Question 1

The case of New Zealand,as described in the text,draws what simple conclusion regarding the country's international debt position?

Accepted Answer

Fundamentally,the question is whether or not a country can sustain a current account deficit indefinitely.The conclusion is that,under certain conditions,yes it can.

Question 2

A current account surplus

Accepted Answer

A) poses a problem if domestic savings are being invested more profitably abroad than they would be at home. 
B) may pose no problem if domestic savings are being invested more profitably abroad than they would be at home. 
C) may pose no problem if domestic savings are being invested less profitably abroad than they would be at home. 
D) there is no relation between current account surplus and between savings and investment. 
E) poses a problem if domestic savings are being invested less profitably abroad than they would be at home. 
A) poses a problem if domestic savings are being invested more profitably abroad than they would be at home. 
B) may pose no problem if domestic savings are being invested more profitably abroad than they would be at home. 
C) may pose no problem if domestic savings are being invested less profitably abroad than they would be at home. 
D) there is no relation between current account surplus and between savings and investment. 
E) poses a problem if domestic savings are being invested less profitably abroad than they would be at home. B

Question 3

Advocates of floating rates pointed out that

Accepted Answer

A) removal of the obligation to peg currency values would restore monetary control to central banks. 
B) imposing of the obligation to peg currency values would restore monetary control to central banks. 
C) removing of the obligation to peg currency values would restore fiscal control. 
D) imposing of the obligation to peg currency values would restore fiscal control. 
E) imposing of the obligation to peg currency would restore monetary control to the consumer. 
A) removal of the obligation to peg currency values would restore monetary control to central banks. 
B) imposing of the obligation to peg currency values would restore monetary control to central banks. 
C) removing of the obligation to peg currency values would restore fiscal control. 
D) imposing of the obligation to peg currency values would restore fiscal control. 
E) imposing of the obligation to peg currency would restore monetary control to the consumer. A

Question 4

How did the international monetary system created at Bretton Woods in 1944 allow its members to reconcile their external commitments with their internal goals of full employment and price stability?

Accepted Answer

As the world economy evolved in the year

Question 5

The IMF agreement forced the U.S.to exchange gold for dollars at what price?

Accepted Answer

A) $25/ ounce 
B) $35/ ounce 
C) $45/ ounce 
D) $55/ ounce 
E) $20/ ounce 
A) $25/ ounce 
B) $35/ ounce 
C) $45/ ounce 
D) $55/ ounce 
E) $20/ ounce

Question 6

"The line distinguishing external from internal goals can be fuzzy." Discuss.

Accepted Answer

This statement is true.For exa

Question 7

The reason that the claim that floating exchange rates result in greater economic autonomy for individual countries may not be entirely accurate is that

Accepted Answer

A) empirical research finds no supporting data. 
B) policy makers are influenced by the effect of domestic policies on the exchange rate. 
C) there is no generally satisfactory method for measuring economic autonomy. 
D) it is based on the assumption of a gold standard. 
E) countries that run large trade deficits must increase exports to balance trade. 
A) empirical research finds no supporting data. 
B) policy makers are influenced by the effect of domestic policies on the exchange rate. 
C) there is no generally satisfactory method for measuring economic autonomy. 
D) it is based on the assumption of a gold standard. 
E) countries that run large trade deficits must increase exports to balance trade.

Question 8

"No central bank can be indifferent to its currency's value in the foreign exchange market." Discuss.

Accepted Answer

- despite the "Monetary Policy Autonomy"

Question 9

Use the DD-AA model to compare the domestic economic response under flexible and fixed exchange rate regimes to a temporary rise in export demand from foreign countries.

Accepted Answer

Under floating rate: The DD curve shifts

Question 10

Due to macroeconomics interdependence between large countries,the effect of a permanent fiscal expansion by Home is as follows: Home output

Accepted Answer

A) falls,Home's currency appreciates,Foreign output rises. 
B) rises,Home's currency appreciates,Foreign output rises. 
C) rises,Home's currency depreciates,Foreign output rises. 
D) rises,Home's currency appreciates,Foreign output decreases. 
E) falls,Homes currency depreciates,Foreign output rises. 
A) falls,Home's currency appreciates,Foreign output rises. 
B) rises,Home's currency appreciates,Foreign output rises. 
C) rises,Home's currency depreciates,Foreign output rises. 
D) rises,Home's currency appreciates,Foreign output decreases. 
E) falls,Homes currency depreciates,Foreign output rises.

Question 11

Using the II-XX framework,show using a figure that fiscal policies by themselves cannot bring the economy to both internal and external balances.

Accepted Answer

Starting at point 2,fiscal policy is sho

Question 12

Which one of the following statements is TRUE?

Accepted Answer

A) Countries where investment is relatively productive should be net importers of current output. 
B) Countries where investment is relatively unproductive should be net importers of current output. 
C) Countries where investment is relatively productive should be net exporters of current output. 
D) Countries where investment is relatively productive should not export or import current output. 
E) Countries where investment is relatively unproductive should invest at home. 
A) Countries where investment is relatively productive should be net importers of current output. 
B) Countries where investment is relatively unproductive should be net importers of current output. 
C) Countries where investment is relatively productive should be net exporters of current output. 
D) Countries where investment is relatively productive should not export or import current output. 
E) Countries where investment is relatively unproductive should invest at home.

Question 13

If the demand for Home exports decreased abroad,the Home fall in output would be greatest

Accepted Answer

A) if the decrease was temporary and the exchange rate was fixed. 
B) if the decrease was temporary and the exchange rate was floating. 
C) if the decrease was permanent and the exchange rate was fixed. 
D) if the decrease was permanent and the exchange rate was floating. 
E) if the decrease was permanent and the exchange rate was high. 
A) if the decrease was temporary and the exchange rate was fixed. 
B) if the decrease was temporary and the exchange rate was floating. 
C) if the decrease was permanent and the exchange rate was fixed. 
D) if the decrease was permanent and the exchange rate was floating. 
E) if the decrease was permanent and the exchange rate was high.

Question 14

"Even under flexible exchange rate regime,governments could not be indifferent to the behavior of exchange rates and inevitably surrendered some of their policy autonomy in other areas to prevent exchange rate movements they viewed as harmful to their economies." Discuss.

Accepted Answer

True.One example is Volcker in

Question 15

Under flexible exchange rate,the response of an economy to a temporary fall in foreign demand for its exports is

Accepted Answer

A) the currency appreciates,and output falls. 
B) the currency depreciates,and output falls. 
C) the currency depreciates,and output increases. 
D) the currency depreciates,and output remains constant. 
E) the currency appreciates,and output increases. 
A) the currency appreciates,and output falls. 
B) the currency depreciates,and output falls. 
C) the currency depreciates,and output increases. 
D) the currency depreciates,and output remains constant. 
E) the currency appreciates,and output increases.

Question 16

A two-tier gold market like the one created during the Bretton Woods System refers to

Accepted Answer

A) a private tier for private gold traders where the price would not be allowed to fluctuate,and an official tier for central banks where the official gold price would be allowed to fluctuate. 
B) a private tier for private gold traders where the price would not be allowed to fluctuate,and an official tier for central banks where the official gold price would rise on a yearly basis by pre-determined increments. 
C) a private tier for private gold traders where the price would be allowed to fluctuate,and an official tier for central banks where the official gold price would be set at $35 an ounce. 
D) a private tier for private gold traders where the price would be set at $35 an ounce,and an official tier for central banks where the official gold price would be allowed to fluctuate. 
E) a private tier for private gold traders where the price of gold would rise on a yearly basis by pre-determined increments,and an official tier for central banks where the official gold price would be set at $35 an ounce. 
A) a private tier for private gold traders where the price would not be allowed to fluctuate,and an official tier for central banks where the official gold price would be allowed to fluctuate. 
B) a private tier for private gold traders where the price would not be allowed to fluctuate,and an official tier for central banks where the official gold price would rise on a yearly basis by pre-determined increments. 
C) a private tier for private gold traders where the price would be allowed to fluctuate,and an official tier for central banks where the official gold price would be set at $35 an ounce. 
D) a private tier for private gold traders where the price would be set at $35 an ounce,and an official tier for central banks where the official gold price would be allowed to fluctuate. 
E) a private tier for private gold traders where the price of gold would rise on a yearly basis by pre-determined increments,and an official tier for central banks where the official gold price would be set at $35 an ounce.

Question 17

Countries with

Accepted Answer

A) strong investment opportunities should invest little at home and channel their savings into more productive investment activity abroad. 
B) strong investment opportunities should invest more at home and less abroad. 
C) weak investment opportunities should invest more at home. 
D) weak investment opportunities should invest little abroad. 
E) countries with productive investment should invest exclusively at home. 
A) strong investment opportunities should invest little at home and channel their savings into more productive investment activity abroad. 
B) strong investment opportunities should invest more at home and less abroad. 
C) weak investment opportunities should invest more at home. 
D) weak investment opportunities should invest little abroad. 
E) countries with productive investment should invest exclusively at home.

Question 18

Comparing fixed to flexible exchange rate,the response of an economy to a temporary fall in foreign demand for its exports is

Accepted Answer

A) output actually falls less under fixed rate than under floating rate. 
B) output actually falls more under fixed rate than under floating rate. 
C) output actually remains the same under fixed rate than under floating rate. 
D) the currency value grows in a fixed rate system and falls in a flexible system. 
E) output grows in a fixed rate system and falls in a flexible system. 
A) output actually falls less under fixed rate than under floating rate. 
B) output actually falls more under fixed rate than under floating rate. 
C) output actually remains the same under fixed rate than under floating rate. 
D) the currency value grows in a fixed rate system and falls in a flexible system. 
E) output grows in a fixed rate system and falls in a flexible system.

Question 19

What is a convertible currency?

Accepted Answer

A convertible curren

Question 20

What explains the nearly universal scope of the Great Depression?

Accepted Answer

The international gold standar

Exam 19: International Monetary Systems: An Historical Overview

The case of New Zealand,as described in the text,draws what simple conclusion regarding the country's international debt position?

A current account surplus

Advocates of floating rates pointed out that

How did the international monetary system created at Bretton Woods in 1944 allow its members to reconcile their external commitments with their internal goals of full employment and price stability?

The IMF agreement forced the U.S.to exchange gold for dollars at what price?

"The line distinguishing external from internal goals can be fuzzy." Discuss.

The reason that the claim that floating exchange rates result in greater economic autonomy for individual countries may not be entirely accurate is that

"No central bank can be indifferent to its currency's value in the foreign exchange market." Discuss.

Use the DD-AA model to compare the domestic economic response under flexible and fixed exchange rate regimes to a temporary rise in export demand from foreign countries.

Due to macroeconomics interdependence between large countries,the effect of a permanent fiscal expansion by Home is as follows: Home output

Using the II-XX framework,show using a figure that fiscal policies by themselves cannot bring the economy to both internal and external balances.

Which one of the following statements is TRUE?

If the demand for Home exports decreased abroad,the Home fall in output would be greatest

"Even under flexible exchange rate regime,governments could not be indifferent to the behavior of exchange rates and inevitably surrendered some of their policy autonomy in other areas to prevent exchange rate movements they viewed as harmful to their economies." Discuss.

Under flexible exchange rate,the response of an economy to a temporary fall in foreign demand for its exports is

A two-tier gold market like the one created during the Bretton Woods System refers to

Countries with

Comparing fixed to flexible exchange rate,the response of an economy to a temporary fall in foreign demand for its exports is

What is a convertible currency?

What explains the nearly universal scope of the Great Depression?

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