Question 1

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Accepted Answer

A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium. 
A)  euro would rise. 
B)  euro would fall. 
C)  dollar would fall. 
D)  euro would be in equilibrium.

Question 2

Figure 19-1
  
-Of the graphs in Figure 19-1,which one shows the effects of an increase in interest rates in Japan 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 3

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

Accepted Answer

The International Monetary Fund (IMF)exa

Question 4

If U.S.securities pay 7 percent interest,and if Great Britain's securities pay 5 percent interest,then

Accepted Answer

A)  pounds depreciate relative to dollars. 
B)  pounds appreciate relative to dollars. 
C)  Great Britain's imports will rise. 
D)  Great Britain's exports will fall. 
A)  pounds depreciate relative to dollars. 
B)  pounds appreciate relative to dollars. 
C)  Great Britain's imports will rise. 
D)  Great Britain's exports will fall.

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

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

Accepted Answer

There is no grand organizing principle i

Question 7

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 8

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 9

The recent experience in Greece,Portugal,and Ireland make the euro

Accepted Answer

A)  seem very unlikely to fail because of decreasing debt levels. 
B)  seem very unlikely to fail because of increasing interest rates. 
C)  seem somewhat likely to fail because of increasing debt levels. 
D)  seem somewhat likely to fail because of increasing interest rates. 
A)  seem very unlikely to fail because of decreasing debt levels. 
B)  seem very unlikely to fail because of increasing interest rates. 
C)  seem somewhat likely to fail because of increasing debt levels. 
D)  seem somewhat likely to fail because of increasing interest rates.

Question 10

Figure 19-3
  
-Of the graphs in Figure 19-3,where the dotted line shows the actual exchange rate,which one shows a country with an overvalued currency and a balance of trade deficit?

Accepted Answer

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

Question 11

The prospect of a recession in the United States would probably cause the dollar to

Accepted Answer

A)  depreciate because interest rates would be expected to rise. 
B)  depreciate because imports would be expected to rise. 
C)  appreciate because imports would be expected to fall. 
D)  appreciate because interest rates would be expected to decrease. 
A)  depreciate because interest rates would be expected to rise. 
B)  depreciate because imports would be expected to rise. 
C)  appreciate because imports would be expected to fall. 
D)  appreciate because interest rates would be expected to decrease.

Question 12

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 13

Which of the following countries has gone so far as to adopt the U.S.dollar as its domestic currency?

Accepted Answer

A)  Panama 
B)  Ecuador 
C)  Zimbabwe 
D)  all of the above 
A)  Panama 
B)  Ecuador 
C)  Zimbabwe 
D)  all of the above

Question 14

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 15

In 2007,the value of the American dollar rose relative to the euro.

Accepted Answer

A) True 
 B)False

Question 16

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 17

In 2008-2009,Iceland and several Baltic states increased their interest rates.One would expect which of the following?

Accepted Answer

A)  U.S. bond prices will fall and the dollar will appreciate. 
B)  U.S. bond prices will rise and the dollar will appreciate. 
C)  U.S. bond prices will fall and the dollar will depreciate. 
D)  U.S. bond prices will rise and the dollar will depreciate. 
A)  U.S. bond prices will fall and the dollar will appreciate. 
B)  U.S. bond prices will rise and the dollar will appreciate. 
C)  U.S. bond prices will fall and the dollar will depreciate. 
D)  U.S. bond prices will rise and the dollar will depreciate.

Question 18

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

Accepted Answer

A)  has a balance of payments surplus. 
B)  has an undervalued currency. 
C)  has an overvalued currency. 
D)  need not fear a "run" on its currency. 
A)  has a balance of payments surplus. 
B)  has an undervalued currency. 
C)  has an overvalued currency. 
D)  need not fear a "run" on its currency.

Question 19

A prolonged recession in Europe should decrease the

Accepted Answer

A)  supply of U.S. dollars. 
B)  demand for U.S. dollars. 
C)  supply of U.S. goods and services. 
D)  demand by Americans for euros. 
A)  supply of U.S. dollars. 
B)  demand for U.S. dollars. 
C)  supply of U.S. goods and services. 
D)  demand by Americans for euros.

Question 20

One method for a deficit country to correct the situation under a fixed exchange rate system is to

Accepted Answer

A)  increase aggregate demand with stimulative monetary policy. 
B)  increase aggregate supply with tax cuts. 
C)  decrease aggregate demand with restrictive fiscal and monetary policy. 
D)  decrease aggregate supply with restrictive fiscal policy. 
A)  increase aggregate demand with stimulative monetary policy. 
B)  increase aggregate supply with tax cuts. 
C)  decrease aggregate demand with restrictive fiscal and monetary policy. 
D)  decrease aggregate supply with restrictive fiscal policy.

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Figure 19-1 -Of the graphs in Figure 19-1,which one shows the effects of an increase in interest rates in Japan and a depreciation of the dollar?

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

If U.S.securities pay 7 percent interest,and if Great Britain's securities pay 5 percent interest,then

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

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

If the dollar appreciates,it can be said that

At any given moment there is one exchange rate

The recent experience in Greece,Portugal,and Ireland make the euro

Figure 19-3 -Of the graphs in Figure 19-3,where the dotted line shows the actual exchange rate,which one shows a country with an overvalued currency and a balance of trade deficit?

The prospect of a recession in the United States would probably cause the dollar to

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

Which of the following countries has gone so far as to adopt the U.S.dollar as its domestic currency?

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

In 2007,the value of the American dollar rose relative to the euro.

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

In 2008-2009,Iceland and several Baltic states increased their interest rates.One would expect which of the following?

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

A prolonged recession in Europe should decrease the

One method for a deficit country to correct the situation under a fixed exchange rate system is to

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?

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Figure 19-1 -Of the graphs in Figure 19-1,which one shows the effects of an increase in interest rates in Japan and a depreciation of the dollar?

Explain the role of the International Monetary Fund.Discuss the criticisms leveled against this agency in the wake of economic crises of the 1990s.

If U.S.securities pay 7 percent interest,and if Great Britain's securities pay 5 percent interest,then

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

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

If the dollar appreciates,it can be said that

At any given moment there is one exchange rate

The recent experience in Greece,Portugal,and Ireland make the euro

Figure 19-3 -Of the graphs in Figure 19-3,where the dotted line shows the actual exchange rate,which one shows a country with an overvalued currency and a balance of trade deficit?

The prospect of a recession in the United States would probably cause the dollar to

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

Which of the following countries has gone so far as to adopt the U.S.dollar as its domestic currency?

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

In 2007,the value of the American dollar rose relative to the euro.

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

In 2008-2009,Iceland and several Baltic states increased their interest rates.One would expect which of the following?

A country,such as Argentina in 2002,that is buying its own currency to maintain a given exchange rate

A prolonged recession in Europe should decrease the

One method for a deficit country to correct the situation under a fixed exchange rate system is to

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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