Question 1

The Bretton Woods system _____

Accepted Answer

A)  established a worldwide gold standard. 
B)  established a worldwide system of fixed exchange rates. 
C)  established a worldwide system of flexible exchange rates. 
D)  harmonized tariff systems. 
E)  was restricted to industrialized nations. 
A)  established a worldwide gold standard. 
B)  established a worldwide system of fixed exchange rates. 
C)  established a worldwide system of flexible exchange rates. 
D)  harmonized tariff systems. 
E)  was restricted to industrialized nations.

Question 2

When gold production exceeded the growth in economic activity, _____

Accepted Answer

A)  the price level dropped. 
B)  the price level rose. 
C)  the price level was unchanged. 
D)  money supply decreased. 
E)  deflation occurred. 
A)  the price level dropped. 
B)  the price level rose. 
C)  the price level was unchanged. 
D)  money supply decreased. 
E)  deflation occurred.

Question 3

An exchange rate is the price of one commodity (e.g., corn) measured in terms of another commodity (e.g., wheat).

Accepted Answer

A) True 
 B)False

Question 4

If the dollar per pound exchange rate falls from $1.50 per pound to $1.25 per pound, ______

Accepted Answer

A)  U.S. imports of British goods will increase. 
B)  U.S. exports of goods to Great Britain will increase. 
C)  U.S. exports of services to Great Britain will fall because the price of the pound has increased. 
D)  British demand for American goods will remain unchanged, but American demand for British goods will fall. 
E)  U.S. demand for British goods will remain unchanged, but British demand for American goods will increase. 
A)  U.S. imports of British goods will increase. 
B)  U.S. exports of goods to Great Britain will increase. 
C)  U.S. exports of services to Great Britain will fall because the price of the pound has increased. 
D)  British demand for American goods will remain unchanged, but American demand for British goods will fall. 
E)  U.S. demand for British goods will remain unchanged, but British demand for American goods will increase.

Question 5

A fixed exchange rate is enforced by _____

Accepted Answer

A)  state governments, who establish appropriate trade barriers for each country they trade with. 
B)  state governments, who manipulate gold reserves appropriately. 
C)  central banks, who buy and sell appropriate currencies. 
D)  the International Monetary Fund, which offers loans to its member countries. 
E)  local governments, who manipulate capital reserves appropriately. 
A)  state governments, who establish appropriate trade barriers for each country they trade with. 
B)  state governments, who manipulate gold reserves appropriately. 
C)  central banks, who buy and sell appropriate currencies. 
D)  the International Monetary Fund, which offers loans to its member countries. 
E)  local governments, who manipulate capital reserves appropriately.

Question 6

Between 1917 and 1982, the U.S. ran a financial account deficit.

Accepted Answer

A) True 
 B)False

Question 7

If under the gold standard, the dollar was worth one ounce of gold, and the British pound was worth one ounce of gold, then one British pound was worth _____

Accepted Answer

A)  $5. 
B)  $20. 
C)  $4. 
D)  $1. 
E)  half an ounce of gold. 
A)  $5. 
B)  $20. 
C)  $4. 
D)  $1. 
E)  half an ounce of gold.

Question 8

If interest rates fall in country A, other things constant, which of the following statements is true?

Accepted Answer

A)  The demand for country A's currency will fall and the currency will depreciate. 
B)  The demand for country A's currency will fall and the currency will appreciate. 
C)  The demand for country A's currency will increase and the currency will depreciate. 
D)  The demand for country A's currency will increase and the currency will appreciate. 
E)  There will be a net inflow of foreign investments in country A. 
A)  The demand for country A's currency will fall and the currency will depreciate. 
B)  The demand for country A's currency will fall and the currency will appreciate. 
C)  The demand for country A's currency will increase and the currency will depreciate. 
D)  The demand for country A's currency will increase and the currency will appreciate. 
E)  There will be a net inflow of foreign investments in country A.

Question 9

If the exchange rate changes from 20 cents per franc to 18 cents per franc, the U.S. dollar has _____

Accepted Answer

A)  appreciated, since its value has increased. 
B)  appreciated, since its value has declined. 
C)  depreciated, making French goods more expensive in the United States. 
D)  depreciated, since its value has declined. 
E)  depreciated, since its value has increased. 
A)  appreciated, since its value has increased. 
B)  appreciated, since its value has declined. 
C)  depreciated, making French goods more expensive in the United States. 
D)  depreciated, since its value has declined. 
E)  depreciated, since its value has increased.

Question 10

Exhibit 18.1
  
-Refer to Exhibit 18.1. A shift of the demand curve from D to D' will _____

Accepted Answer

A)  decrease the exchange rate from E' to E. 
B)  increase the exchange rate from E to E'. 
C)  cause the foreign currency to depreciate. 
D)  cause the domestic currency to appreciate. 
E)  cause the supply curve to shift. 
A)  decrease the exchange rate from E' to E. 
B)  increase the exchange rate from E to E'. 
C)  cause the foreign currency to depreciate. 
D)  cause the domestic currency to appreciate. 
E)  cause the supply curve to shift.

Question 11

Any decrease in the demand for foreign exchange, other things constant, will _____

Accepted Answer

A)  reduce the number of foreign exchange units required to purchase dollars. 
B)  reduce the number of dollars required to purchase one unit of foreign exchange. 
C)  cause the dollar to depreciate. 
D)  cause the foreign currency to appreciate. 
E)  have no effect. 
A)  reduce the number of foreign exchange units required to purchase dollars. 
B)  reduce the number of dollars required to purchase one unit of foreign exchange. 
C)  cause the dollar to depreciate. 
D)  cause the foreign currency to appreciate. 
E)  have no effect.

Question 12

If the British pound appreciates, U.S. television stations need fewer dollars to buy episodes of a British sitcom from the British Broadcasting Company.

Accepted Answer

A) True 
 B)False

Question 13

If the U.S. dollar appreciates relative to the Brazilian real, then _____

Accepted Answer

A)  the U.S. dollar per real exchange rate will increase. 
B)  U.S. goods become less expensive in Brazil. 
C)  Brazilian goods become more expensive in the United States. 
D)  Brazilian investors will pay fewer reals to buy one unit of U.S. dollar. 
E)  the United States will import more goods and services from Brazil. 
A)  the U.S. dollar per real exchange rate will increase. 
B)  U.S. goods become less expensive in Brazil. 
C)  Brazilian goods become more expensive in the United States. 
D)  Brazilian investors will pay fewer reals to buy one unit of U.S. dollar. 
E)  the United States will import more goods and services from Brazil.

Question 14

If the current account is in deficit, imports of goods and services exceed exports of goods and services, plus net unilateral transfers.

Accepted Answer

A) True 
 B)False

Question 15

The value of a country's exports is listed in its balance-of-payments account as a(n) _____

Accepted Answer

A)  credit. 
B)  debit. 
C)  payment. 
D)  investment. 
E)  unilateral transfer. 
A)  credit. 
B)  debit. 
C)  payment. 
D)  investment. 
E)  unilateral transfer.

Question 16

The International Monetary Fund was founded in _____

Accepted Answer

A)  1938. 
B)  1961. 
C)  1971. 
D)  1991. 
E)  1944. 
A)  1938. 
B)  1961. 
C)  1971. 
D)  1991. 
E)  1944.

Question 17

The purchasing power parity theory _____

Accepted Answer

A)  is more a predictor of a long-run tendency than of the day-to-day relationship between changes in the price level and the exchange rate. 
B)  predicts that exchange rates between two currencies will adjust in the short run so that the price level is equal to the exchange rate between two countries. 
C)  is more a predictor of a short-run phenomenon than of a long-run relationship between the price level and the exchange rate between two countries. 
D)  is helpful in explaining long-run trends, even though trade barriers and central bank intervention may hinder the usefulness of the theory. 
E)  tells us that a country's currency generally will appreciate if its inflation rate is higher than that of the rest of the world. 
A)  is more a predictor of a long-run tendency than of the day-to-day relationship between changes in the price level and the exchange rate. 
B)  predicts that exchange rates between two currencies will adjust in the short run so that the price level is equal to the exchange rate between two countries. 
C)  is more a predictor of a short-run phenomenon than of a long-run relationship between the price level and the exchange rate between two countries. 
D)  is helpful in explaining long-run trends, even though trade barriers and central bank intervention may hinder the usefulness of the theory. 
E)  tells us that a country's currency generally will appreciate if its inflation rate is higher than that of the rest of the world.

Question 18

An exchange rate is _____

Accepted Answer

A)  the rate at which goods are traded between countries. 
B)  the rate at which the central bank of a country gives loans to commercial banks. 
C)  the rate at which commercial banks give loans to individuals. 
D)  the price of one currency in terms of another. 
E)  the price at which one good trades for another within a country. 
A)  the rate at which goods are traded between countries. 
B)  the rate at which the central bank of a country gives loans to commercial banks. 
C)  the rate at which commercial banks give loans to individuals. 
D)  the price of one currency in terms of another. 
E)  the price at which one good trades for another within a country.

Question 19

Which of the following statements is true of speculators?

Accepted Answer

A)  There is no risk involved in their speculative activity. 
B)  They simultaneously buy and sell a currency in different markets. 
C)  They hope to profit by trading a currency at a different exchange rate later. 
D)  Their actions do not affect exchange rates. 
E)  Their actions are exactly like those of arbitrageurs. 
A)  There is no risk involved in their speculative activity. 
B)  They simultaneously buy and sell a currency in different markets. 
C)  They hope to profit by trading a currency at a different exchange rate later. 
D)  Their actions do not affect exchange rates. 
E)  Their actions are exactly like those of arbitrageurs.

Question 20

Under fixed exchange rates, government officials have limited roles to play in the foreign exchange market.

Accepted Answer

A) True 
 B)False

The Bretton Woods system _____

When gold production exceeded the growth in economic activity, _____

An exchange rate is the price of one commodity (e.g., corn) measured in terms of another commodity (e.g., wheat).

If the dollar per pound exchange rate falls from $1.50 per pound to $1.25 per pound, ______

A fixed exchange rate is enforced by _____

Between 1917 and 1982, the U.S. ran a financial account deficit.

If under the gold standard, the dollar was worth one ounce of gold, and the British pound was worth one ounce of gold, then one British pound was worth _____

If interest rates fall in country A, other things constant, which of the following statements is true?

If the exchange rate changes from 20 cents per franc to 18 cents per franc, the U.S. dollar has _____

Exhibit 18.1 -Refer to Exhibit 18.1. A shift of the demand curve from D to D' will _____

Any decrease in the demand for foreign exchange, other things constant, will _____

If the British pound appreciates, U.S. television stations need fewer dollars to buy episodes of a British sitcom from the British Broadcasting Company.

If the U.S. dollar appreciates relative to the Brazilian real, then _____

If the current account is in deficit, imports of goods and services exceed exports of goods and services, plus net unilateral transfers.

The value of a country's exports is listed in its balance-of-payments account as a(n) _____

The International Monetary Fund was founded in _____

The purchasing power parity theory _____

An exchange rate is _____

Which of the following statements is true of speculators?

Under fixed exchange rates, government officials have limited roles to play in the foreign exchange market.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

Economic Development.

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Exam 18: International Finance.

The Bretton Woods system _____

When gold production exceeded the growth in economic activity, _____

An exchange rate is the price of one commodity (e.g., corn) measured in terms of another commodity (e.g., wheat).

If the dollar per pound exchange rate falls from $1.50 per pound to $1.25 per pound, ______

A fixed exchange rate is enforced by _____

Between 1917 and 1982, the U.S. ran a financial account deficit.

If under the gold standard, the dollar was worth one ounce of gold, and the British pound was worth one ounce of gold, then one British pound was worth _____

If interest rates fall in country A, other things constant, which of the following statements is true?

If the exchange rate changes from 20 cents per franc to 18 cents per franc, the U.S. dollar has _____

Exhibit 18.1 -Refer to Exhibit 18.1. A shift of the demand curve from D to D' will _____

Any decrease in the demand for foreign exchange, other things constant, will _____

If the British pound appreciates, U.S. television stations need fewer dollars to buy episodes of a British sitcom from the British Broadcasting Company.

If the U.S. dollar appreciates relative to the Brazilian real, then _____

If the current account is in deficit, imports of goods and services exceed exports of goods and services, plus net unilateral transfers.

The value of a country's exports is listed in its balance-of-payments account as a(n) _____

The International Monetary Fund was founded in _____

The purchasing power parity theory _____

An exchange rate is _____

Which of the following statements is true of speculators?

Under fixed exchange rates, government officials have limited roles to play in the foreign exchange market.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

Economic Development.

Filters