Question 1

The sale of foreign assets by a central bank accompanied by an open market purchase of securities of the same size results in

Accepted Answer

A)  a reduction in the monetary base. 
B)  an increase in the monetary base. 
C)  a sterilized intervention. 
D)  an unsterilized intervention. 
A)  a reduction in the monetary base. 
B)  an increase in the monetary base. 
C)  a sterilized intervention. 
D)  an unsterilized intervention.

Question 2

Countries in which region experienced disruptive capital flows in 1997-98?

Accepted Answer

A)  Eastern Europe 
B)  Western Europe 
C)  Latin America 
D)  East Asia 
A)  Eastern Europe 
B)  Western Europe 
C)  Latin America 
D)  East Asia

Question 3

If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S.Treasury

Accepted Answer

A)  the monetary base will decline by $1 billion. 
B)  the monetary base will rise by $1 billion. 
C)  the Fed has conducted an unsterilized foreign-exchange intervention. 
D)  the Fed has conducted a sterilized foreign-exchange intervention. 
A)  the monetary base will decline by $1 billion. 
B)  the monetary base will rise by $1 billion. 
C)  the Fed has conducted an unsterilized foreign-exchange intervention. 
D)  the Fed has conducted a sterilized foreign-exchange intervention.

Question 4

Currently,the price of gold is

Accepted Answer

A)  fixed by the United States. 
B)  adjusted periodically by the IMF. 
C)  adjusted periodically by the World Bank. 
D)  determined in the market by demand and supply. 
A)  fixed by the United States. 
B)  adjusted periodically by the IMF. 
C)  adjusted periodically by the World Bank. 
D)  determined in the market by demand and supply.

Question 5

Make use of a graph of the foreign exchange market to show how the Brazilian Central Bank can use an unsterilized intervention to reduce the value of its currency,the real,in terms of the dollar.

Accepted Answer

An unsterilized intervention by the cent

Question 6

Assets denominated in foreign currency and used in international transactions are referred to as

Accepted Answer

A)  foreign money. 
B)  international reserves. 
C)  international monetary base. 
D)  foreign exchange. 
A)  foreign money. 
B)  international reserves. 
C)  international monetary base. 
D)  foreign exchange.

Question 7

Historically,the leading official reserve asset was

Accepted Answer

A)  gold. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  the German mark. 
A)  gold. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  the German mark.

Question 8

How can a country with a fixed nominal exchange rate,such as Greece,experience a lower real exchange rate?

Accepted Answer

A)  by experiencing higher inflation than its partners 
B)  by experiencing deflation if its partners have low inflation rates 
C)  by limiting the growth of productivity 
D)  by increasing wages at a faster rate than inflation 
A)  by experiencing higher inflation than its partners 
B)  by experiencing deflation if its partners have low inflation rates 
C)  by limiting the growth of productivity 
D)  by increasing wages at a faster rate than inflation

Question 9

The official settlement balance

Accepted Answer

A)  is an amount that the IMF requires each member country to pay annually. 
B)  must by definition always be zero. 
C)  equals the current account balance divided by the capital account balance. 
D)  equals the net increase in a country's official reserve assets. 
A)  is an amount that the IMF requires each member country to pay annually. 
B)  must by definition always be zero. 
C)  equals the current account balance divided by the capital account balance. 
D)  equals the net increase in a country's official reserve assets.

Question 10

Which of the following is NOT considered a payment in the balance of payments?

Accepted Answer

A)  capital outflows 
B)  U.S. foreign aid to other countries 
C)  imports of goods 
D)  exports of services 
A)  capital outflows 
B)  U.S. foreign aid to other countries 
C)  imports of goods 
D)  exports of services

Question 11

At the time the monetary union in Europe began in 1999,which of the following countries declined to participate?

Accepted Answer

A)  France 
B)  United Kingdom 
C)  Italy 
D)  Germany 
A)  France 
B)  United Kingdom 
C)  Italy 
D)  Germany

Question 12

If the Fed sterilizes the purchase of foreign assets

Accepted Answer

A)  its assets and liabilities rise by the same amount. 
B)  its assets and liabilities fall by the same amount. 
C)  the composition of its assets changes, but its liabilities are unaffected. 
D)  the composition of its liabilities changes, but its assets are unaffected. 
A)  its assets and liabilities rise by the same amount. 
B)  its assets and liabilities fall by the same amount. 
C)  the composition of its assets changes, but its liabilities are unaffected. 
D)  the composition of its liabilities changes, but its assets are unaffected.

Question 13

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion

Accepted Answer

A)  its assets will rise by $2 billion and the monetary base will rise by $2 billion. 
B)  its assets will fall by $2 billion and the monetary base will fall by $2 billion. 
C)  its assets will rise by $2 billion and the monetary base will fall by $2 billion. 
D)  its assets will fall by $2 billion and the monetary base will rise by $2 billion. 
A)  its assets will rise by $2 billion and the monetary base will rise by $2 billion. 
B)  its assets will fall by $2 billion and the monetary base will fall by $2 billion. 
C)  its assets will rise by $2 billion and the monetary base will fall by $2 billion. 
D)  its assets will fall by $2 billion and the monetary base will rise by $2 billion.

Question 14

Throughout most of the post-World War II period,the use of capital controls by governments around the world was declining.But in the late 1990s,a number of governments expressed renewed interest in capital controls.What accounts for this renewed interest?

Accepted Answer

The major currency crises during this pe

Question 15

The Swiss franc is considered to be stronger if

Accepted Answer

A)  it takes fewer francs to acquire a foreign currency such as a dollar. 
B)  it takes more francs to acquire a foreign currency such as a dollar. 
C)  it takes fewer dollars to acquire a franc. 
D)  it takes fewer dollars and fewer euros to acquire a franc. 
A)  it takes fewer francs to acquire a foreign currency such as a dollar. 
B)  it takes more francs to acquire a foreign currency such as a dollar. 
C)  it takes fewer dollars to acquire a franc. 
D)  it takes fewer dollars and fewer euros to acquire a franc.

Question 16

How did the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

Accepted Answer

Before the euro,the central banks of tho

Question 17

All of the following are advantages of currency pegging EXCEPT

Accepted Answer

A)  it reduces exchange rate risk. 
B)  it is a check against inflation. 
C)  it provides protection for firms that have taken out loans in foreign currencies. 
D)  it keeps the exchange rate closer to its equilibrium rate. 
A)  it reduces exchange rate risk. 
B)  it is a check against inflation. 
C)  it provides protection for firms that have taken out loans in foreign currencies. 
D)  it keeps the exchange rate closer to its equilibrium rate.

Question 18

The trade balance is

Accepted Answer

A)  by definition, identical to the current account balance. 
B)  a major portion, but not the only component, of the current account balance. 
C)  almost invariably larger than the financial account balance. 
D)  the largest component of the financial account. 
A)  by definition, identical to the current account balance. 
B)  a major portion, but not the only component, of the current account balance. 
C)  almost invariably larger than the financial account balance. 
D)  the largest component of the financial account.

Question 19

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Accepted Answer

Some economists point out that this prob

Question 20

Special Drawing Rights

Accepted Answer

A)  are granted by the Fed to banks which want to trade in the foreign exchange markets. 
B)  were eliminated when the Bretton Woods system broke down. 
C)  are created by the IMF in its role as lender of last resort. 
D)  were created by the Nixon administration on August 15, 1971. 
A)  are granted by the Fed to banks which want to trade in the foreign exchange markets. 
B)  were eliminated when the Bretton Woods system broke down. 
C)  are created by the IMF in its role as lender of last resort. 
D)  were created by the Nixon administration on August 15, 1971.

The sale of foreign assets by a central bank accompanied by an open market purchase of securities of the same size results in

Countries in which region experienced disruptive capital flows in 1997-98?

If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S.Treasury

Currently,the price of gold is

Make use of a graph of the foreign exchange market to show how the Brazilian Central Bank can use an unsterilized intervention to reduce the value of its currency,the real,in terms of the dollar.

Assets denominated in foreign currency and used in international transactions are referred to as

Historically,the leading official reserve asset was

How can a country with a fixed nominal exchange rate,such as Greece,experience a lower real exchange rate?

The official settlement balance

Which of the following is NOT considered a payment in the balance of payments?

At the time the monetary union in Europe began in 1999,which of the following countries declined to participate?

If the Fed sterilizes the purchase of foreign assets

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion

Throughout most of the post-World War II period,the use of capital controls by governments around the world was declining.But in the late 1990s,a number of governments expressed renewed interest in capital controls.What accounts for this renewed interest?

The Swiss franc is considered to be stronger if

How did the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

All of the following are advantages of currency pegging EXCEPT

The trade balance is

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Special Drawing Rights

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 16: The International Financial System and Monetary Policy

The sale of foreign assets by a central bank accompanied by an open market purchase of securities of the same size results in

Countries in which region experienced disruptive capital flows in 1997-98?

If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S.Treasury

Currently,the price of gold is

Make use of a graph of the foreign exchange market to show how the Brazilian Central Bank can use an unsterilized intervention to reduce the value of its currency,the real,in terms of the dollar.

Assets denominated in foreign currency and used in international transactions are referred to as

Historically,the leading official reserve asset was

How can a country with a fixed nominal exchange rate,such as Greece,experience a lower real exchange rate?

The official settlement balance

Which of the following is NOT considered a payment in the balance of payments?

At the time the monetary union in Europe began in 1999,which of the following countries declined to participate?

If the Fed sterilizes the purchase of foreign assets

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion

Throughout most of the post-World War II period,the use of capital controls by governments around the world was declining.But in the late 1990s,a number of governments expressed renewed interest in capital controls.What accounts for this renewed interest?

The Swiss franc is considered to be stronger if

How did the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

All of the following are advantages of currency pegging EXCEPT

The trade balance is

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Special Drawing Rights

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters