Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

IDA loans receive direct funding from the World Bank.

Accepted Answer

A) True 
 B)False

Question 3

The gold standard called for fixed exchange rates against the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 4

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

Accepted Answer

A country that introduces a currency boa

Question 5

Currencies of countries with currency boards will become uncompetitive and overvalued if local inflation rates are lower than the inflation rate in the country to which the currency is pegged.

Accepted Answer

A) True 
 B)False

Question 6

Increasingly the _____ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies.

Accepted Answer

A)  ECOSOC 
B)  IMF 
C)  UN 
D)  World Bank 
A)  ECOSOC 
B)  IMF 
C)  UN 
D)  World Bank

Question 7

Describe the different exchange rate policies that are in practice today.

Accepted Answer

Governments around the world pursue a nu

Question 8

The current system of foreign exchange is a mixed system of government intervention and speculative activity.

Accepted Answer

A) True 
 B)False

Question 9

Contracting out manufacturing allows companies to reduce economic exposure because ____.

Accepted Answer

A)  having multiple suppliers attracts subsidies from government 
B)  it reduces the pressure on them to maintain a trade surplus 
C)  it allows companies to shift suppliers from country to country 
D)  quality issues are insignificant when manufacturing is contracted to others 
A)  having multiple suppliers attracts subsidies from government 
B)  it reduces the pressure on them to maintain a trade surplus 
C)  it allows companies to shift suppliers from country to country 
D)  quality issues are insignificant when manufacturing is contracted to others

Question 10

Which of the following is the reason why the current foreign-exchange system is sometimes thought of as a managed-float system?

Accepted Answer

A)  The exchange rates of a currency are determined by market forces. 
B)  Governments intervene frequently in the foreign exchange market. 
C)  Major currencies are allowed to freely float against each other. 
D)  Countries use a reference currency to estimate the value of their currencies. 
A)  The exchange rates of a currency are determined by market forces. 
B)  Governments intervene frequently in the foreign exchange market. 
C)  Major currencies are allowed to freely float against each other. 
D)  Countries use a reference currency to estimate the value of their currencies.

Question 11

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

Question 12

The monetary autonomy argument is supported by the advocates of fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 13

Those in favor of floating exchange rate claim that ____.

Accepted Answer

A)  uncertainty in monetary markets dampens the growth of international trade 
B)  inflation is beneficial to a country if it is controlled closely 
C)  trade imbalances can be adjusted by using floating exchange rates 
D)  governments can have rigid control over monetary markets by using floating rates 
A)  uncertainty in monetary markets dampens the growth of international trade 
B)  inflation is beneficial to a country if it is controlled closely 
C)  trade imbalances can be adjusted by using floating exchange rates 
D)  governments can have rigid control over monetary markets by using floating rates

Question 14

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 15

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.

Accepted Answer

A) True 
 B)False

Question 16

The amount of a currency needed to purchase one ounce of gold was referred to as the gold par value under the gold standard.

Accepted Answer

A) True 
 B)False

Question 17

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

Accepted Answer

A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate 
A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate

Question 18

A currency crisis occurs when investors lose confidence in a country's banking system.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Accepted Answer

A)  United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries. 
A)  United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries.

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

IDA loans receive direct funding from the World Bank.

The gold standard called for fixed exchange rates against the U.S. dollar.

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

Currencies of countries with currency boards will become uncompetitive and overvalued if local inflation rates are lower than the inflation rate in the country to which the currency is pegged.

Increasingly the _____ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies.

Describe the different exchange rate policies that are in practice today.

The current system of foreign exchange is a mixed system of government intervention and speculative activity.

Contracting out manufacturing allows companies to reduce economic exposure because ____.

Which of the following is the reason why the current foreign-exchange system is sometimes thought of as a managed-float system?

The monetary autonomy argument holds that ____.

The monetary autonomy argument is supported by the advocates of fixed exchange rates.

Those in favor of floating exchange rate claim that ____.

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

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.

The amount of a currency needed to purchase one ounce of gold was referred to as the gold par value under the gold standard.

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

A currency crisis occurs when investors lose confidence in a country's banking system.

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

United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 11: The International Monetary System

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

IDA loans receive direct funding from the World Bank.

The gold standard called for fixed exchange rates against the U.S. dollar.

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

Currencies of countries with currency boards will become uncompetitive and overvalued if local inflation rates are lower than the inflation rate in the country to which the currency is pegged.

Increasingly the _____ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies.

Describe the different exchange rate policies that are in practice today.

The current system of foreign exchange is a mixed system of government intervention and speculative activity.

Contracting out manufacturing allows companies to reduce economic exposure because ____.

Which of the following is the reason why the current foreign-exchange system is sometimes thought of as a managed-float system?

The monetary autonomy argument holds that ____.

The monetary autonomy argument is supported by the advocates of fixed exchange rates.

Those in favor of floating exchange rate claim that ____.

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

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.

The amount of a currency needed to purchase one ounce of gold was referred to as the gold par value under the gold standard.

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

A currency crisis occurs when investors lose confidence in a country's banking system.

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

United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters