Question 1

Under the gold standard era of 1870-1914

Accepted Answer

A)  Tokyo was the center of the international monetary system. 
B)  Paris was the center of the international monetary system. 
C)  Berlin was the center of the international monetary system. 
D)  New York was the center of the international monetary system. 
E)  London was the center of the international monetary system. 
A)  Tokyo was the center of the international monetary system. 
B)  Paris was the center of the international monetary system. 
C)  Berlin was the center of the international monetary system. 
D)  New York was the center of the international monetary system. 
E)  London was the center of the international monetary system.

Question 2

Explain how a country with a current account surplus is a ripe candidate for currency revaluation.

Accepted Answer

If a country like Germany had a current

Question 3

Coordination of economic policies among nations is a prisoner's ________ because if all countries go it alone, they will choose to ________.

Accepted Answer

A)  dilemma; compete 
B)  conundrum; cooperate 
C)  sentence; compete 
D)  dilemma; cooperate 
E)  quandary; collude 
A)  dilemma; compete 
B)  conundrum; cooperate 
C)  sentence; compete 
D)  dilemma; cooperate 
E)  quandary; collude

Question 4

Economic experience since 1973 indicates that, under floating exchange rates, symmetry

Accepted Answer

A)  was not attained. 
B)  was attained almost immediately. 
C)  was attained over time as central banks held more U.S. dollars as a reserve currency. 
D)  has been difficult to measure and no consensus has emerged. 
E)  has been attained in foreign countries, but not domestically. 
A)  was not attained. 
B)  was attained almost immediately. 
C)  was attained over time as central banks held more U.S. dollars as a reserve currency. 
D)  has been difficult to measure and no consensus has emerged. 
E)  has been attained in foreign countries, but not domestically.

Question 5

Advocates of flexible exchange rates claim that under flexible exchange rates, a currency

Accepted Answer

A)  depreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them. 
B)  appreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them. 
C)  appreciation caused by decreasing the money supply would reduce unemployment by increasing world demand for them. 
D)  appreciation caused by increasing the money supply would increase unemployment by increasing world demand for them. 
E)  appreciation caused by increasing the money supply would increase unemployment by decreasing world demand for them. 
A)  depreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them. 
B)  appreciation caused by increasing the money supply would reduce unemployment by increasing world demand for them. 
C)  appreciation caused by decreasing the money supply would reduce unemployment by increasing world demand for them. 
D)  appreciation caused by increasing the money supply would increase unemployment by increasing world demand for them. 
E)  appreciation caused by increasing the money supply would increase unemployment by decreasing world demand for them.

Question 6

A sudden decrease in the U.S. price level

Accepted Answer

A)  makes those with dollar debts worse off. 
B)  makes those with dollar debts better off. 
C)  does not affect those with dollar debts. 
D)  makes those with DM worse off. 
E)  makes creditors worse off. 
A)  makes those with dollar debts worse off. 
B)  makes those with dollar debts better off. 
C)  does not affect those with dollar debts. 
D)  makes those with DM worse off. 
E)  makes creditors worse off.

Question 7

"Fixed exchange rates are not even an option for most countries." Discuss.

Accepted Answer

Durable fixed exchange rate arrangements

Question 8

The case of New Zealand, described in the text, concludes that a country's current account deficits are NOT sustainable if a country's

Accepted Answer

A)  prospects for long-term economic growth are above its global deficit growth. 
B)  ability to sustain current account deficits is questionable. 
C)  unproductive industrial sectors and its prospects for long-run growth. 
D)  labor productivity is below that of most other countries. 
E)  exchange rate has fallen relative to other currencies. 
A)  prospects for long-term economic growth are above its global deficit growth. 
B)  ability to sustain current account deficits is questionable. 
C)  unproductive industrial sectors and its prospects for long-run growth. 
D)  labor productivity is below that of most other countries. 
E)  exchange rate has fallen relative to other currencies.

Question 9

Coordination of economic policies among nations is a prisoner's ________ because all countries will be better off if they ________.

Accepted Answer

A)  dilemma; cooperate 
B)  conundrum; cooperate 
C)  sentence; compete 
D)  screed; compete 
E)  quandary; collude 
A)  dilemma; cooperate 
B)  conundrum; cooperate 
C)  sentence; compete 
D)  screed; compete 
E)  quandary; collude

Question 10

Economic experience since 1973 indicates that, under floating exchange rates

Accepted Answer

A)  large and persistent departures from external balance were not prevented. 
B)  large and persistent departures from external balance were prevented. 
C)  changes in exchange rates failed to act as automatic stabilizers. 
D)  reduced monetary policy autonomy. 
E)  monetary policy autonomy was protected. 
A)  large and persistent departures from external balance were not prevented. 
B)  large and persistent departures from external balance were prevented. 
C)  changes in exchange rates failed to act as automatic stabilizers. 
D)  reduced monetary policy autonomy. 
E)  monetary policy autonomy was protected.

Question 11

Which of the following is one component of the "trilemma" that is faced by policy makers in choosing monetary arrangements?

Accepted Answer

A)  freedom of international capital movements 
B)  exchange rate instability 
C)  tariffs and subsidies 
D)  restrictions on the migration of labor 
E)  global inflation 
A)  freedom of international capital movements 
B)  exchange rate instability 
C)  tariffs and subsidies 
D)  restrictions on the migration of labor 
E)  global inflation

Question 12

-Refer to the above figure. Use the DD-AA model to examine and compare the response of an economy under fixed and floating exchange rate to a temporary fall in foreign demand for its exports.

Accepted Answer

The DD curve shifts to the left. When th

Question 13

The alteration of exchange rates to move the economy to internal and external balance may lead to all EXCEPT

Accepted Answer

A)  a balance of payments crisis. 
B)  changes in the terms of trade. 
C)  changes in the level of imports or exports. 
D)  changes in interest rates. 
E)  a guaranteed unilateral improvement in economic wealth. 
A)  a balance of payments crisis. 
B)  changes in the terms of trade. 
C)  changes in the level of imports or exports. 
D)  changes in interest rates. 
E)  a guaranteed unilateral improvement in economic wealth.

Question 14

What is a convertible currency?

Accepted Answer

A convertible curren

Question 15

Advocates of flexible exchange rates claim that under flexible exchange rates

Accepted Answer

A)  enhanced control over fiscal policy would allow countries to dismantle their distorting barriers to international payments. 
B)  reduced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. 
C)  enhanced control over monetary policy would allow countries to increase their distorting barriers to international payments. 
D)  enhanced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. 
E)  enhanced control over monetary policy would destabilize exchange rates. 
A)  enhanced control over fiscal policy would allow countries to dismantle their distorting barriers to international payments. 
B)  reduced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. 
C)  enhanced control over monetary policy would allow countries to increase their distorting barriers to international payments. 
D)  enhanced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. 
E)  enhanced control over monetary policy would destabilize exchange rates.

Question 16

How did the international monetary system influence macroeconomic policy-making and performance during the gold standard era (1870-1914)?

Accepted Answer

London was the center of the internation

Question 17

Under the fixed rate regime foreign countries could hold their dollar exchange rates constant by

Accepted Answer

A)  using tight monetary policy. 
B)  using expansionary fiscal policy. 
C)  negotiating with the central bank of the United States. 
D)  setting their domestic interest rate equal to the U.S. interest rate. 
E)  holding their exchange rates constantly pegged to the euro and yen. 
A)  using tight monetary policy. 
B)  using expansionary fiscal policy. 
C)  negotiating with the central bank of the United States. 
D)  setting their domestic interest rate equal to the U.S. interest rate. 
E)  holding their exchange rates constantly pegged to the euro and yen.

Question 18

Advocates of flexible exchange rates claim that under flexible exchange rates

Accepted Answer

A)  the United States would no longer have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
B)  the United States would have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
C)  the United Kingdom would not have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
D)  Germany would not have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
E)  China would have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
A)  the United States would no longer have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
B)  the United States would have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
C)  the United Kingdom would not have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
D)  Germany would not have the same opportunity as other countries to influence its exchange rate against foreign currencies. 
E)  China would have the same opportunity as other countries to influence its exchange rate against foreign currencies.

Question 19

Which system of interest rates is theoretically worst for policy coordination among the industrial countries of the world?
 How has this played out since the 1980s?

Accepted Answer

- pro-fixed rate theorists predicted tha

Question 20

Under fixed exchange rates

Accepted Answer

A)  monetary policy is not an effective policy. 
B)  fiscal policy is not an effective policy. 
C)  monetary policy and fiscal policy are not effective. 
D)  both monetary and fiscal policies are effective. 
E)  monetary policy has an unpredictable effect on the domestic money supply. 
A)  monetary policy is not an effective policy. 
B)  fiscal policy is not an effective policy. 
C)  monetary policy and fiscal policy are not effective. 
D)  both monetary and fiscal policies are effective. 
E)  monetary policy has an unpredictable effect on the domestic money supply.

Exam 19: International Monetary Systems: an Historical Overview

Under the gold standard era of 1870-1914

Explain how a country with a current account surplus is a ripe candidate for currency revaluation.

Coordination of economic policies among nations is a prisoner's ________ because if all countries go it alone, they will choose to ________.

Economic experience since 1973 indicates that, under floating exchange rates, symmetry

Advocates of flexible exchange rates claim that under flexible exchange rates, a currency

A sudden decrease in the U.S. price level

"Fixed exchange rates are not even an option for most countries." Discuss.

The case of New Zealand, described in the text, concludes that a country's current account deficits are NOT sustainable if a country's

Coordination of economic policies among nations is a prisoner's ________ because all countries will be better off if they ________.

Economic experience since 1973 indicates that, under floating exchange rates

Which of the following is one component of the "trilemma" that is faced by policy makers in choosing monetary arrangements?

-Refer to the above figure. Use the DD-AA model to examine and compare the response of an economy under fixed and floating exchange rate to a temporary fall in foreign demand for its exports.

The alteration of exchange rates to move the economy to internal and external balance may lead to all EXCEPT

What is a convertible currency?

Advocates of flexible exchange rates claim that under flexible exchange rates

How did the international monetary system influence macroeconomic policy-making and performance during the gold standard era (1870-1914)?

Under the fixed rate regime foreign countries could hold their dollar exchange rates constant by

Advocates of flexible exchange rates claim that under flexible exchange rates

Which system of interest rates is theoretically worst for policy coordination among the industrial countries of the world? How has this played out since the 1980s?

Under fixed exchange rates

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

Coordination of economic policies among nations is a prisoner's because if all countries go it alone, they will choose to .

Coordination of economic policies among nations is a prisoner's because all countries will be better off if they .