Question 1

Which of the following statements is true of pegged exchange rates?

Accepted Answer

A)  A pegged exchange rate allows a country's currency to be determined by market forces. 
B)  A pegged exchange rate weakens the monetary discipline of a country. 
C)  Pegged exchange rates are popular among many of the world's smaller nations. 
D)  Adopting a pegged exchange rate regime increases inflationary pressures in a country. 
A)  A pegged exchange rate allows a country's currency to be determined by market forces. 
B)  A pegged exchange rate weakens the monetary discipline of a country. 
C)  Pegged exchange rates are popular among many of the world's smaller nations. 
D)  Adopting a pegged exchange rate regime increases inflationary pressures in a country.

Question 2

Which of the following is a function of World Bank?

Accepted Answer

A)  Implementing a rigid fixed exchange rate regime 
B)  Promoting the gold standard across the world 
C)  Lending money to governments for development 
D)  Implementing a flexible fixed exchange rate regime 
A)  Implementing a rigid fixed exchange rate regime 
B)  Promoting the gold standard across the world 
C)  Lending money to governments for development 
D)  Implementing a flexible fixed exchange rate regime

Question 3

Market forces have produced a stable dollar exchange rate under a floating exchange rate regime.

Accepted Answer

A) True 
 B)False

Question 4

A country's trade balance is in surplus when:

Accepted Answer

A)  its exports are more than its imports. 
B)  it experiences negative inflation. 
C)  its exports equal the imports. 
D)  the prices of commodities are low in the country. 
A)  its exports are more than its imports. 
B)  it experiences negative inflation. 
C)  its exports equal the imports. 
D)  the prices of commodities are low in the country.

Question 5

Currencies of countries with currency boards will become uncompetitive and overvalued if:

Accepted Answer

A)  local inflation rates remain higher than the inflation rate in the country to which the currency is pegged. 
B)  the country to which the currency is pegged experiences a trade deficit. 
C)  local inflation rates are lower than the inflation rate in the country to which the currency is pegged. 
D)  the country to which the currency is pegged experiences a trade surplus. 
A)  local inflation rates remain higher than the inflation rate in the country to which the currency is pegged. 
B)  the country to which the currency is pegged experiences a trade deficit. 
C)  local inflation rates are lower than the inflation rate in the country to which the currency is pegged. 
D)  the country to which the currency is pegged experiences a trade surplus.

Question 6

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

Accepted Answer

For companies operating in a world of vo

Question 7

A _____ means the value of a currency is fixed relative to a reference currency.

Accepted Answer

A)  pegged exchange rate 
B)  floating exchange rate 
C)  managed float system 
D)  fixed exchange rate 
A)  pegged exchange rate 
B)  floating exchange rate 
C)  managed float system 
D)  fixed exchange rate

Question 8

Gold par value refers to the:

Accepted Answer

A)  ratio of the price of gold in a currency to price of gold in U.S. dollars. 
B)  amount of a currency needed to purchase one ounce of gold. 
C)  ratio of price of gold in a currency to price of gold in euros. 
D)  amount of gold required to equal the reference currency that a nation is using. 
A)  ratio of the price of gold in a currency to price of gold in U.S. dollars. 
B)  amount of a currency needed to purchase one ounce of gold. 
C)  ratio of price of gold in a currency to price of gold in euros. 
D)  amount of gold required to equal the reference currency that a nation is using.

Question 9

Advocates of a _____ argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.

Accepted Answer

A)  fixed exchange rate regime 
B)  dirty-float system 
C)  floating exchange rate regime 
D)  pegged exchange rate regime 
A)  fixed exchange rate regime 
B)  dirty-float system 
C)  floating exchange rate regime 
D)  pegged exchange rate regime

Question 10

Which of the following arguments is in favor of floating exchange rates?

Accepted Answer

A)  A country's ability to expand or contract its money supply should be limited by the need to maintain exchange rate parity. 
B)  Maintaining balance of trade equilibrium is not in the best interest of a country. 
C)  Countries can isolate themselves from uncertainties when they trade using a mutually agreed on exchange rate. 
D)  Governments can restore monetary control by removing the obligation to maintain exchange rate parity. 
A)  A country's ability to expand or contract its money supply should be limited by the need to maintain exchange rate parity. 
B)  Maintaining balance of trade equilibrium is not in the best interest of a country. 
C)  Countries can isolate themselves from uncertainties when they trade using a mutually agreed on exchange rate. 
D)  Governments can restore monetary control by removing the obligation to maintain exchange rate parity.

Question 11

_____ limits the ability of the government to print money and, thereby, create inflationary pressures.

Accepted Answer

A)  A dirty-float system 
B)  A managed-float system 
C)  The European Monetary System 
D)  A currency board system 
A)  A dirty-float system 
B)  A managed-float system 
C)  The European Monetary System 
D)  A currency board system

Question 12

Which of the following is a common criticism against the International Monetary Fund?

Accepted Answer

A)  IMF lacks any real mechanism for accountability. 
B)  It is hesitant to help banks when they are in crisis. 
C)  IMF has not intervened to resolve the Asian crisis. 
D)  It did not try to resolve the Mexican currency crisis. 
A)  IMF lacks any real mechanism for accountability. 
B)  It is hesitant to help banks when they are in crisis. 
C)  IMF has not intervened to resolve the Asian crisis. 
D)  It did not try to resolve the Mexican currency crisis.

Question 13

Government projects were a factor behind the investment boom in most Southeast Asian economies.

Accepted Answer

A) True 
 B)False

Question 14

Exchange rates are _____ under a pure "free float" system.

Accepted Answer

A)  completely balanced 
B)  determined by market forces 
C)  wildly variable and unpredictable 
D)  determined by the government 
A)  completely balanced 
B)  determined by market forces 
C)  wildly variable and unpredictable 
D)  determined by the government

Question 15

The quality of investments declined significantly in the Asian countries during the 1990s.

Accepted Answer

A) True 
 B)False

Question 16

The international monetary system refers to the institutional arrangements that govern exchange rates.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

Accepted Answer

A)  Managed float 
B)  Fixed peg 
C)  Free float 
D)  Currency board 
A)  Managed float 
B)  Fixed peg 
C)  Free float 
D)  Currency board

Question 18

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Accepted Answer

A)  It is likely to create high unemployment in some cases. 
B)  It will lead to inflationary economies across the world. 
C)  It is likely to bring about trade wars between nations. 
D)  It will instigate competitive devaluations and intense competition. 
A)  It is likely to create high unemployment in some cases. 
B)  It will lead to inflationary economies across the world. 
C)  It is likely to bring about trade wars between nations. 
D)  It will instigate competitive devaluations and intense competition.

Question 19

Which of the following arguments strengthen the idea of floating exchange rates?

Accepted Answer

A)  External agencies should not interfere in the monetary policies of a country. 
B)  Trade deficits can be corrected through changes in exchange rates. 
C)  Changes in exchange rates will not impact the trade balance in a country. 
D)  Governments should act in ways to minimize the uncertainty in monetary markets. 
A)  External agencies should not interfere in the monetary policies of a country. 
B)  Trade deficits can be corrected through changes in exchange rates. 
C)  Changes in exchange rates will not impact the trade balance in a country. 
D)  Governments should act in ways to minimize the uncertainty in monetary markets.

Question 20

The monetary autonomy argument holds that:

Accepted Answer

A)  each country should be allowed to choose its own inflation rate. 
B)  inflation is beneficial to a country's economy and growth. 
C)  inflation is detrimental to a country's economy and growth. 
D)  countries should restrict inflation based on the global standards. 
A)  each country should be allowed to choose its own inflation rate. 
B)  inflation is beneficial to a country's economy and growth. 
C)  inflation is detrimental to a country's economy and growth. 
D)  countries should restrict inflation based on the global standards.

Which of the following statements is true of pegged exchange rates?

Which of the following is a function of World Bank?

Market forces have produced a stable dollar exchange rate under a floating exchange rate regime.

A country's trade balance is in surplus when:

Currencies of countries with currency boards will become uncompetitive and overvalued if:

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

A _____ means the value of a currency is fixed relative to a reference currency.

Gold par value refers to the:

Advocates of a _____ argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.

Which of the following arguments is in favor of floating exchange rates?

_____ limits the ability of the government to print money and, thereby, create inflationary pressures.

Which of the following is a common criticism against the International Monetary Fund?

Government projects were a factor behind the investment boom in most Southeast Asian economies.

Exchange rates are _____ under a pure "free float" system.

The quality of investments declined significantly in the Asian countries during the 1990s.

The international monetary system refers to the institutional arrangements that govern exchange rates.

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Which of the following arguments strengthen the idea of floating exchange rates?

The monetary autonomy argument holds that:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 11: The International Monetary System

Which of the following statements is true of pegged exchange rates?

Which of the following is a function of World Bank?

Market forces have produced a stable dollar exchange rate under a floating exchange rate regime.

A country's trade balance is in surplus when:

Currencies of countries with currency boards will become uncompetitive and overvalued if:

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

A _____ means the value of a currency is fixed relative to a reference currency.

Gold par value refers to the:

Advocates of a _____ argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.

Which of the following arguments is in favor of floating exchange rates?

_____ limits the ability of the government to print money and, thereby, create inflationary pressures.

Which of the following is a common criticism against the International Monetary Fund?

Government projects were a factor behind the investment boom in most Southeast Asian economies.

Exchange rates are _____ under a pure "free float" system.

The quality of investments declined significantly in the Asian countries during the 1990s.

The international monetary system refers to the institutional arrangements that govern exchange rates.

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Which of the following arguments strengthen the idea of floating exchange rates?

The monetary autonomy argument holds that:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters