Question 1

U.S.currency continues to be backed by the gold standard to this day.

Accepted Answer

A) True 
 B)False

Question 2

International flows of capital increase both efficiency and growth in countries around the world.

Accepted Answer

A) True 
 B)False

Question 3

Purchasing power parity is the theory that,in the long run,exchange rates move to equalize

Accepted Answer

A) nominal interest rates across countries. 
B) real GDP across countries. 
C) corporate profits across countries. 
D) the relative purchasing power of currencies across countries. 
A) nominal interest rates across countries. 
B) real GDP across countries. 
C) corporate profits across countries. 
D) the relative purchasing power of currencies across countries.

Question 4

Will the use of the euro help increase economic growth in countries in the European Union? Will it help individual countries using the euro in times of recession? Explain.

Accepted Answer

While a common currency makes it easier

Question 5

Which aspects of globalization help to increase growth in the world economy?

Accepted Answer

Economic growth relies on the channel th

Question 6

Although the pegged exchange rate between the yuan and the dollar has ________ the yuan,China had been reluctant to abandon the peg for fear that abandoning the peg would ________.

Accepted Answer

A) undervalued; reduce exports 
B) undervalued; reduce imports 
C) overvalued; increase imports 
D) overvalued; reduce exports 
A) undervalued; reduce exports 
B) undervalued; reduce imports 
C) overvalued; increase imports 
D) overvalued; reduce exports

Question 7

Should European nations which are not currently using the euro choose to adopt the euro as their currency,these countries would risk giving up the ability to use ________ to stabilize their economies in the event of a recession.

Accepted Answer

A) expansionary fiscal policy 
B) contractionary fiscal policy 
C) expansionary monetary policy 
D) contractionary monetary policy 
A) expansionary fiscal policy 
B) contractionary fiscal policy 
C) expansionary monetary policy 
D) contractionary monetary policy

Question 8

If one U.S.dollar could be exchanged for one Australian dollar in 1970,and one U.S.dollar can now be exchanged for 0.98 Australian dollars,which of the following is true?

Accepted Answer

A) The U.S.dollar gained value against the Australian dollar. 
B) The Australian dollar lost value against the U.S.dollar. 
C) The Australian dollar gained value against the U.S.dollar. 
D) Both A and C are true. 
A) The U.S.dollar gained value against the Australian dollar. 
B) The Australian dollar lost value against the U.S.dollar. 
C) The Australian dollar gained value against the U.S.dollar. 
D) Both A and C are true.

Question 9

Figure 19-11  
-Refer to Figure 19-11.The graph above depicts supply and demand for British pounds during a trading day,where the quantity is millions of pounds.In order to support a fixed exchange rate of $2.00 per pound,the British central bank must

Accepted Answer

A) buy 0.6 million pounds per trading day. 
B) sell 0.6 million pounds per trading day. 
C) buy 1.2 million pounds per trading day. 
D) sell 1.2 million pounds per trading day. 
A) buy 0.6 million pounds per trading day. 
B) sell 0.6 million pounds per trading day. 
C) buy 1.2 million pounds per trading day. 
D) sell 1.2 million pounds per trading day.

Question 10

Briefly describe how the Bretton Woods system operated.

Accepted Answer

Under the Bretton Woods System of fixed

Question 11

Figure 19-7  
-Refer to Figure 19-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

Accepted Answer

A) undervalued. 
B) overvalued. 
C) parity valued. 
D) equilibrium valued. 
A) undervalued. 
B) overvalued. 
C) parity valued. 
D) equilibrium valued.

Question 12

The ________ in the United States is best described as a managed float exchange rate system.

Accepted Answer

A) earliest used exchange rate system 
B) current exchange rate system 
C) exchange rate system used prior to the Great Depression 
D) exchange rate system set up at the end of World War II 
A) earliest used exchange rate system 
B) current exchange rate system 
C) exchange rate system used prior to the Great Depression 
D) exchange rate system set up at the end of World War II

Question 13

How will the exchange rate (foreign currency per dollar)respond to an increase in the relative rate of productivity growth in the United States in the long run?

Accepted Answer

A) Exchange rates will rise. 
B) Exchange rates will fall. 
C) Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States,both in the short run and in the long run. 
D) The exchange rate will be affected in the short run,but not in the long run. 
A) Exchange rates will rise. 
B) Exchange rates will fall. 
C) Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States,both in the short run and in the long run. 
D) The exchange rate will be affected in the short run,but not in the long run.

Question 14

Foreign portfolio investment in the United States has continually declined since 1995.

Accepted Answer

A) True 
 B)False

Question 15

All of the following actions were taken by the Thai government to help Thailand maintain its peg against the dollar in the 1990s except

Accepted Answer

A) borrowing dollars from the International Monetary Fund in exchange for baht. 
B) buying baht on the foreign exchange market to support higher demand for the baht. 
C) increasing domestic interest rates to attract more foreign investors. 
D) imposing restrictions on exports to the United States to prevent too many dollars from entering the economy. 
A) borrowing dollars from the International Monetary Fund in exchange for baht. 
B) buying baht on the foreign exchange market to support higher demand for the baht. 
C) increasing domestic interest rates to attract more foreign investors. 
D) imposing restrictions on exports to the United States to prevent too many dollars from entering the economy.

Question 16

A depreciation of a country's currency always lowers the domestic firm's profits.

Accepted Answer

A) True 
 B)False

Question 17

When the Bretton Woods system was set up,the United States agreed initially to buy and sell gold at a price of ________ per ounce.

Accepted Answer

A) $24 
B) $35 
C) $42 
D) $48 
A) $24 
B) $35 
C) $42 
D) $48

Question 18

Table 19-1
   Source: "The Big Mac Index," Economist,July 13,2017.
-Refer to Table 19-1.Fill in the missing values in the above table.Assume the Big Mac is selling for $5.30 in the United States.Explain whether the U.S.dollar is overvalued or undervalued relative to each of the other currencies and predict what will happen in the future to each exchange rate.

Accepted Answer

To calculate the implied exchange rate,d

Question 19

Figure 19-10  
-Refer to Figure 19-10.Under the Bretton Woods System of exchange rates,if the par exchange rate was $4 per pound in the figure above,then which of the following is true?

Accepted Answer

A) The Bank of England would have to buy 0.7 million pounds per day with dollars. 
B) There is a shortage of pounds equal to 0.7 million. 
C) The Bank of England would have to sell 0.7 million pounds per day in exchange for dollars. 
D) The par exchange rate is below the equilibrium rate,causing a shortage of domestic currency. 
A) The Bank of England would have to buy 0.7 million pounds per day with dollars. 
B) There is a shortage of pounds equal to 0.7 million. 
C) The Bank of England would have to sell 0.7 million pounds per day in exchange for dollars. 
D) The par exchange rate is below the equilibrium rate,causing a shortage of domestic currency.

Question 20

Expanding,contracting,and managing the money supply is easier for a central bank under the gold standard.

Accepted Answer

A) True 
 B)False

U.S.currency continues to be backed by the gold standard to this day.

International flows of capital increase both efficiency and growth in countries around the world.

Purchasing power parity is the theory that,in the long run,exchange rates move to equalize

Will the use of the euro help increase economic growth in countries in the European Union? Will it help individual countries using the euro in times of recession? Explain.

Which aspects of globalization help to increase growth in the world economy?

Although the pegged exchange rate between the yuan and the dollar has the yuan,China had been reluctant to abandon the peg for fear that abandoning the peg would .

Should European nations which are not currently using the euro choose to adopt the euro as their currency,these countries would risk giving up the ability to use ________ to stabilize their economies in the event of a recession.

If one U.S.dollar could be exchanged for one Australian dollar in 1970,and one U.S.dollar can now be exchanged for 0.98 Australian dollars,which of the following is true?

Figure 19-11 -Refer to Figure 19-11.The graph above depicts supply and demand for British pounds during a trading day,where the quantity is millions of pounds.In order to support a fixed exchange rate of $2.00 per pound,the British central bank must

Briefly describe how the Bretton Woods system operated.

Figure 19-7 -Refer to Figure 19-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

The ________ in the United States is best described as a managed float exchange rate system.

How will the exchange rate (foreign currency per dollar)respond to an increase in the relative rate of productivity growth in the United States in the long run?

Foreign portfolio investment in the United States has continually declined since 1995.

All of the following actions were taken by the Thai government to help Thailand maintain its peg against the dollar in the 1990s except

A depreciation of a country's currency always lowers the domestic firm's profits.

When the Bretton Woods system was set up,the United States agreed initially to buy and sell gold at a price of ________ per ounce.

Figure 19-10 -Refer to Figure 19-10.Under the Bretton Woods System of exchange rates,if the par exchange rate was $4 per pound in the figure above,then which of the following is true?

Expanding,contracting,and managing the money supply is easier for a central bank under the gold standard.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

Filters

Exam 19: The International Financial System

U.S.currency continues to be backed by the gold standard to this day.

International flows of capital increase both efficiency and growth in countries around the world.

Purchasing power parity is the theory that,in the long run,exchange rates move to equalize

Will the use of the euro help increase economic growth in countries in the European Union? Will it help individual countries using the euro in times of recession? Explain.

Which aspects of globalization help to increase growth in the world economy?

Although the pegged exchange rate between the yuan and the dollar has ________ the yuan,China had been reluctant to abandon the peg for fear that abandoning the peg would ________.

Should European nations which are not currently using the euro choose to adopt the euro as their currency,these countries would risk giving up the ability to use ________ to stabilize their economies in the event of a recession.

If one U.S.dollar could be exchanged for one Australian dollar in 1970,and one U.S.dollar can now be exchanged for 0.98 Australian dollars,which of the following is true?

Figure 19-11 -Refer to Figure 19-11.The graph above depicts supply and demand for British pounds during a trading day,where the quantity is millions of pounds.In order to support a fixed exchange rate of $2.00 per pound,the British central bank must

Briefly describe how the Bretton Woods system operated.

Figure 19-7 -Refer to Figure 19-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

The ________ in the United States is best described as a managed float exchange rate system.

How will the exchange rate (foreign currency per dollar)respond to an increase in the relative rate of productivity growth in the United States in the long run?

Foreign portfolio investment in the United States has continually declined since 1995.

All of the following actions were taken by the Thai government to help Thailand maintain its peg against the dollar in the 1990s except

A depreciation of a country's currency always lowers the domestic firm's profits.

When the Bretton Woods system was set up,the United States agreed initially to buy and sell gold at a price of ________ per ounce.

Figure 19-10 -Refer to Figure 19-10.Under the Bretton Woods System of exchange rates,if the par exchange rate was $4 per pound in the figure above,then which of the following is true?

Expanding,contracting,and managing the money supply is easier for a central bank under the gold standard.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

Filters

Although the pegged exchange rate between the yuan and the dollar has the yuan,China had been reluctant to abandon the peg for fear that abandoning the peg would .