Exam 15: The International Financial System

Describe the four determinants of exchange rates in the long run. _ _

(Essay)

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Question 41

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, what is the dollar cost of a Big Mac in Poland?

(Multiple Choice)

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Question 42

Fill in the values for the implied exchange rate in the various currencies per United States (US)dollar in the following table. Assume that the Big Mac burger sells for $3.06 in the United States of America. Explain whether the US dollar is overvalued or undervalued relative to each currency and predict what will happen in the future to each exchange rate. _ _

(Essay)

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Question 43

When a currency's exchange rate is pegged to the United States (US)dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency, then in order to maintain the peg, the country's central bank must:

(Multiple Choice)

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Question 44

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms, then:

(Multiple Choice)

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Question 45

The model of purchasing power parity is the only way to determine whether a country's currency is undervalued or overvalued.

(True/False)

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Question 46

The countries that abandoned the gold standard the earliest during the Great Depression suffered the least loss of production.

(True/False)

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Question 47

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

(True/False)

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Question 48

If a country's exchange rate is pegged above the equilibrium exchange rate, the country must:

(Multiple Choice)

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Question 49

If Australians develop an increased preference for foreign goods, how will the exchange rate for the dollar respond in the long run, ceteris paribus?

(Multiple Choice)

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Question 50

Today, there are some developing countries that attempt to fix their currencies against the United States dollar.

(True/False)

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Question 51

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

(True/False)

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Question 52

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

(True/False)

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Question 53

The greatest drawback to the gold standard was that the central bank lacked control of the supply of gold.

(True/False)

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Question 54

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that the dollar will:

(Multiple Choice)

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Question 55

If one United States dollar could be exchanged for one Australian dollar in 1970, and one United States dollar can now be exchanged for 1.27 Australian dollars, which of the following is true?

(Multiple Choice)

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Question 56

By the early 20th century, the majority of the world's major trading nations had adopted the:

(Multiple Choice)

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Question 57

The International Monetary Fund was established during the Bretton Woods System to:

(Multiple Choice)

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Question 58

Which of the following would increase the value of the Australian dollar in the long run?

(Multiple Choice)

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Question 59

A country that imports a significant proportion of its consumer goods can avoid inflation by adopting a fixed exchange rate because it can avoid the price increases of that occur when the value of the domestic currency .

(Multiple Choice)

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Question 60

Describe the four determinants of exchange rates in the long run. _ _

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, what is the dollar cost of a Big Mac in Poland?

When a currency's exchange rate is pegged to the United States (US)dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency, then in order to maintain the peg, the country's central bank must:

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms, then:

The model of purchasing power parity is the only way to determine whether a country's currency is undervalued or overvalued.

The countries that abandoned the gold standard the earliest during the Great Depression suffered the least loss of production.

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

If a country's exchange rate is pegged above the equilibrium exchange rate, the country must:

If Australians develop an increased preference for foreign goods, how will the exchange rate for the dollar respond in the long run, ceteris paribus?

Today, there are some developing countries that attempt to fix their currencies against the United States dollar.

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

The greatest drawback to the gold standard was that the central bank lacked control of the supply of gold.

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that the dollar will:

If one United States dollar could be exchanged for one Australian dollar in 1970, and one United States dollar can now be exchanged for 1.27 Australian dollars, which of the following is true?

By the early 20th century, the majority of the world's major trading nations had adopted the:

The International Monetary Fund was established during the Bretton Woods System to:

Which of the following would increase the value of the Australian dollar in the long run?

A country that imports a significant proportion of its consumer goods can avoid inflation by adopting a fixed exchange rate because it can avoid the price increases of that occur when the value of the domestic currency .

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

Filters

Exam 15: The International Financial System

Describe the four determinants of exchange rates in the long run. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, what is the dollar cost of a Big Mac in Poland?

When a currency's exchange rate is pegged to the United States (US)dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency, then in order to maintain the peg, the country's central bank must:

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms, then:

The model of purchasing power parity is the only way to determine whether a country's currency is undervalued or overvalued.

The countries that abandoned the gold standard the earliest during the Great Depression suffered the least loss of production.

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

If a country's exchange rate is pegged above the equilibrium exchange rate, the country must:

If Australians develop an increased preference for foreign goods, how will the exchange rate for the dollar respond in the long run, ceteris paribus?

Today, there are some developing countries that attempt to fix their currencies against the United States dollar.

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

The greatest drawback to the gold standard was that the central bank lacked control of the supply of gold.

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that the dollar will:

If one United States dollar could be exchanged for one Australian dollar in 1970, and one United States dollar can now be exchanged for 1.27 Australian dollars, which of the following is true?

By the early 20th century, the majority of the world's major trading nations had adopted the:

The International Monetary Fund was established during the Bretton Woods System to:

Which of the following would increase the value of the Australian dollar in the long run?

A country that imports a significant proportion of its consumer goods can avoid inflation by adopting a fixed exchange rate because it can avoid the price increases of ________ that occur when the value of the domestic currency ________.

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

Filters

Describe the four determinants of exchange rates in the long run. _ _

A country that imports a significant proportion of its consumer goods can avoid inflation by adopting a fixed exchange rate because it can avoid the price increases of that occur when the value of the domestic currency .