Question 1

On May 12,2011,it cost U.S.$.04 to buy one 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 2

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 3

A fixed exchange rate can be maintained by a government as long as it has sufficient

Accepted Answer

A)  supplies of its own currency. 
B)  foreign reserves. 
C)  gold and other precious metals. 
D)  tax revenues. 
A)  supplies of its own currency. 
B)  foreign reserves. 
C)  gold and other precious metals. 
D)  tax revenues.

Question 4

Under a gold standard,a discovery of gold will

Accepted Answer

A)  decrease the general price level. 
B)  increase the general price level. 
C)  cause increased unemployment. 
D)  cause decreased rates of economic growth. 
A)  decrease the general price level. 
B)  increase the general price level. 
C)  cause increased unemployment. 
D)  cause decreased rates of economic growth.

Question 5

Appreciation is the term used to describe

Accepted Answer

A)  the conversion of one currency into another currency in the free market 
B)  a reduction in the official value of a currency. 
C)  the upward movement of currencies in a free market. 
D)  an increase in the official value of a currency. 
A)  the conversion of one currency into another currency in the free market 
B)  a reduction in the official value of a currency. 
C)  the upward movement of currencies in a free market. 
D)  an increase in the official value of a currency.

Question 6

A strong dollar helps U.S.exporters and hurts importers.

Accepted Answer

A) True 
 B)False

Question 7

Adhering to a strict fixed exchange rate system means that

Accepted Answer

A)  no country will experience inflation or recession. 
B)  each nation improves control over its money supply. 
C)  each nation loses some control of its monetary policy and its domestic economy. 
D)  each nation improves control over its fiscal policy and aggregate demand. 
A)  no country will experience inflation or recession. 
B)  each nation improves control over its money supply. 
C)  each nation loses some control of its monetary policy and its domestic economy. 
D)  each nation improves control over its fiscal policy and aggregate demand.

Question 8

If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen,the dollar has depreciated.

Accepted Answer

A) True 
 B)False

Question 9

Figure 19-2
  
-Of the graphs in Figure 19-2,which one shows Japan practicing "dirty" floating to keep an undervalued currency?

Accepted Answer

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

Question 10

Assuming free trade between countries,exchange rates will change so that goods cost the same in all countries.This concept is known as the

Accepted Answer

A)  long-run equilibrium theory. 
B)  exchange rate equalization theory. 
C)  interest rate parity theory. 
D)  purchasing power parity theory. 
A)  long-run equilibrium theory. 
B)  exchange rate equalization theory. 
C)  interest rate parity theory. 
D)  purchasing power parity theory.

Question 11

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 12

Why did the Bretton Woods system ultimately break down?

Accepted Answer

A)  The refusal of OPEC countries to accept payment for oil in gold. 
B)  The refusal of surplus countries to devalue as required by law. 
C)  An inability to devalue the U.S. dollar despite chronic payments deficits. 
D)  An inability to adequately measure balance of payments surpluses and deficits. 
A)  The refusal of OPEC countries to accept payment for oil in gold. 
B)  The refusal of surplus countries to devalue as required by law. 
C)  An inability to devalue the U.S. dollar despite chronic payments deficits. 
D)  An inability to adequately measure balance of payments surpluses and deficits.

Question 13

The exchange rate of Country X is set by government decisions and maintained by government actions.Country X follows a

Accepted Answer

A)  floating exchange rate policy. 
B)  free market exchange rate policy. 
C)  pegged exchange rate policy. 
D)  fixed exchange rate policy. 
A)  floating exchange rate policy. 
B)  free market exchange rate policy. 
C)  pegged exchange rate policy. 
D)  fixed exchange rate policy.

Question 14

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 15

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

Accepted Answer

A) 0.69 
B) 1.44 
C) 1.69 
D) 2.44 
A) 0.69 
B) 1.44 
C) 1.69 
D) 2.44

Question 16

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

Accepted Answer

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

Question 17

If the U.S.purchases oil from Venezuela,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 18

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

Accepted Answer

A) True 
 B)False

Question 19

The currency value of Agraria is set by government decree.Which of the following happens when the government alters the exchange rate so that its currency can buy more units of foreign currency?

Accepted Answer

A)  Reflation 
B)  Devaluation 
C)  Appreciation 
D)  Revaluation 
A)  Reflation 
B)  Devaluation 
C)  Appreciation 
D)  Revaluation

Question 20

A freely floating exchange rate brings some risks to people who are actively engaged in foreign trade.

Accepted Answer

A) True 
 B)False

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

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

A fixed exchange rate can be maintained by a government as long as it has sufficient

Under a gold standard,a discovery of gold will

Appreciation is the term used to describe

A strong dollar helps U.S.exporters and hurts importers.

Adhering to a strict fixed exchange rate system means that

If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen,the dollar has depreciated.

Figure 19-2 -Of the graphs in Figure 19-2,which one shows Japan practicing "dirty" floating to keep an undervalued currency?

Assuming free trade between countries,exchange rates will change so that goods cost the same in all countries.This concept is known as the

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

Why did the Bretton Woods system ultimately break down?

The exchange rate of Country X is set by government decisions and maintained by government actions.Country X follows a

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?

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

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

If the U.S.purchases oil from Venezuela,what is the effect in the foreign exchange market?

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

The currency value of Agraria is set by government decree.Which of the following happens when the government alters the exchange rate so that its currency can buy more units of foreign currency?

A freely floating exchange rate brings some risks to people who are actively engaged in foreign trade.

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?

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

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

A fixed exchange rate can be maintained by a government as long as it has sufficient

Under a gold standard,a discovery of gold will

Appreciation is the term used to describe

A strong dollar helps U.S.exporters and hurts importers.

Adhering to a strict fixed exchange rate system means that

If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen,the dollar has depreciated.

Figure 19-2 -Of the graphs in Figure 19-2,which one shows Japan practicing "dirty" floating to keep an undervalued currency?

Assuming free trade between countries,exchange rates will change so that goods cost the same in all countries.This concept is known as the

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

Why did the Bretton Woods system ultimately break down?

The exchange rate of Country X is set by government decisions and maintained by government actions.Country X follows a

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?

On May 12,2011,it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

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

If the U.S.purchases oil from Venezuela,what is the effect in the foreign exchange market?

Countries experiencing balance of payments surpluses are usually eager to inflate their economies.

The currency value of Agraria is set by government decree.Which of the following happens when the government alters the exchange rate so that its currency can buy more units of foreign currency?

A freely floating exchange rate brings some risks to people who are actively engaged in foreign trade.

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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