Question 1

The most extreme inflationary conditions occurred

Accepted Answer

A) in Zimbabwe in 2008. 
B) in Chile in 2012. 
C) in Eastern Europe in the 1990s. 
D) in Western Europe in the 1980s. 
E) in Germany in 20013. 
A) in Zimbabwe in 2008. 
B) in Chile in 2012. 
C) in Eastern Europe in the 1990s. 
D) in Western Europe in the 1980s. 
E) in Germany in 20013.

Question 2

What will be the effects of an increase in the money supply on the interest rate?

Accepted Answer

An increase in the money supply will cau

Question 3

Which one of the countries below announces inflation targets?

Accepted Answer

A) Japan 
B) U.S. 
C) Canada 
D) Mexico 
E) Nicaragua 
A) Japan 
B) U.S. 
C) Canada 
D) Mexico 
E) Nicaragua

Question 4

The aggregate demand for money can be expressed by

Accepted Answer

A) Md = P × L(R,Y). 
B) Md = L × P(R,Y). 
C) Md = P × Y(R,L). 
D) Md = R × L(P,Y). 
E) Md = R × L(R,P). 
A) Md = P × L(R,Y). 
B) Md = L × P(R,Y). 
C) Md = P × Y(R,L). 
D) Md = R × L(P,Y). 
E) Md = R × L(R,P).

Question 5

Individuals base their demand for an asset on

Accepted Answer

A) the expected return the asset offers compared with the returns offered by other assets. 
B) the riskiness of the asset's expected return. 
C) the asset's liquidity. 
D) the expected return,how risky that expected return is,and the asset's liquidity. 
E) the aesthetic qualities of the asset. 
A) the expected return the asset offers compared with the returns offered by other assets. 
B) the riskiness of the asset's expected return. 
C) the asset's liquidity. 
D) the expected return,how risky that expected return is,and the asset's liquidity. 
E) the aesthetic qualities of the asset.

Question 6

In a classic paper,Columbia University economist Phillip Cagan drew the line between inflation and hyperinflation at an inflation rate of

Accepted Answer

A) more than 120 percent per year. 
B) more than 100 percent per year. 
C) more than 200 percent per year. 
D) more than 12,000 percent per year. 
E) more than 1,000 percent per year. 
A) more than 120 percent per year. 
B) more than 100 percent per year. 
C) more than 200 percent per year. 
D) more than 12,000 percent per year. 
E) more than 1,000 percent per year.

Question 7

Explain the exchange rate over-shooting hypothesis.

Accepted Answer

Many prices in the economy are written i

Question 8

After a permanent increase in the money supply

Accepted Answer

A) the exchange rate overshoots in the short run. 
B) the exchange rate overshoots in the long run. 
C) the exchange rate smoothly depreciates in the short run. 
D) the exchange rate smoothly appreciates in the short run. 
E) the exchange rate remains the same. 
A) the exchange rate overshoots in the short run. 
B) the exchange rate overshoots in the long run. 
C) the exchange rate smoothly depreciates in the short run. 
D) the exchange rate smoothly appreciates in the short run. 
E) the exchange rate remains the same.

Question 9

Using 4 different figures,plot the time paths showing the effects of a permanent increase in the United States money supply on:
(a)U.S.Money supply
(b)The dollar interest rate.
(c)The U.S.price level
(d)The dollar/euro exchange rate

Accepted Answer

The answer of Using 4 different figures,plot the time paths...

Question 10

Using year-by-year data from 1987-2007 shows that

Accepted Answer

A) there is a strong positive relation between average Latin American money-supply growth and inflation. 
B) there is a strong negative relation between average Latin American money-supply growth and inflation. 
C) there is a strong positive relation between average Latin American money-supply growth and deflation. 
D) it is difficult to find a strong positive relation between average Latin American money-supply growth and inflation. 
E) there is a weak positive relation between average Latin American money-supply growth and inflation. 
A) there is a strong positive relation between average Latin American money-supply growth and inflation. 
B) there is a strong negative relation between average Latin American money-supply growth and inflation. 
C) there is a strong positive relation between average Latin American money-supply growth and deflation. 
D) it is difficult to find a strong positive relation between average Latin American money-supply growth and inflation. 
E) there is a weak positive relation between average Latin American money-supply growth and inflation.

Question 11

Money includes

Accepted Answer

A) currency. 
B) checking deposits held by households and firms. 
C) deposits in the foreign exchange markets. 
D) currency and checking deposits held by households and firms. 
E) futures and deposits in the foreign exchange market. 
A) currency. 
B) checking deposits held by households and firms. 
C) deposits in the foreign exchange markets. 
D) currency and checking deposits held by households and firms. 
E) futures and deposits in the foreign exchange market.

Question 12

If individuals are holding more money than they desire

Accepted Answer

A) they will attempt to reduce their liquidity by using money to purchase goods. 
B) they will attempt to reduce their liquidity by using money to purchase interest-bearing assets. 
C) they will attempt to reduce their liquidity by converting real money holdings into nominal money holdings. 
D) they will keep their holdings constant. 
A) they will attempt to reduce their liquidity by using money to purchase goods. 
B) they will attempt to reduce their liquidity by using money to purchase interest-bearing assets. 
C) they will attempt to reduce their liquidity by converting real money holdings into nominal money holdings. 
D) they will keep their holdings constant.

Question 13

The exchange rate between currencies depends on

Accepted Answer

A) the interest rate that can be earned on deposits of those currencies. 
B) the interest rate that can be earned on deposits of those currencies and the expected future exchange rate. 
C) the expected future exchange rate. 
D) national output. 
E) the interest rate that can be earned on deposits of those countries and the national output. 
A) the interest rate that can be earned on deposits of those currencies. 
B) the interest rate that can be earned on deposits of those currencies and the expected future exchange rate. 
C) the expected future exchange rate. 
D) national output. 
E) the interest rate that can be earned on deposits of those countries and the national output.

Question 14

Which one of the following statements is the MOST accurate?

Accepted Answer

A) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to fall. 
B) A reduction in the average value of transactions carried out by a household or a firm causes its demand for money to rise. 
C) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to rise. 
D) A rise in the average value of transactions carried out by a household or a firm causes its demand for real money to rise. 
E) a decrease in the average value of transactions carried out by a household or a firm causes its demand for real money to rise. 
A) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to fall. 
B) A reduction in the average value of transactions carried out by a household or a firm causes its demand for money to rise. 
C) A rise in the average value of transactions carried out by a household or a firm causes its demand for money to rise. 
D) A rise in the average value of transactions carried out by a household or a firm causes its demand for real money to rise. 
E) a decrease in the average value of transactions carried out by a household or a firm causes its demand for real money to rise.

Question 15

Explain how the money markets of two countries are linked through the foreign exchange market.

Accepted Answer

The monetary policy actions by the Fed a

Question 16

In a world where the price level could adjust immediately to its new long-run level after a money supply increase

Accepted Answer

A) The dollar interest rate would increase because prices would adjust immediately and prevent the money supply from rising. 
B) The dollar interest rate would fall because prices would adjust immediately and prevent the money supply from rising. 
C) The dollar interest rate would fall because prices would adjust immediately and prevent the money supply from decreasing. 
D) The dollar interest rate would decrease because prices would adjust immediately and prevent the money supply from decreasing. 
E) The dollar interest rate would fall because prices would not be able to prevent the money supply from rising. 
A) The dollar interest rate would increase because prices would adjust immediately and prevent the money supply from rising. 
B) The dollar interest rate would fall because prices would adjust immediately and prevent the money supply from rising. 
C) The dollar interest rate would fall because prices would adjust immediately and prevent the money supply from decreasing. 
D) The dollar interest rate would decrease because prices would adjust immediately and prevent the money supply from decreasing. 
E) The dollar interest rate would fall because prices would not be able to prevent the money supply from rising.

Question 17

What term means an explosive and seemingly uncontrollable inflation in which money loses value rapidly and may even go out of use?

Accepted Answer

A) superinflation 
B) stagflation 
C) hyperinflation 
D) maginflation 
E) deflation 
A) superinflation 
B) stagflation 
C) hyperinflation 
D) maginflation 
E) deflation

Question 18

If there is initially an

Accepted Answer

A) excess demand for money,the interest rate will fall,and the supply of money it will rise. 
B) excess supply of money,the interest rate will fall,and if there is initially an excess demand,it will rise. 
C) excess supply of money,the interest rate will rise,and if there is initially an excess demand,it will fall. 
D) excess supply of money,the interest rate will fall,and if there is also an excess demand,it will fall rapidly. 
E) excess supply of money,the interest rate will rise,and if there is also an excess demand,it will rise rapidly. 
A) excess demand for money,the interest rate will fall,and the supply of money it will rise. 
B) excess supply of money,the interest rate will fall,and if there is initially an excess demand,it will rise. 
C) excess supply of money,the interest rate will rise,and if there is initially an excess demand,it will fall. 
D) excess supply of money,the interest rate will fall,and if there is also an excess demand,it will fall rapidly. 
E) excess supply of money,the interest rate will rise,and if there is also an excess demand,it will rise rapidly.

Question 19

What would be the effect of an increase in the European Money Supply in the Dollar Euro Exchange Rate?

Accepted Answer

An increase in the European mo

Question 20

In a world with money and bonds only

Accepted Answer

A) it is not risky to hold money. 
B) it is risky to hold money. 
C) risk is an important factor in the demand for money. 
D) there is no relationship between risk and holding money. 
E) assets become meaningless. 
A) it is not risky to hold money. 
B) it is risky to hold money. 
C) risk is an important factor in the demand for money. 
D) there is no relationship between risk and holding money. 
E) assets become meaningless.

Exam 15: Money,Interest Rates, and Exchange Rates

The most extreme inflationary conditions occurred

What will be the effects of an increase in the money supply on the interest rate?

Which one of the countries below announces inflation targets?

The aggregate demand for money can be expressed by

Individuals base their demand for an asset on

In a classic paper,Columbia University economist Phillip Cagan drew the line between inflation and hyperinflation at an inflation rate of

Explain the exchange rate over-shooting hypothesis.

After a permanent increase in the money supply

Using 4 different figures,plot the time paths showing the effects of a permanent increase in the United States money supply on: (a)U.S.Money supply (b)The dollar interest rate. (c)The U.S.price level (d)The dollar/euro exchange rate

Using year-by-year data from 1987-2007 shows that

Money includes

If individuals are holding more money than they desire

The exchange rate between currencies depends on

Which one of the following statements is the MOST accurate?

Explain how the money markets of two countries are linked through the foreign exchange market.

In a world where the price level could adjust immediately to its new long-run level after a money supply increase

What term means an explosive and seemingly uncontrollable inflation in which money loses value rapidly and may even go out of use?

If there is initially an

What would be the effect of an increase in the European Money Supply in the Dollar Euro Exchange Rate?

In a world with money and bonds only

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

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

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

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