Question 1

When a government intentionally lowers the value of its currency,that is called depreciation.

Accepted Answer

A) True 
 B)False

Question 2

An area in which the United States has had a sizable surplus in its balance of payments is sales of ____ to foreigners.

Accepted Answer

A)  goods 
B)  energy 
C)  assets 
D)  automobiles 
A)  goods 
B)  energy 
C)  assets 
D)  automobiles

Question 3

The Bretton Woods agreements

Accepted Answer

A)  established a system of fixed exchange rates based on the free convertibility of the U.S. dollar into gold. 
B)  established a system of fixed exchange rates based on the gold standard. 
C)  permitted countries with a balance of payments deficit to make regular devaluations of their currencies. 
D)  established GATT to police and manage exchange rates. 
A)  established a system of fixed exchange rates based on the free convertibility of the U.S. dollar into gold. 
B)  established a system of fixed exchange rates based on the gold standard. 
C)  permitted countries with a balance of payments deficit to make regular devaluations of their currencies. 
D)  established GATT to police and manage exchange rates.

Question 4

The exchange rate

Accepted Answer

A)  is the ratio of two countries' GDPs. 
B)  is the rate at which one country's money is flowing into another country. 
C)  states the price of one currency in terms of another currency. 
D)  is closely related to the concept of absolute advantage. 
A)  is the ratio of two countries' GDPs. 
B)  is the rate at which one country's money is flowing into another country. 
C)  states the price of one currency in terms of another currency. 
D)  is closely related to the concept of absolute advantage.

Question 5

The decline in the value of the dollar from 1985 to 1988 was beneficial to

Accepted Answer

A)  American tourists travelling to Europe. 
B)  firms importing goods into America. 
C)  American exporting businesses. 
D)  foreigners holding U.S. government bonds. 
A)  American tourists travelling to Europe. 
B)  firms importing goods into America. 
C)  American exporting businesses. 
D)  foreigners holding U.S. government bonds.

Question 6

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 7

Why does anyone demand foreign currency?

Accepted Answer

A)  international trade in goods and services 
B)  international trade in financial assets 
C)  purchases of physical assets overseas 
D)  All of the above are correct. 
A)  international trade in goods and services 
B)  international trade in financial assets 
C)  purchases of physical assets overseas 
D)  All of the above are correct.

Question 8

On May 12,2011 the U.S.dollar was worth 0.70 euros.How many dollars did it take to buy one euro?

Accepted Answer

A) 0.70 
B) 1.43 
C) 1.70 
D) 2.70 
A) 0.70 
B) 1.43 
C) 1.70 
D) 2.70

Question 9

If the U.S.exports passenger jet aircraft,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 10

Which of the following would cause an increase in the demand for U.S.dollars?

Accepted Answer

A)  an interest rate cut in the United States 
B)  an interest rate cut in Europe 
C)  an interest rate increase in Europe 
D)  a recession in Europe 
A)  an interest rate cut in the United States 
B)  an interest rate cut in Europe 
C)  an interest rate increase in Europe 
D)  a recession in Europe

Question 11

If the dollar depreciates,it can be said that

Accepted Answer

A)  foreign countries no longer respect the United States. 
B)  it falls in value within the United States. 
C)  it takes fewer dollars to buy foreign currencies. 
D)  other currencies appreciate. 
A)  foreign countries no longer respect the United States. 
B)  it falls in value within the United States. 
C)  it takes fewer dollars to buy foreign currencies. 
D)  other currencies appreciate.

Question 12

Under the gold standard,

Accepted Answer

A)  no nation had control of its domestic monetary policy, and therefore no nation could control its aggregate demand. 
B)  the world's commerce was at the mercy of gold discoveries. 
C)  discoveries of gold meant higher prices in the long run and higher real economic activity in the short run. 
D)  All of the above are correct. 
A)  no nation had control of its domestic monetary policy, and therefore no nation could control its aggregate demand. 
B)  the world's commerce was at the mercy of gold discoveries. 
C)  discoveries of gold meant higher prices in the long run and higher real economic activity in the short run. 
D)  All of the above are correct.

Question 13

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

Accepted Answer

A) True 
 B)False

Question 14

An overvalued currency,such as the Argentinean peso in 2001,is an indicator of a balance of payments surplus.

Accepted Answer

A) True 
 B)False

Question 15

Explain three factors that would cause the dollar to appreciate.

Accepted Answer

An increase in the demand for U.S.export

Question 16

The currency of the European Union,the euro,was established as part of the Bretton Woods agreements.

Accepted Answer

A) True 
 B)False

Question 17

There is an exchange rate between

Accepted Answer

A)  every pair of currencies. 
B)  the world's major currencies but not between the currencies of less-developed countries. 
C)  currencies on a fixed-exchange rate system but not for those on a floating-rate system. 
D)  the currencies of the European Union but not for the nations outside the European Union. 
A)  every pair of currencies. 
B)  the world's major currencies but not between the currencies of less-developed countries. 
C)  currencies on a fixed-exchange rate system but not for those on a floating-rate system. 
D)  the currencies of the European Union but not for the nations outside the European Union.

Question 18

The exchange rate between yen and dollars at one point in 2010 was 83 yen per dollar.If a Big Mac,fries,and a Coke cost $3.91 in San Francisco,how much should the same order cost in yen in Osaka?

Accepted Answer

A) 0.03 
B)  325 
C)  392 
D)  422 
A) 0.03 
B)  325 
C)  392 
D)  422

Question 19

The U.S.Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate.The likely outcome of currency speculation in response to this news is that

Accepted Answer

A)  the dollar will depreciate. 
B)  the dollar will appreciate. 
C)  the yen will appreciate. 
D)  both the dollar and yen will appreciate. 
A)  the dollar will depreciate. 
B)  the dollar will appreciate. 
C)  the yen will appreciate. 
D)  both the dollar and yen will appreciate.

Question 20

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

Accepted Answer

A) True 
 B)False

When a government intentionally lowers the value of its currency,that is called depreciation.

An area in which the United States has had a sizable surplus in its balance of payments is sales of ____ to foreigners.

The Bretton Woods agreements

The exchange rate

The decline in the value of the dollar from 1985 to 1988 was beneficial to

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

Why does anyone demand foreign currency?

On May 12,2011 the U.S.dollar was worth 0.70 euros.How many dollars did it take to buy one euro?

If the U.S.exports passenger jet aircraft,what is the effect in the foreign exchange market?

Which of the following would cause an increase in the demand for U.S.dollars?

If the dollar depreciates,it can be said that

Under the gold standard,

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

An overvalued currency,such as the Argentinean peso in 2001,is an indicator of a balance of payments surplus.

Explain three factors that would cause the dollar to appreciate.

The currency of the European Union,the euro,was established as part of the Bretton Woods agreements.

There is an exchange rate between

The exchange rate between yen and dollars at one point in 2010 was 83 yen per dollar.If a Big Mac,fries,and a Coke cost $3.91 in San Francisco,how much should the same order cost in yen in Osaka?

The U.S.Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate.The likely outcome of currency speculation in response to this news is that

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

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?

When a government intentionally lowers the value of its currency,that is called depreciation.

An area in which the United States has had a sizable surplus in its balance of payments is sales of ____ to foreigners.

The Bretton Woods agreements

The exchange rate

The decline in the value of the dollar from 1985 to 1988 was beneficial to

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

Why does anyone demand foreign currency?

On May 12,2011 the U.S.dollar was worth 0.70 euros.How many dollars did it take to buy one euro?

If the U.S.exports passenger jet aircraft,what is the effect in the foreign exchange market?

Which of the following would cause an increase in the demand for U.S.dollars?

If the dollar depreciates,it can be said that

Under the gold standard,

A deficit country,like Argentina in 2001,must follow restrictive monetary and fiscal policy in order to maintain a fixed exchange rate.

An overvalued currency,such as the Argentinean peso in 2001,is an indicator of a balance of payments surplus.

Explain three factors that would cause the dollar to appreciate.

The currency of the European Union,the euro,was established as part of the Bretton Woods agreements.

There is an exchange rate between

The exchange rate between yen and dollars at one point in 2010 was 83 yen per dollar.If a Big Mac,fries,and a Coke cost $3.91 in San Francisco,how much should the same order cost in yen in Osaka?

The U.S.Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate.The likely outcome of currency speculation in response to this news is that

The gold standard prevented a nation from controlling its domestic economy through monetary policy.

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