Question 1

Which of the following three goals that make up the policy trilemma can be achieved at the same time in China?

Accepted Answer

A)  exchange rate stability and free capital flows 
B)  monetary policy independence and exchange rate stability 
C)  free capital flows and monetary policy independence 
D)  exchange rate stability, free capital flows, and monetary policy independence 
A)  exchange rate stability and free capital flows 
B)  monetary policy independence and exchange rate stability 
C)  free capital flows and monetary policy independence 
D)  exchange rate stability, free capital flows, and monetary policy independence

Question 2

The gold standard probably made the Great Depression more severe in the United States because

Accepted Answer

A)  the value of gold declined sharply during those years. 
B)  the existence of the gold standard kept prices from falling. 
C)  the money supply in the United States increased rapidly as gold flowed into the country. 
D)  the Fed attempted to reduce gold outflows by raising the discount rate. 
A)  the value of gold declined sharply during those years. 
B)  the existence of the gold standard kept prices from falling. 
C)  the money supply in the United States increased rapidly as gold flowed into the country. 
D)  the Fed attempted to reduce gold outflows by raising the discount rate.

Question 3

How does a sterilized intervention by the Fed in foreign exchange markets differ from an unsterilized intervention?

Accepted Answer

Unlike an unsterilized interve

Question 4

If the U.S.dollar were to cease to be the leading international reserve currency

Accepted Answer

A)  U.S. households and businesses would be unaffected. 
B)  U.S. households and businesses would be subject to increased exchange rate risk. 
C)  interest rates in the U.S. would be lower. 
D)  the U.S. monetary base would contract. 
A)  U.S. households and businesses would be unaffected. 
B)  U.S. households and businesses would be subject to increased exchange rate risk. 
C)  interest rates in the U.S. would be lower. 
D)  the U.S. monetary base would contract.

Question 5

A nation with an official settlements balance of $50 billion is likely to experience a

Accepted Answer

A)  balance of payments surplus and accumulate $50 billion in international reserves. 
B)  balance of payments deficit and accumulate $50 billion in international reserves. 
C)  balance of payments surplus and a decline of $50 billion in international reserves. 
D)  balance of payments deficit and a decline of $50 billion in international reserves. 
A)  balance of payments surplus and accumulate $50 billion in international reserves. 
B)  balance of payments deficit and accumulate $50 billion in international reserves. 
C)  balance of payments surplus and a decline of $50 billion in international reserves. 
D)  balance of payments deficit and a decline of $50 billion in international reserves.

Question 6

The main difference between a sterilized intervention and unsterilized intervention in the foreign exchange market is

Accepted Answer

A)  a sterilized intervention is coordinated with other nations. 
B)  an unsterilized intervention does not change the exchange rate. 
C)  an unsterilized intervention does not change the monetary base. 
D)  a sterilized intervention does not change the monetary base. 
A)  a sterilized intervention is coordinated with other nations. 
B)  an unsterilized intervention does not change the exchange rate. 
C)  an unsterilized intervention does not change the monetary base. 
D)  a sterilized intervention does not change the monetary base.

Question 7

In what sense does the IMF act as a lender of last resort? How might the IMF's actions during the Mexican crisis of the mid-1990s have contributed to the Asian currency crisis a few years later?

Accepted Answer

The IMF acts as an international lender

Question 8

In 2015,the net financial account balance was approximately

Accepted Answer

A)  $790 billion. 
B)  $195 billion. 
C)  -$0.04 billion. 
D)  -$463 billion. 
A)  $790 billion. 
B)  $195 billion. 
C)  -$0.04 billion. 
D)  -$463 billion.

Question 9

The "troika" that helped Greece avoid defaulting on its debt included all of the following EXCEPT the

Accepted Answer

A)  IMF. 
B)  European Central Bank. 
C)  World Bank. 
D)  European Commission. 
A)  IMF. 
B)  European Central Bank. 
C)  World Bank. 
D)  European Commission.

Question 10

If the central bank buys foreign assets

Accepted Answer

A)  the domestic monetary base will decline. 
B)  domestic short-term interest rates will decline. 
C)  the foreign-exchange value of the domestic currency will rise. 
D)  its holdings of international reserves will rise. 
A)  the domestic monetary base will decline. 
B)  domestic short-term interest rates will decline. 
C)  the foreign-exchange value of the domestic currency will rise. 
D)  its holdings of international reserves will rise.

Question 11

Briefly describe how the Bretton Woods system worked.What advantages did it have over the gold standard? What problems did the Bretton Woods system eventually encounter?

Accepted Answer

Under the Bretton Woods system,the Unite

Question 12

An unsterilized foreign-exchange intervention occurs

Accepted Answer

A)  whenever a central bank purchases or sells domestic currency. 
B)  whenever a central bank purchases or sells foreign currency. 
C)  whenever a central bank allows the monetary base to respond to the sale or purchase of domestic currency. 
D)  whenever a central bank fails to reduce its holdings of gold by the amount of a foreign-exchange purchase. 
A)  whenever a central bank purchases or sells domestic currency. 
B)  whenever a central bank purchases or sells foreign currency. 
C)  whenever a central bank allows the monetary base to respond to the sale or purchase of domestic currency. 
D)  whenever a central bank fails to reduce its holdings of gold by the amount of a foreign-exchange purchase.

Question 13

What accounted for much of policymakers' concern over U.S.current account deficits in the 1980s,1990s,and 2000s?

Accepted Answer

A)  The current account deficits were thought to be largely responsible for the federal budget deficit. 
B)  Current account deficits lower U.S. interest rates, thereby leading to reduced domestic saving. 
C)  Current account deficits require the United States to borrow funds from foreign savers. 
D)  The United States had signed international agreements in which it had pledged not to run a current account deficit for more than three years in a row. 
A)  The current account deficits were thought to be largely responsible for the federal budget deficit. 
B)  Current account deficits lower U.S. interest rates, thereby leading to reduced domestic saving. 
C)  Current account deficits require the United States to borrow funds from foreign savers. 
D)  The United States had signed international agreements in which it had pledged not to run a current account deficit for more than three years in a row.

Question 14

Capital inflow restrictions

Accepted Answer

A)  receive less support from economists than full capital controls. 
B)  may lessen domestic lending booms and risk-taking by domestic banks. 
C)  were imposed in the United States during the late 1990s. 
D)  were imposed in Europe in May 2000. 
A)  receive less support from economists than full capital controls. 
B)  may lessen domestic lending booms and risk-taking by domestic banks. 
C)  were imposed in the United States during the late 1990s. 
D)  were imposed in Europe in May 2000.

Question 15

In the early 1930s

Accepted Answer

A)  countries that abandoned the gold standard suffered severe inflation. 
B)  countries that tried to defend the gold standard suffered more depression than countries that abandoned the gold standard. 
C)  the gold standard was abandoned by every major industrial country except England. 
D)  the United States was the first major industrial country to abandon the gold standard. 
A)  countries that abandoned the gold standard suffered severe inflation. 
B)  countries that tried to defend the gold standard suffered more depression than countries that abandoned the gold standard. 
C)  the gold standard was abandoned by every major industrial country except England. 
D)  the United States was the first major industrial country to abandon the gold standard.

Question 16

A purchase of foreign assets by a central bank has the same impact on the monetary base as

Accepted Answer

A)  an open market purchase of government securities. 
B)  an open market sale of government securities. 
C)  an increase in the discount rate. 
D)  a reduction in the interest rate on reserves. 
A)  an open market purchase of government securities. 
B)  an open market sale of government securities. 
C)  an increase in the discount rate. 
D)  a reduction in the interest rate on reserves.

Question 17

Under the gold standard,if the demand for U.S.goods increased,which of the following would happen?

Accepted Answer

A)  Gold would flow into the United States. 
B)  The U.S. monetary base would decline. 
C)  Prices in the United States would fall. 
D)  The United States would experience a balance of trade deficit. 
A)  Gold would flow into the United States. 
B)  The U.S. monetary base would decline. 
C)  Prices in the United States would fall. 
D)  The United States would experience a balance of trade deficit.

Question 18

Foreign-exchange market interventions will always

Accepted Answer

A)  lead to a decline in domestic interest rates relative to foreign interest rates. 
B)  lead to a rise in domestic interest rates relative to foreign interest rates. 
C)  lead to a decline in the domestic money supply. 
D)  alter a central bank's holdings of international reserves. 
A)  lead to a decline in domestic interest rates relative to foreign interest rates. 
B)  lead to a rise in domestic interest rates relative to foreign interest rates. 
C)  lead to a decline in the domestic money supply. 
D)  alter a central bank's holdings of international reserves.

Question 19

Which of the following was NOT considered to have been a drawback of the pre-1914 gold standard?

Accepted Answer

A)  It sometimes led to inflation, which several times in the late nineteenth century caused recessions in the United States. 
B)  Countries had little control over their domestic monetary policies. 
C)  Countries with trade deficits experienced deflation. 
D)  Changes in the world money supply were strongly influenced by gold discoveries. 
A)  It sometimes led to inflation, which several times in the late nineteenth century caused recessions in the United States. 
B)  Countries had little control over their domestic monetary policies. 
C)  Countries with trade deficits experienced deflation. 
D)  Changes in the world money supply were strongly influenced by gold discoveries.

Question 20

Which of the following statements is correct?

Accepted Answer

A)  A devaluation of the British pound would result in more dollars to the pound. 
B)  A revaluation of the British pound would raise the prices of U.S. goods in Britain. 
C)  A devaluation of the British pound would lower the prices of British goods in the United States. 
D)  Revaluations and devaluations of a country's currency were not allowed under the Bretton Woods system. 
A)  A devaluation of the British pound would result in more dollars to the pound. 
B)  A revaluation of the British pound would raise the prices of U.S. goods in Britain. 
C)  A devaluation of the British pound would lower the prices of British goods in the United States. 
D)  Revaluations and devaluations of a country's currency were not allowed under the Bretton Woods system.

Which of the following three goals that make up the policy trilemma can be achieved at the same time in China?

The gold standard probably made the Great Depression more severe in the United States because

How does a sterilized intervention by the Fed in foreign exchange markets differ from an unsterilized intervention?

If the U.S.dollar were to cease to be the leading international reserve currency

A nation with an official settlements balance of $50 billion is likely to experience a

The main difference between a sterilized intervention and unsterilized intervention in the foreign exchange market is

In what sense does the IMF act as a lender of last resort? How might the IMF's actions during the Mexican crisis of the mid-1990s have contributed to the Asian currency crisis a few years later?

In 2015,the net financial account balance was approximately

The "troika" that helped Greece avoid defaulting on its debt included all of the following EXCEPT the

If the central bank buys foreign assets

Briefly describe how the Bretton Woods system worked.What advantages did it have over the gold standard? What problems did the Bretton Woods system eventually encounter?

An unsterilized foreign-exchange intervention occurs

What accounted for much of policymakers' concern over U.S.current account deficits in the 1980s,1990s,and 2000s?

Capital inflow restrictions

In the early 1930s

A purchase of foreign assets by a central bank has the same impact on the monetary base as

Under the gold standard,if the demand for U.S.goods increased,which of the following would happen?

Foreign-exchange market interventions will always

Which of the following was NOT considered to have been a drawback of the pre-1914 gold standard?

Which of the following statements is correct?

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

Which of the following three goals that make up the policy trilemma can be achieved at the same time in China?

The gold standard probably made the Great Depression more severe in the United States because

How does a sterilized intervention by the Fed in foreign exchange markets differ from an unsterilized intervention?

If the U.S.dollar were to cease to be the leading international reserve currency

A nation with an official settlements balance of $50 billion is likely to experience a

The main difference between a sterilized intervention and unsterilized intervention in the foreign exchange market is

In what sense does the IMF act as a lender of last resort? How might the IMF's actions during the Mexican crisis of the mid-1990s have contributed to the Asian currency crisis a few years later?

In 2015,the net financial account balance was approximately

The "troika" that helped Greece avoid defaulting on its debt included all of the following EXCEPT the

If the central bank buys foreign assets

Briefly describe how the Bretton Woods system worked.What advantages did it have over the gold standard? What problems did the Bretton Woods system eventually encounter?

An unsterilized foreign-exchange intervention occurs

What accounted for much of policymakers' concern over U.S.current account deficits in the 1980s,1990s,and 2000s?

Capital inflow restrictions

In the early 1930s

A purchase of foreign assets by a central bank has the same impact on the monetary base as

Under the gold standard,if the demand for U.S.goods increased,which of the following would happen?

Foreign-exchange market interventions will always

Which of the following was NOT considered to have been a drawback of the pre-1914 gold standard?

Which of the following statements is correct?

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