Question 1

A devaluation is a reduction in the official value of a currency.

Accepted Answer

A) True 
 B)False

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

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 4

Americans needing foreign currencies get those currencies from a bank. The ultimate source of these currencies is

Accepted Answer

A)  U.S. investments abroad. 
B)  U.S. exports to foreign countries. 
C)  U.S. imports of foreign goods and services. 
D)  the International Monetary Fund. 
A)  U.S. investments abroad. 
B)  U.S. exports to foreign countries. 
C)  U.S. imports of foreign goods and services. 
D)  the International Monetary Fund.

Question 5

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 6

The balance of payments deficit is the amount by which the quantity supplied of a country's currency (per year) exceeds the quantity demanded..

Accepted Answer

A) True 
 B)False

Question 7

A revaluation is an increase in the official value of a currency.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

In 2007, the value of the U.S. dollar

Accepted Answer

A)  increased relative to the euro. 
B)  decreased relative to the euro. 
C)  remained stable relative to the euro. 
D)  was equal to the value of the euro. 
A)  increased relative to the euro. 
B)  decreased relative to the euro. 
C)  remained stable relative to the euro. 
D)  was equal to the value of the euro.

Question 11

Countries like Malaysia and Thailand that tried to maintain overvalued currencies in the late 1990s inevitably faced increased

Accepted Answer

A)  balance of payments surpluses. 
B)  runs on their currencies. 
C)  balance of payments deficits. 
D)  both b and c. 
A)  balance of payments surpluses. 
B)  runs on their currencies. 
C)  balance of payments deficits. 
D)  both b and c.

Question 12

The most important single factor in determining the exchange rate in the short run is

Accepted Answer

A)  inflation differentials. 
B)  interest rate differentials. 
C)  monetary growth differentials. 
D)  price differentials. 
A)  inflation differentials. 
B)  interest rate differentials. 
C)  monetary growth differentials. 
D)  price differentials.

Question 13

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 14

The ________ balance includes purchases and sales of financial assets to and from citizens and companies of other countries.

Accepted Answer

A)  capital account 
B)  investment account 
C)  current account 
D)  none of these 
A)  capital account 
B)  investment account 
C)  current account 
D)  none of these

Question 15

The current exchange rate system for most currencies is described most accurately as one of

Accepted Answer

A)  fixed exchange rates. 
B)  freely flexible exchange rates. 
C)  gold standard rates. 
D)  dirty or managed floating. 
A)  fixed exchange rates. 
B)  freely flexible exchange rates. 
C)  gold standard rates. 
D)  dirty or managed floating.

Question 16

An economic boom in America should increase the

Accepted Answer

A)  demand for U.S. dollars. 
B)  demand for U.S. goods and services. 
C)  demand for foreign currencies. 
D)  supply of foreign currencies. 
A)  demand for U.S. dollars. 
B)  demand for U.S. goods and services. 
C)  demand for foreign currencies. 
D)  supply of foreign currencies.

Question 17

If Japanese tourists visit Yellowstone Park, what is the effect in the foreign-exchange market?

Accepted Answer

A)  It will increase demand for Japanese yen. 
B)  It will decrease demand for Japanese yen. 
C)  It will increase supply of Japanese yen. 
D)  It will decrease supply of Japanese yen. 
A)  It will increase demand for Japanese yen. 
B)  It will decrease demand for Japanese yen. 
C)  It will increase supply of Japanese yen. 
D)  It will decrease supply of Japanese yen.

Question 18

A country with an overvalued currency

Accepted Answer

A)  will have a balance of payments deficit. 
B)  will suffer losses of foreign reserves. 
C)  must intervene in the foreign-exchange market to buy its own currency. 
D)  All of the above are correct. 
A)  will have a balance of payments deficit. 
B)  will suffer losses of foreign reserves. 
C)  must intervene in the foreign-exchange market to buy its own currency. 
D)  All of the above are correct.

Question 19

In each of the following scenarios, explain why the euro will appreciate or depreciate in a system of floating exchange rates. (A) A recession in Germany cuts German purchases of American goods. (B) American investors are attracted by prospects for profit on the Frankfurt Stock Exchange. (C) Interest rates on government bonds rise in the United States but remain stable in Germany.

Accepted Answer

(A) The recession leads to a drop in imp

Question 20

Balance of payments deficits arise whenever the exchange rate is set at an artificially high level.

Accepted Answer

A) True 
 B)False

A devaluation is a reduction in the official value of a currency.

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

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

Americans needing foreign currencies get those currencies from a bank. The ultimate source of these currencies is

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

The balance of payments deficit is the amount by which the quantity supplied of a country's currency (per year) exceeds the quantity demanded..

A revaluation is an increase in the official value of a currency.

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

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

In 2007, the value of the U.S. dollar

Countries like Malaysia and Thailand that tried to maintain overvalued currencies in the late 1990s inevitably faced increased

The most important single factor in determining the exchange rate in the short run is

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

The ________ balance includes purchases and sales of financial assets to and from citizens and companies of other countries.

The current exchange rate system for most currencies is described most accurately as one of

An economic boom in America should increase the

If Japanese tourists visit Yellowstone Park, what is the effect in the foreign-exchange market?

A country with an overvalued currency

Balance of payments deficits arise whenever the exchange rate is set at an artificially high level.

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

Contemporary Issues in the Us Economy

Filters

Exam 35: The International Monetary System: Order or Disorder

A devaluation is a reduction in the official value of a currency.

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

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

Americans needing foreign currencies get those currencies from a bank. The ultimate source of these currencies is

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

The balance of payments deficit is the amount by which the quantity supplied of a country's currency (per year) exceeds the quantity demanded..

A revaluation is an increase in the official value of a currency.

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

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

In 2007, the value of the U.S. dollar

Countries like Malaysia and Thailand that tried to maintain overvalued currencies in the late 1990s inevitably faced increased

The most important single factor in determining the exchange rate in the short run is

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

The ________ balance includes purchases and sales of financial assets to and from citizens and companies of other countries.

The current exchange rate system for most currencies is described most accurately as one of

An economic boom in America should increase the

If Japanese tourists visit Yellowstone Park, what is the effect in the foreign-exchange market?

A country with an overvalued currency

Balance of payments deficits arise whenever the exchange rate is set at an artificially high level.

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

Contemporary Issues in the Us Economy

Filters