Question 1

Special Drawing Rights

Accepted Answer

A)  are granted by the Fed to banks which want to trade in the foreign exchange markets. 
B)  were eliminated when the Bretton Woods system broke down. 
C)  are created by the IMF in its role as lender of last resort. 
D)  were created by the Nixon administration on August 15, 1971. 
A)  are granted by the Fed to banks which want to trade in the foreign exchange markets. 
B)  were eliminated when the Bretton Woods system broke down. 
C)  are created by the IMF in its role as lender of last resort. 
D)  were created by the Nixon administration on August 15, 1971.

Question 2

In the balance-of-payments accounts,the statistical discrepancy

Accepted Answer

A)  equals the capital account balance minus the current account balance. 
B)  equals the current account balance minus the capital account balance. 
C)  probably reflects hidden capital flows. 
D)  must equal zero. 
A)  equals the capital account balance minus the current account balance. 
B)  equals the current account balance minus the capital account balance. 
C)  probably reflects hidden capital flows. 
D)  must equal zero.

Question 3

How did the the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

Accepted Answer

Before the euro,the central banks of tho

Question 4

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

Accepted Answer

A)  its assets will rise by $2 billion and its liabilities will fall by $2 billion. 
B)  its assets will fall by $2 billion and its liabilities will rise by $2 billion. 
C)  its assets and liabilities will both fall by $2 billion. 
D)  its assets and liabilities will both rise by $2 billion. 
A)  its assets will rise by $2 billion and its liabilities will fall by $2 billion. 
B)  its assets will fall by $2 billion and its liabilities will rise by $2 billion. 
C)  its assets and liabilities will both fall by $2 billion. 
D)  its assets and liabilities will both rise by $2 billion.

Question 5

Historically,the leading official reserve asset was

Accepted Answer

A)  gold. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  the German mark. 
A)  gold. 
B)  the U.S. dollar. 
C)  the British pound. 
D)  the German mark.

Question 6

On August 15,1971,the United States

Accepted Answer

A)  returned to the gold standard. 
B)  suspended the convertibility of dollars into gold. 
C)  provided unlimited dollar reserves to the German central bank to help end a speculative attack on the mark. 
D)  provided unlimited dollar reserves to the Bank of England to help end a speculative attack on the pound. 
A)  returned to the gold standard. 
B)  suspended the convertibility of dollars into gold. 
C)  provided unlimited dollar reserves to the German central bank to help end a speculative attack on the mark. 
D)  provided unlimited dollar reserves to the Bank of England to help end a speculative attack on the pound.

Question 7

If the Fed sterilizes the purchase of foreign assets,

Accepted Answer

A)  the monetary base is left unchanged. 
B)  the monetary base rises by the amount of the purchase. 
C)  the monetary base falls by the amount of the purchase. 
D)  the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase. 
A)  the monetary base is left unchanged. 
B)  the monetary base rises by the amount of the purchase. 
C)  the monetary base falls by the amount of the purchase. 
D)  the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase.

Question 8

How did the global savings glut in the 2000s affect the U.S.current account balance?

Accepted Answer

A)  it caused it to decline by increasing the value of the dollar 
B)  it caused it to decline by reducing the value of the dollar 
C)  it caused it to increase by increasing the value of the dollar 
D)  it caused it to increase by reducing the value of the dollar 
A)  it caused it to decline by increasing the value of the dollar 
B)  it caused it to decline by reducing the value of the dollar 
C)  it caused it to increase by increasing the value of the dollar 
D)  it caused it to increase by reducing the value of the dollar

Question 9

The main reason central banks engage in foreign-exchange interventions is to

Accepted Answer

A)  stabilize the domestic money supply. 
B)  stabilize domestic interest rates. 
C)  stabilize foreign interest rates. 
D)  stabilize the exchange rate. 
A)  stabilize the domestic money supply. 
B)  stabilize domestic interest rates. 
C)  stabilize foreign interest rates. 
D)  stabilize the exchange rate.

Question 10

How does a sterilized intervention by the Fed in foreign exchange market differ from an unsterilized intervention?

Accepted Answer

Unlike an unsterilized interve

Question 11

If the Fed sells foreign assets,the monetary base will

Accepted Answer

A)  fall by the amount of the sale, only if the Fed buys domestic bank deposits with the proceeds. 
B)  fall by the amount of the sale, only if the Fed buys domestic currency with the proceeds. 
C)  fall by the amount of the sale, whether the Fed buys domestic bank deposits or domestic currency with the proceeds. 
D)  rise by the amount of the sale. 
A)  fall by the amount of the sale, only if the Fed buys domestic bank deposits with the proceeds. 
B)  fall by the amount of the sale, only if the Fed buys domestic currency with the proceeds. 
C)  fall by the amount of the sale, whether the Fed buys domestic bank deposits or domestic currency with the proceeds. 
D)  rise by the amount of the sale.

Question 12

Which of the following is NOT considered a receipt in the balance of payments?

Accepted Answer

A)  exports of goods 
B)  capital inflows 
C)  import of services 
D)  unilateral transfers to U.S. citizens 
A)  exports of goods 
B)  capital inflows 
C)  import of services 
D)  unilateral transfers to U.S. citizens

Question 13

The Bretton Woods system lasted from

Accepted Answer

A)  1801 to 1861. 
B)  1863 to 1914. 
C)  1945 to 1971. 
D)  1981 to 1993. 
A)  1801 to 1861. 
B)  1863 to 1914. 
C)  1945 to 1971. 
D)  1981 to 1993.

Question 14

If the Fed sterilizes the purchase of foreign assets,

Accepted Answer

A)  its assets and liabilities rise by the same amount. 
B)  its assets and liabilities fall by the same amount. 
C)  the composition of its assets changes, but its liabilities are unaffected. 
D)  the composition of its liabilities changes, but its assets are unaffected. 
A)  its assets and liabilities rise by the same amount. 
B)  its assets and liabilities fall by the same amount. 
C)  the composition of its assets changes, but its liabilities are unaffected. 
D)  the composition of its liabilities changes, but its assets are unaffected.

Question 15

What was the approximate value of the U.S.current account balance in 2009?

Accepted Answer

A)  +$10 billion 
B)  +$79 billion 
C)  -$380 billion 
D)  -$600 billion 
A)  +$10 billion 
B)  +$79 billion 
C)  -$380 billion 
D)  -$600 billion

Question 16

Members of the European Exchange Rate Mechanism (ERM)

Accepted Answer

A)  agreed to buy and sell gold at a fixed rate. 
B)  promised to maintain the values of their currencies within a fixed range. 
C)  attempted to maintain a fixed exchange rate against the dollar. 
D)  all agreed to charge the same interest rate on central bank loans. 
A)  agreed to buy and sell gold at a fixed rate. 
B)  promised to maintain the values of their currencies within a fixed range. 
C)  attempted to maintain a fixed exchange rate against the dollar. 
D)  all agreed to charge the same interest rate on central bank loans.

Question 17

If a central bank wishes to raise the foreign-exchange value of its currency,it will

Accepted Answer

A)  buy domestic currency and sell foreign assets. 
B)  sell domestic currency and buy foreign assets. 
C)  attempt to reduce domestic interest rates. 
D)  attempt to raise the domestic price level relative to foreign price levels. 
A)  buy domestic currency and sell foreign assets. 
B)  sell domestic currency and buy foreign assets. 
C)  attempt to reduce domestic interest rates. 
D)  attempt to raise the domestic price level relative to foreign price levels.

Question 18

Under the Bretton Woods system,exchange rates were supposed to be adjusted

Accepted Answer

A)  only when a country experienced fundamental disequilibrium. 
B)  daily. 
C)  weekly. 
D)  following each annual meeting of the board of governors of the International Monetary Fund. 
A)  only when a country experienced fundamental disequilibrium. 
B)  daily. 
C)  weekly. 
D)  following each annual meeting of the board of governors of the International Monetary Fund.

Question 19

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

Accepted Answer

A)  its assets will rise by $2 billion and the monetary base will rise by $2 billion. 
B)  its assets will fall by $2 billion and the monetary base will fall by $2 billion. 
C)  its assets will rise by $2 billion and the monetary base will fall by $2 billion. 
D)  its assets will fall by $2 billion and the monetary base will rise by $2 billion. 
A)  its assets will rise by $2 billion and the monetary base will rise by $2 billion. 
B)  its assets will fall by $2 billion and the monetary base will fall by $2 billion. 
C)  its assets will rise by $2 billion and the monetary base will fall by $2 billion. 
D)  its assets will fall by $2 billion and the monetary base will rise by $2 billion.

Question 20

The fixed exchange rates of the Bretton Woods system were maintained

Accepted Answer

A)  by central bank interventions in the foreign-exchange market. 
B)  by the requirement that short-term interest rates be equalized in all participating countries. 
C)  by the requirement that long-term interest rates be equalized in all participating countries. 
D)  through the automatic workings of the foreign-exchange market. 
A)  by central bank interventions in the foreign-exchange market. 
B)  by the requirement that short-term interest rates be equalized in all participating countries. 
C)  by the requirement that long-term interest rates be equalized in all participating countries. 
D)  through the automatic workings of the foreign-exchange market.

Special Drawing Rights

In the balance-of-payments accounts,the statistical discrepancy

How did the the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

Historically,the leading official reserve asset was

On August 15,1971,the United States

If the Fed sterilizes the purchase of foreign assets,

How did the global savings glut in the 2000s affect the U.S.current account balance?

The main reason central banks engage in foreign-exchange interventions is to

How does a sterilized intervention by the Fed in foreign exchange market differ from an unsterilized intervention?

If the Fed sells foreign assets,the monetary base will

Which of the following is NOT considered a receipt in the balance of payments?

The Bretton Woods system lasted from

If the Fed sterilizes the purchase of foreign assets,

What was the approximate value of the U.S.current account balance in 2009?

Members of the European Exchange Rate Mechanism (ERM)

If a central bank wishes to raise the foreign-exchange value of its currency,it will

Under the Bretton Woods system,exchange rates were supposed to be adjusted

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

The fixed exchange rates of the Bretton Woods system were maintained

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 16: The International Financial System and Monetary Policy

Special Drawing Rights

In the balance-of-payments accounts,the statistical discrepancy

How did the the use of the euro limit the use of monetary policy by European nations severely affected by the Financial Crisis of 2007-2009?

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

Historically,the leading official reserve asset was

On August 15,1971,the United States

If the Fed sterilizes the purchase of foreign assets,

How did the global savings glut in the 2000s affect the U.S.current account balance?

The main reason central banks engage in foreign-exchange interventions is to

How does a sterilized intervention by the Fed in foreign exchange market differ from an unsterilized intervention?

If the Fed sells foreign assets,the monetary base will

Which of the following is NOT considered a receipt in the balance of payments?

The Bretton Woods system lasted from

If the Fed sterilizes the purchase of foreign assets,

What was the approximate value of the U.S.current account balance in 2009?

Members of the European Exchange Rate Mechanism (ERM)

If a central bank wishes to raise the foreign-exchange value of its currency,it will

Under the Bretton Woods system,exchange rates were supposed to be adjusted

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion,

The fixed exchange rates of the Bretton Woods system were maintained

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters