Question 1

Under the gold standard,a balance of payments surplus leads to an outflow of gold.

Accepted Answer

A) True 
 B)False

Question 2

When a government influences the exchange rate of its currency,it is said to be practicing "dirty floating."

Accepted Answer

A) True 
 B)False

Question 3

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 4

The price of a currency will decrease when quantity demanded is less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 5

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

Accepted Answer

A) True 
 B)False

Question 6

Domestic monetary policy is essentially useless under

Accepted Answer

A)  a floating exchange rate system. 
B)  a fixed exchange rate system. 
C)  the gold standard. 
D)  conditions of balance of payments surpluses. 
A)  a floating exchange rate system. 
B)  a fixed exchange rate system. 
C)  the gold standard. 
D)  conditions of balance of payments surpluses.

Question 7

The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that

Accepted Answer

A)  the government gains more control over the economy. 
B)  floating exchange rates impose risks on importers and exporters from unpredictable exchange rates. 
C)  exchange controls become unnecessary. 
D)  fiscal and monetary policy can focus more on domestic conditions. 
A)  the government gains more control over the economy. 
B)  floating exchange rates impose risks on importers and exporters from unpredictable exchange rates. 
C)  exchange controls become unnecessary. 
D)  fiscal and monetary policy can focus more on domestic conditions.

Question 8

The purchasing power parity theory of exchange rate determination maintains that

Accepted Answer

A)  the exchange rate between two nations' currencies is determined by the percent of gold that backs each nation's currency. 
B)  the exchange rate between two nations' currencies adjusts to reflect differences in the price levels in the two nations. 
C)  in the short run, exchange rates are determined by central bank intervention in the currency markets. 
D)  the exchange rate between two currencies is determined by the debt that each nation owes to the World Bank. 
A)  the exchange rate between two nations' currencies is determined by the percent of gold that backs each nation's currency. 
B)  the exchange rate between two nations' currencies adjusts to reflect differences in the price levels in the two nations. 
C)  in the short run, exchange rates are determined by central bank intervention in the currency markets. 
D)  the exchange rate between two currencies is determined by the debt that each nation owes to the World Bank.

Question 9

A balance of payments deficit is defined as the amount by which

Accepted Answer

A)  a country's exports exceed its imports. 
B)  a currency must appreciate in order to reach equilibrium. 
C)  quantity supplied of a country's currency exceeds quantity demanded. 
D)  quantity demanded of a country's currency exceeds quantity supplied. 
A)  a country's exports exceed its imports. 
B)  a currency must appreciate in order to reach equilibrium. 
C)  quantity supplied of a country's currency exceeds quantity demanded. 
D)  quantity demanded of a country's currency exceeds quantity supplied.

Question 10

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 11

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 U.S.but remain stable in Germany.

Accepted Answer

A)The recession leads to a drop in impor

Question 12

Is it possible for a currency to appreciate relative to one currency,and depreciate relative to another?

Accepted Answer

A)  No, a currency rises or falls against all currencies. 
B)  No, this could happen only under the gold standard. 
C)  Yes, but only if all governments agree on the new rates. 
D)  Yes, this is possible in a world of floating rates. 
A)  No, a currency rises or falls against all currencies. 
B)  No, this could happen only under the gold standard. 
C)  Yes, but only if all governments agree on the new rates. 
D)  Yes, this is possible in a world of floating rates.

Question 13

Can the U.S.dollar and the European euro both appreciate relative to each other?

Accepted Answer

A)  Yes, both countries can gain in this manner. 
B)  Yes, provided the central banks permit it. 
C)  No, unless there is a system of fixed exchange rates. 
D)  No, if one currency appreciates, the other must depreciate. 
A)  Yes, both countries can gain in this manner. 
B)  Yes, provided the central banks permit it. 
C)  No, unless there is a system of fixed exchange rates. 
D)  No, if one currency appreciates, the other must depreciate.

Under the gold standard,a balance of payments surplus leads to an outflow of gold.

When a government influences the exchange rate of its currency,it is said to be practicing "dirty floating."

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

The price of a currency will decrease when quantity demanded is less than quantity supplied.

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

Domestic monetary policy is essentially useless under

The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that

The purchasing power parity theory of exchange rate determination maintains that

A balance of payments deficit is defined as the amount by which

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

Is it possible for a currency to appreciate relative to one currency,and depreciate relative to another?

Can the U.S.dollar and the European euro both appreciate relative to each other?

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

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Exam 19: The International Monetary System: Order or Disorder?

Under the gold standard,a balance of payments surplus leads to an outflow of gold.

When a government influences the exchange rate of its currency,it is said to be practicing "dirty floating."

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

The price of a currency will decrease when quantity demanded is less than quantity supplied.

The exchange rate states the price,in terms of one currency,at which another currency can be bought.

Domestic monetary policy is essentially useless under

The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that

The purchasing power parity theory of exchange rate determination maintains that

A balance of payments deficit is defined as the amount by which

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

Is it possible for a currency to appreciate relative to one currency,and depreciate relative to another?

Can the U.S.dollar and the European euro both appreciate relative to each other?

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