Question 1

Lately, the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

Accepted Answer

A) managed-float; devalued 
B) currency peg; depreciated 
C) floating rate; revalued 
D) currency peg; appreciated 
A) managed-float; devalued 
B) currency peg; depreciated 
C) floating rate; revalued 
D) currency peg; appreciated

Question 2

For developing countries, one of the dangers inherent in the inflows of capital that finance investment is

Accepted Answer

A) increasing unemployment that accompanies foreign investment. 
B) rapid outflows of funds that put pressure on exchange rates. 
C) the deflation that accompanies inflows of foreign capital. 
D) the inflation that accompanies outflows of foreign capital. 
A) increasing unemployment that accompanies foreign investment. 
B) rapid outflows of funds that put pressure on exchange rates. 
C) the deflation that accompanies inflows of foreign capital. 
D) the inflation that accompanies outflows of foreign capital.

Question 3

Inflation plays a major role in determining whether a currency is appreciating or depreciating.

Accepted Answer

A) True 
 B)False

Question 4

Figure 19-1
  
-Of the graphs in Figure 19-1, which one shows the effects of an increase in interest rates in Japan and a depreciation of the dollar?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 5

Under a gold standard, a balance of payments surplus automatically

Accepted Answer

A) raised interest rates. 
B) increased exports. 
C) increased domestic prices. 
D) decreased imports. 
A) raised interest rates. 
B) increased exports. 
C) increased domestic prices. 
D) decreased imports.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

A country with an overvalued currency

Accepted Answer

A) will have a balance of payments deficit. 
B) will suffer losses of foreign reserves. 
C) must intervene in the foreign exchange market to buy its own currency. 
D) All of the above are correct. 
A) will have a balance of payments deficit. 
B) will suffer losses of foreign reserves. 
C) must intervene in the foreign exchange market to buy its own currency. 
D) All of the above are correct.

Question 8

On June 3, 2005, it cost 1.22 U.S.dollars to buy one euro.How many euros did it take to buy one U.S.dollar?

Accepted Answer

A) 0.82 euros 
B) 0.88 euros 
C) 1.22 euros 
D) 88 euros 
A) 0.82 euros 
B) 0.88 euros 
C) 1.22 euros 
D) 88 euros

Question 9

Define the following terms and explain their importance to the study of macroeconomics:a.exchange rateb.depreciationc.devaluationd.fixed exchange rates

Accepted Answer

a.The exchange rate states the price, in

Question 10

-From Table 19-1, what is the exchange rate between the dollar and the pound?

Accepted Answer

A) One dollar is worth two pounds. 
B) One pound is worth two dollars. 
C) One pound is worth one dollar. 
D) One pound is worth 50 cents. 
A) One dollar is worth two pounds. 
B) One pound is worth two dollars. 
C) One pound is worth one dollar. 
D) One pound is worth 50 cents.

Question 11

An economic boom in the United States will tend to cause booms in other countries because as U.S.GDP rises, U.S.

Accepted Answer

A) tariffs will automatically fall. 
B) exports will rise. 
C) imports will rise. 
D) exports will fall. 
A) tariffs will automatically fall. 
B) exports will rise. 
C) imports will rise. 
D) exports will fall.

Question 12

Can the U.S.dollar and the European euro both appreciate relative to each other?

Accepted Answer

A) Yes, both countries can gain in this manner. 
B) Yes, provided the central banks permit it. 
C) No, unless there is a system of fixed exchange rates. 
D) No, if one currency appreciates, the other must depreciate. 
A) Yes, both countries can gain in this manner. 
B) Yes, provided the central banks permit it. 
C) No, unless there is a system of fixed exchange rates. 
D) No, if one currency appreciates, the other must depreciate.

Question 13

On May 12, 2011, it cost U.S.$.04 to buy one Russian ruble.How many Russian rubles would U.S.$1 buy?

Accepted Answer

A) 40 
B) 33 
C) 25 
D) 14 
A) 40 
B) 33 
C) 25 
D) 14

Question 14

A fixed exchange rate system encourages speculators to attack weaker currencies.

Accepted Answer

A) True 
 B)False

Question 15

Figure 19-3
  
-Of the graphs in Figure 19-3, where the dotted line shows the actual exchange rate, which one shows a country with an undervalued currency and a balance of trade surplus?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 16

Figure 19-2
  
-Of the graphs in Figure 19-2, which one shows the effects on the exchange rate of an expansion in Japan?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 17

If the U.S.purchases oil from Venezuela, 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 18

Everything else being equal, one can expect the euro to appreciate relative to the dollar if

Accepted Answer

A) Americans decrease their travel to Germany. 
B) the Germans add to their holdings of U.S.Treasury bills. 
C) Americans purchase land in Germany and build factories. 
D) American exports to Germany increase. 
A) Americans decrease their travel to Germany. 
B) the Germans add to their holdings of U.S.Treasury bills. 
C) Americans purchase land in Germany and build factories. 
D) American exports to Germany increase.

Question 19

Because central banks intervene in currency markets, the term ____ has been used to describe the system.

Accepted Answer

A) planned float 
B) controlled float 
C) flexible 
D) dirty float 
A) planned float 
B) controlled float 
C) flexible 
D) dirty float

Question 20

If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen, the dollar has depreciated.

Accepted Answer

A) True 
 B)False

Exam 36: The International Monetary System: Order or Disorder

Lately, the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

For developing countries, one of the dangers inherent in the inflows of capital that finance investment is

Inflation plays a major role in determining whether a currency is appreciating or depreciating.

Figure 19-1 -Of the graphs in Figure 19-1, which one shows the effects of an increase in interest rates in Japan and a depreciation of the dollar?

Under a gold standard, a balance of payments surplus automatically

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

A country with an overvalued currency

On June 3, 2005, it cost 1.22 U.S.dollars to buy one euro.How many euros did it take to buy one U.S.dollar?

Define the following terms and explain their importance to the study of macroeconomics:a.exchange rateb.depreciationc.devaluationd.fixed exchange rates

-From Table 19-1, what is the exchange rate between the dollar and the pound?

An economic boom in the United States will tend to cause booms in other countries because as U.S.GDP rises, U.S.

Can the U.S.dollar and the European euro both appreciate relative to each other?

On May 12, 2011, it cost U.S.$.04 to buy one Russian ruble.How many Russian rubles would U.S.$1 buy?

A fixed exchange rate system encourages speculators to attack weaker currencies.

Figure 19-3 -Of the graphs in Figure 19-3, where the dotted line shows the actual exchange rate, which one shows a country with an undervalued currency and a balance of trade surplus?

Figure 19-2 -Of the graphs in Figure 19-2, which one shows the effects on the exchange rate of an expansion in Japan?

If the U.S.purchases oil from Venezuela, what is the effect in the foreign exchange market?

Everything else being equal, one can expect the euro to appreciate relative to the dollar if

Because central banks intervene in currency markets, the term ____ has been used to describe the system.

If the price of the dollar changes from 100 Japanese yen to 120 Japanese yen, the dollar has depreciated.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

Lately, the Chinese authorities seem to be backing away from and the Yuan has relative to the dollar.