Question 1

Mercantilism held that

Accepted Answer

A)  silver alone was the mainstay of national wealth. 
B)  gold alone was the mainstay of national wealth. 
C)  silver and gold were the mainstays of national wealth. 
D)  silver and gold are not important for national wealth of a country. 
E)  labor forces were the mainstay of national wealth. 
A)  silver alone was the mainstay of national wealth. 
B)  gold alone was the mainstay of national wealth. 
C)  silver and gold were the mainstays of national wealth. 
D)  silver and gold are not important for national wealth of a country. 
E)  labor forces were the mainstay of national wealth.

Question 2

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 3

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 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 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 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

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 6

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 7

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

Accepted Answer

A)  monetary policy oriented towards domestic goals 
B)  exchange rate instability 
C)  tariffs and subsidies 
D)  restrictions on the migration of labor 
E)  global inflation 
A)  monetary policy oriented towards domestic goals 
B)  exchange rate instability 
C)  tariffs and subsidies 
D)  restrictions on the migration of labor 
E)  global inflation

Question 8

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 9

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 10

The effects of an increase in real money demand on an economy

Accepted Answer

A)  is an argument against flexible exchange rates. 
B)  is an argument in favor of flexible exchange rates. 
C)  shows the difficulties in determining which exchange rate regime is better. 
D)  is an argument in favor of flexible exchange rates only in the short run. 
E)  is an argument against flexible exchange rates only in the short run. 
A)  is an argument against flexible exchange rates. 
B)  is an argument in favor of flexible exchange rates. 
C)  shows the difficulties in determining which exchange rate regime is better. 
D)  is an argument in favor of flexible exchange rates only in the short run. 
E)  is an argument against flexible exchange rates only in the short run.

Question 11

The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to

Accepted Answer

A)  the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs 
B)  consumer fear of stock market instability 
C)  producer fear of rising wages 
D)  the lack of convertibility of gold into silver 
E)  low consumer spending because of balance of payment crises. 
A)  the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs 
B)  consumer fear of stock market instability 
C)  producer fear of rising wages 
D)  the lack of convertibility of gold into silver 
E)  low consumer spending because of balance of payment crises.

Question 12

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 13

The costs of inflation have been most apparent in the post-war period in countries like

Accepted Answer

A)  Brazil. 
B)  Belgium. 
C)  the United States. 
D)  Canada. 
E)  Japan. 
A)  Brazil. 
B)  Belgium. 
C)  the United States. 
D)  Canada. 
E)  Japan.

Question 14

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 15

Refer to the payoff matrix below, which ________ a prisoner's dilemma. If both countries cooperate, 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 16

Which of the following is not a result of a temporary fall in foreign demand on one country's exports under floating exchange rate?

Accepted Answer

A)  The DD curve shifts to the left due to reduction of aggregate demand. 
B)  The AA curve shifts downwards due to reduction of money supply. 
C)  a fall in aggregate output 
D)  depreciation in home country's currency 
E)  a fall in the home interest rate 
A)  The DD curve shifts to the left due to reduction of aggregate demand. 
B)  The AA curve shifts downwards due to reduction of money supply. 
C)  a fall in aggregate output 
D)  depreciation in home country's currency 
E)  a fall in the home interest rate

Question 17

Once the United States Civil War broke out, the United States moved to a

Accepted Answer

A)  gold standard. 
B)  silver standard. 
C)  bimetallic monetary standard consisting of silver and gold. 
D)  bimetallic monetary standard consisting of copper and gold. 
E)  paper currency, called the "greenback." 
A)  gold standard. 
B)  silver standard. 
C)  bimetallic monetary standard consisting of silver and gold. 
D)  bimetallic monetary standard consisting of copper and gold. 
E)  paper currency, called the "greenback."

Question 18

Inflation can occur even under conditions of full employment

Accepted Answer

A)  only if the central bank continues to inject money into the economy and the agents' expectations of inflation are supported by the bank's activities. 
B)  only if the central bank continues to inject money into the economy. 
C)  only if the central bank continues to withdraw money from the economy. 
D)  only if the central bank continues to inject money into the economy and all agents expect that inflation will not occur. 
E)  only if the central bank fails to inject money into the economy. 
A)  only if the central bank continues to inject money into the economy and the agents' expectations of inflation are supported by the bank's activities. 
B)  only if the central bank continues to inject money into the economy. 
C)  only if the central bank continues to withdraw money from the economy. 
D)  only if the central bank continues to inject money into the economy and all agents expect that inflation will not occur. 
E)  only if the central bank fails to inject money into the economy.

Question 19

L. Frank Baum's classic 1900 children's book, The Wonderful Wizard of Oz, is

Accepted Answer

A)  an allegorical rendition of the U.S. political struggle over silver. 
B)  an allegorical rendition of the U.S. political struggle over copper. 
C)  an allegorical rendition of the U.S. political struggle over both silver and gold. 
D)  an allegorical rendition of the U.S. political struggle over indebted farmers. 
E)  an allegorical rendition of the U.S. political struggle over gold. 
A)  an allegorical rendition of the U.S. political struggle over silver. 
B)  an allegorical rendition of the U.S. political struggle over copper. 
C)  an allegorical rendition of the U.S. political struggle over both silver and gold. 
D)  an allegorical rendition of the U.S. political struggle over indebted farmers. 
E)  an allegorical rendition of the U.S. political struggle over gold.

Question 20

Countries where investment is relatively

Accepted Answer

A)  productive should be net exporters of currently available output. 
B)  unproductive should be net importers of currently available output. 
C)  unproductive should be net exporters of currently available output. 
D)  unproductive should be net exporters of future available output. 
E)  unproductive should focus on their internal balance. 
A)  productive should be net exporters of currently available output. 
B)  unproductive should be net importers of currently available output. 
C)  unproductive should be net exporters of currently available output. 
D)  unproductive should be net exporters of future available output. 
E)  unproductive should focus on their internal balance.

Exam 19: International Monetary Systems: An Historical Overview

Mercantilism held that

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

Under the gold standard era of 1870-1914,

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?

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

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

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

Which one of the following statements is true?

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

The effects of an increase in real money demand on an economy

The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to

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

The costs of inflation have been most apparent in the post-war period in countries like

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

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

Which of the following is not a result of a temporary fall in foreign demand on one country's exports under floating exchange rate?

Once the United States Civil War broke out, the United States moved to a

Inflation can occur even under conditions of full employment

L. Frank Baum's classic 1900 children's book, The Wonderful Wizard of Oz, is

Countries where investment is relatively

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters

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