Question 1

A sudden decrease in the U.S.price level

Accepted Answer

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

Question 2

Until the United States Civil War,The Unites States had a

Accepted Answer

A) gold-based monetary standard. 
B) silver-based monetary standard. 
C) bimetallic monetary standard consisting of silver and gold. 
D) bimetallic monetary standard consisting of copper and silver. 
E) bimetallic monetary standard consisting of copper and gold. 
A) gold-based monetary standard. 
B) silver-based monetary standard. 
C) bimetallic monetary standard consisting of silver and gold. 
D) bimetallic monetary standard consisting of copper and silver. 
E) bimetallic monetary standard consisting of copper and gold.

Question 3

If central banks were no longer obliged to intervene in currency markets to fix exchange rates,governments would be able to use monetary policy to reach

Accepted Answer

A) internal balance. 
B) external balance. 
C) internal and external balance. 
D) internal but not external balance. 
E) external but not internal balance. 
A) internal balance. 
B) external balance. 
C) internal and external balance. 
D) internal but not external balance. 
E) external but not internal balance.

Question 4

Refer to the graph below,which shows the effect of ________ on the home economy.

Accepted Answer

A) foreign inflation 
B) domestic inflation 
C) foreign deflation 
D) domestic recession 
E) foreign recession 
A) foreign inflation 
B) domestic inflation 
C) foreign deflation 
D) domestic recession 
E) foreign recession

Question 5

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 6

Which one of the following statements is TRUE?

Accepted Answer

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

Question 7

By the end of the 1960s,many countries felt that they were importing inflation from

Accepted Answer

A) the United States. 
B) Germany. 
C) France. 
D) Japan. 
E) the United Kingdom. 
A) the United States. 
B) Germany. 
C) France. 
D) Japan. 
E) the United Kingdom.

Question 8

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

Accepted Answer

London was the center of the internation

Question 9

One should expect the forward exchange market to flourish

Accepted Answer

A) under a fixed exchange rate regime. 
B) under a flexible exchange rate regime. 
C) under neither fixed nor flexible exchange rate regimes. 
D) under both fixed and flexible exchange rate regimes. 
E) only under a gold standard. 
A) under a fixed exchange rate regime. 
B) under a flexible exchange rate regime. 
C) under neither fixed nor flexible exchange rate regimes. 
D) under both fixed and flexible exchange rate regimes. 
E) only under a gold standard.

Question 10

Refer to the payoff matrix below,which ________ a prisoner's dilemma.If both countries go it alone,Home will choose Policy ________ and Foreign will choose Policy ________.

Accepted Answer

A) is;1;A 
B) is;2;B 
C) is;1;B 
D) is not;2;B 
E) is not;1;A 
A) is;1;A 
B) is;2;B 
C) is;1;B 
D) is not;2;B 
E) is not;1;A

Question 11

"A monetary policy is not a policy tool under fixed exchange rates." Discuss.

Accepted Answer

True,under fixed exchange rate

Question 12

Under the Gold standard,a country is said to be in balance of payments equilibrium when the current account balance is

Accepted Answer

A) financed entirely by international lending without reserve movements. 
B) financed by international lending and with reserve movements. 
C) equal to zero. 
D) financed entirely by international lending and past gold reserves. 
E) financed entirely by gold reserves. 
A) financed entirely by international lending without reserve movements. 
B) financed by international lending and with reserve movements. 
C) equal to zero. 
D) financed entirely by international lending and past gold reserves. 
E) financed entirely by gold reserves.

Question 13

Advocates of flexible exchange rates claim that under flexible exchange rates,if the central bank faced unemployment

Accepted Answer

A) and thus wished to decrease its money supply,there would no longer be any legal barrier to the currency depreciation this would cause. 
B) and thus wished to expand its money supply,there would no longer be any legal barrier to the currency depreciation this would cause. 
C) and wished to expand its money supply,there would no longer be any legal barrier to the currency appreciation this would cause. 
D) and wished to decrease its money supply,there now would be a legal barrier to the currency depreciation this would cause. 
E) and wished to increase output,there would no longer be a legal barrier to the currency appreciation this would cause. 
A) and thus wished to decrease its money supply,there would no longer be any legal barrier to the currency depreciation this would cause. 
B) and thus wished to expand its money supply,there would no longer be any legal barrier to the currency depreciation this would cause. 
C) and wished to expand its money supply,there would no longer be any legal barrier to the currency appreciation this would cause. 
D) and wished to decrease its money supply,there now would be a legal barrier to the currency depreciation this would cause. 
E) and wished to increase output,there would no longer be a legal barrier to the currency appreciation this would cause.

Question 14

Under a flexible exchange rate regime,an increase in real money demand

Accepted Answer

A) moves the AA curve to the right. 
B) moves the AA curve to the left. 
C) leaves the AA curve unchanged. 
D) moves the DD curve to the right. 
E) moves the DD curve to the left. 
A) moves the AA curve to the right. 
B) moves the AA curve to the left. 
C) leaves the AA curve unchanged. 
D) moves the DD curve to the right. 
E) moves the DD curve to the left.

Question 15

The effects of a decrease in export demand

Accepted Answer

A) is a powerful argument in favor of fixed rates. 
B) is a powerful argument in favor of flexible rates. 
C) shows the difficulties in determining which exchange rate is better. 
D) is a powerful argument in favor of fixed rates only in the short run. 
E) is a powerful argument in favor of fixed rates only in the long run. 
A) is a powerful argument in favor of fixed rates. 
B) is a powerful argument in favor of flexible rates. 
C) shows the difficulties in determining which exchange rate is better. 
D) is a powerful argument in favor of fixed rates only in the short run. 
E) is a powerful argument in favor of fixed rates only in the long run.

Question 16

By external balance,most economists mean

Accepted Answer

A) avoiding excessive imbalances in international payments. 
B) balance between exports and imports. 
C) balance between the trade and service accounts. 
D) what amounts to fixed exchange rates. 
E) imbalance in internal transactions. 
A) avoiding excessive imbalances in international payments. 
B) balance between exports and imports. 
C) balance between the trade and service accounts. 
D) what amounts to fixed exchange rates. 
E) imbalance in internal transactions.

Question 17

The case of New Zealand,described in the text,asks what question about the country's international debt position?

Accepted Answer

Fundamentally,the question is

Question 18

A devaluation of the home currency

Accepted Answer

A) makes foreign goods and services cheaper relative to those sold at home. 
B) makes domestic goods and services more expensive relative to those sold abroad. 
C) decreases demand and output. 
D) increases demand for domestic goods and services. 
E) increases output and makes domestic goods and services cheaper relative to those sold abroad. 
A) makes foreign goods and services cheaper relative to those sold at home. 
B) makes domestic goods and services more expensive relative to those sold abroad. 
C) decreases demand and output. 
D) increases demand for domestic goods and services. 
E) increases output and makes domestic goods and services cheaper relative to those sold abroad.

Question 19

The gold standard period was

Accepted Answer

A) up until the first world war. 
B) between the first and second world wars. 
C) following the second world war until 1970. 
D) between 1954 and 1970. 
E) between 1814 and 1865. 
A) up until the first world war. 
B) between the first and second world wars. 
C) following the second world war until 1970. 
D) between 1954 and 1970. 
E) between 1814 and 1865.

Question 20

Which one of the following is/are INCORRECT? An argument against floating exchange rates is that

Accepted Answer

A) a fixed rate automatically prevents instability in the domestic money market from affecting the economy if shocks come from home domestic money market. 
B) a fixed rate might become unpredictable,complicating economic planning. 
C) a rise in money demand under a fixed exchange rate would have no effect on the exchange rate and output. 
D) a fixed rate functions within the price-specie-flow mechanism and maintains a balance of payments equilibrium. 
E) a fixed rate automatically prevents instability in the economy from output market shocks. 
A) a fixed rate automatically prevents instability in the domestic money market from affecting the economy if shocks come from home domestic money market. 
B) a fixed rate might become unpredictable,complicating economic planning. 
C) a rise in money demand under a fixed exchange rate would have no effect on the exchange rate and output. 
D) a fixed rate functions within the price-specie-flow mechanism and maintains a balance of payments equilibrium. 
E) a fixed rate automatically prevents instability in the economy from output market shocks.

Exam 19: International Monetary Systems: An Historical Overview

A sudden decrease in the U.S.price level

Until the United States Civil War,The Unites States had a

If central banks were no longer obliged to intervene in currency markets to fix exchange rates,governments would be able to use monetary policy to reach

Refer to the graph below,which shows the effect of ________ on the home economy.

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

Which one of the following statements is TRUE?

By the end of the 1960s,many countries felt that they were importing inflation from

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

One should expect the forward exchange market to flourish

Refer to the payoff matrix below,which ________ a prisoner's dilemma.If both countries go it alone,Home will choose Policy ________ and Foreign will choose Policy ________.

"A monetary policy is not a policy tool under fixed exchange rates." Discuss.

Under the Gold standard,a country is said to be in balance of payments equilibrium when the current account balance is

Advocates of flexible exchange rates claim that under flexible exchange rates,if the central bank faced unemployment

Under a flexible exchange rate regime,an increase in real money demand

The effects of a decrease in export demand

By external balance,most economists mean

The case of New Zealand,described in the text,asks what question about the country's international debt position?

A devaluation of the home currency

The gold standard period was

Which one of the following is/are INCORRECT? An argument against floating exchange rates is that

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 all countries will be better off if they .

Refer to the payoff matrix below,which a prisoner's dilemma.If both countries go it alone,Home will choose Policy and Foreign will choose Policy .