.S.dollars to buy 1 euro.How many euros did it take to buy 1 U.S.dollar?

If a Mexican pension fund decides to purchase U.S.government bonds, what is the effect in the foreign-exchange market?

Figure 19-1 ​ -Of the graphs in Figure 19-1, which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?

If nations erect tariffs and quotas to restrict trade, what is likely to happen to predicted values of currencies drawn from the purchasing power parity theory?

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

The current role of the International Monetary Fund is one of

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

Filters

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 19-1 -Of the graphs in Figure 19-1, which one shows the effects of an economic boom in the United States and a depreciation of the dollar?

Figure 19-1 -Of the graphs in Figure 19-1, which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?