Question 1

Interest rate differentials can cause rapid fluctuations in short-run exchange rates.

Accepted Answer

A) True 
 B)False

Question 2

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

Accepted Answer

A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration. 
A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  In the short run, interest rate differentials have the greatest impact on exchange rates. 
B)  In the medium run, differences in growth rates of aggregate demand have the greatest impact on exchange rates. 
C)  In the long run, price and inflation differentials have the greatest impact on exchange rates. 
D)  All of the above are correct. 
A)  In the short run, interest rate differentials have the greatest impact on exchange rates. 
B)  In the medium run, differences in growth rates of aggregate demand have the greatest impact on exchange rates. 
C)  In the long run, price and inflation differentials have the greatest impact on exchange rates. 
D)  All of the above are correct.

Question 4

A recession in the United States will tend to cause recessions in other countries because as U.S.GDP falls,U.S.

Accepted Answer

A)  tariffs will automatically rise. 
B)  exports will rise. 
C)  imports will fall. 
D)  exports will fall. 
A)  tariffs will automatically rise. 
B)  exports will rise. 
C)  imports will fall. 
D)  exports will fall.

Question 5

Fixed exchange rates are fixed by

Accepted Answer

A)  international speculators who manipulate the world's currencies. 
B)  international demand and supply. 
C)  national governments. 
D)  All of the above are correct. 
A)  international speculators who manipulate the world's currencies. 
B)  international demand and supply. 
C)  national governments. 
D)  All of the above are correct.

Question 6

Under a gold standard,

Accepted Answer

A)  with a balance of payments deficit, interest rates would fall and attract foreign capital. 
B)  a deficit in the balance of payments increased a nation's money supply automatically. 
C)  all currencies were defined in terms of gold. 
D)  when a nation had a deficit in its balance of payments, more gold was flowing in than was flowing out. 
E)  All of the above are correct. 
A)  with a balance of payments deficit, interest rates would fall and attract foreign capital. 
B)  a deficit in the balance of payments increased a nation's money supply automatically. 
C)  all currencies were defined in terms of gold. 
D)  when a nation had a deficit in its balance of payments, more gold was flowing in than was flowing out. 
E)  All of the above are correct.

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

From the beginning of 2007,the value of the U.S.dollar

Accepted Answer

A)  dropped sharply against major currencies. 
B)  increased mildly against major currencies. 
C)  remained stable relative to major currencies. 
D)  fluctuated with no major trend against major currencies. 
A)  dropped sharply against major currencies. 
B)  increased mildly against major currencies. 
C)  remained stable relative to major currencies. 
D)  fluctuated with no major trend against major currencies.

Question 10

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

Accepted Answer

A) 0.56 
B) 0.61 
C) 1.64 
D) 2.64 
A) 0.56 
B) 0.61 
C) 1.64 
D) 2.64

Question 11

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 12

An important effect of foreign currency speculators is that

Accepted Answer

A)  they have consistently lost money and have left the market. 
B)  they have pushed exchange rates to wider extremes than most economists predicted. 
C)  they actually limit the volatility of exchange rate movements. 
D)  they have had no effect at all on exchange rate volatility. 
A)  they have consistently lost money and have left the market. 
B)  they have pushed exchange rates to wider extremes than most economists predicted. 
C)  they actually limit the volatility of exchange rate movements. 
D)  they have had no effect at all on exchange rate volatility.

Question 13

When goods or services cross international borders

Accepted Answer

A)  countries must ship gold to make payment. 
B)  money must generally move in the opposite direction. 
C)  a future shipment must be made to offset the current purchase. 
D)  payment must be made in another good, using barter. 
A)  countries must ship gold to make payment. 
B)  money must generally move in the opposite direction. 
C)  a future shipment must be made to offset the current purchase. 
D)  payment must be made in another good, using barter.

Question 14

The exchange rate is the price of one currency in terms of another.

Accepted Answer

A) True 
 B)False

Question 15

A federal deficit that raises interest rates will,everything else being equal,

Accepted Answer

A)  lead to a dollar depreciation. 
B)  decrease imports. 
C)  reduce exports. 
D)  reduce the balance of trade deficit. 
A)  lead to a dollar depreciation. 
B)  decrease imports. 
C)  reduce exports. 
D)  reduce the balance of trade deficit.

Question 16

Figure 19-2
  
-Of the graphs in Figure 19-2,which one shows the effect of an increase in interest rates in Japan?

Accepted Answer

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

Question 17

The International Monetary Fund was established to manage the Bretton Woods System.

Accepted Answer

A) True 
 B)False

Question 18

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 19

There are at least three exchange rates between every pair of national currencies.

Accepted Answer

A) True 
 B)False

Question 20

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

Accepted Answer

A) True 
 B)False

Interest rate differentials can cause rapid fluctuations in short-run exchange rates.

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

Which of the following statements is correct?

A recession in the United States will tend to cause recessions in other countries because as U.S.GDP falls,U.S.

Fixed exchange rates are fixed by

Under a gold standard,

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

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

From the beginning of 2007,the value of the U.S.dollar

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

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

An important effect of foreign currency speculators is that

When goods or services cross international borders

The exchange rate is the price of one currency in terms of another.

A federal deficit that raises interest rates will,everything else being equal,

Figure 19-2 -Of the graphs in Figure 19-2,which one shows the effect of an increase in interest rates in Japan?

The International Monetary Fund was established to manage the Bretton Woods System.

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

There are at least three exchange rates between every pair of national currencies.

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

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

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

Interest rate differentials can cause rapid fluctuations in short-run exchange rates.

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

Which of the following statements is correct?

A recession in the United States will tend to cause recessions in other countries because as U.S.GDP falls,U.S.

Fixed exchange rates are fixed by

Under a gold standard,

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

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

From the beginning of 2007,the value of the U.S.dollar

On May 12,2011,it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

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

An important effect of foreign currency speculators is that

When goods or services cross international borders

The exchange rate is the price of one currency in terms of another.

A federal deficit that raises interest rates will,everything else being equal,

Figure 19-2 -Of the graphs in Figure 19-2,which one shows the effect of an increase in interest rates in Japan?

The International Monetary Fund was established to manage the Bretton Woods System.

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

There are at least three exchange rates between every pair of national currencies.

Since its inception in January 1999 until 2011,the dollar has consistently appreciated against the euro.

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