Question 1

Why may a central bank intervene in the foreign exchange market when its currency is appreciating?

Accepted Answer

A)  concerns about the country's exports becoming less competitive 
B)  concerns about inflation 
C)  concerns about imports becoming less competitive 
D)  to sterilize the effects on the domestic economy 
A)  concerns about the country's exports becoming less competitive 
B)  concerns about inflation 
C)  concerns about imports becoming less competitive 
D)  to sterilize the effects on the domestic economy

Question 2

International reserves are

Accepted Answer

A)  assets denominated in a foreign currency and used in international transactions. 
B)  reserves the Fed requires banks to hold against Eurodollar deposits. 
C)  reserves the International Monetary Fund requires banks to hold if they wish to participate in the market for foreign exchange. 
D)  central bank holdings of gold. 
A)  assets denominated in a foreign currency and used in international transactions. 
B)  reserves the Fed requires banks to hold against Eurodollar deposits. 
C)  reserves the International Monetary Fund requires banks to hold if they wish to participate in the market for foreign exchange. 
D)  central bank holdings of gold.

Question 3

The gold standard probably made the Great Depression more severe in the United States because

Accepted Answer

A)  the value of gold declined sharply during those years. 
B)  the existence of the gold standard kept prices from falling. 
C)  the money supply in the United States increased rapidly as gold flowed into the country. 
D)  the Fed attempted to reduce gold outflows by raising the discount rate. 
A)  the value of gold declined sharply during those years. 
B)  the existence of the gold standard kept prices from falling. 
C)  the money supply in the United States increased rapidly as gold flowed into the country. 
D)  the Fed attempted to reduce gold outflows by raising the discount rate.

Question 4

The speculative attack on the British pound in 1967 succeeded because

Accepted Answer

A)  the pound was seriously undervalued relative to the dollar. 
B)  Britain decided to drop out of the Bretton Woods system. 
C)  British exports greatly exceeded British imports, causing a large inflow of gold. 
D)  the Bank of England lacked the international reserves to defend the existing exchange rate indefinitely. 
A)  the pound was seriously undervalued relative to the dollar. 
B)  Britain decided to drop out of the Bretton Woods system. 
C)  British exports greatly exceeded British imports, causing a large inflow of gold. 
D)  the Bank of England lacked the international reserves to defend the existing exchange rate indefinitely.

Question 5

Countries in which region experienced disruptive capital flows in 1997-98?

Accepted Answer

A)  Eastern Europe 
B)  Western Europe 
C)  Latin America 
D)  East Asia 
A)  Eastern Europe 
B)  Western Europe 
C)  Latin America 
D)  East Asia

Question 6

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Accepted Answer

Some economists point out that this prob

Question 7

Which of the following is true of the U.S.balance of payments?

Accepted Answer

A)  It includes as receipts all inflows of funds from foreigners to the United States. 
B)  It includes as receipts only inflows of funds used to purchase U.S. produced goods and services. 
C)  It includes as receipts inflows of funds used to purchase U.S. goods or services or to acquire U.S. assets but not funds received as unilateral transfers. 
D)  It includes as receipts inflows of funds used to purchase U.S. goods or services and funds received as unilateral transfers but not inflows of funds used to acquire U.S. assets. 
A)  It includes as receipts all inflows of funds from foreigners to the United States. 
B)  It includes as receipts only inflows of funds used to purchase U.S. produced goods and services. 
C)  It includes as receipts inflows of funds used to purchase U.S. goods or services or to acquire U.S. assets but not funds received as unilateral transfers. 
D)  It includes as receipts inflows of funds used to purchase U.S. goods or services and funds received as unilateral transfers but not inflows of funds used to acquire U.S. assets.

Question 8

Although coordinated changes in monetary policy are likely to affect the exchange rate,

Accepted Answer

A)  it has proven impossible to achieve such coordination among the world's central banks. 
B)  sterilized interventions by themselves are unlikely to have a long-term effect on the exchange rate. 
C)  they can do so only at the cost of increasing the worldwide inflation rate. 
D)  they can do so only at the cost of significantly increasing the chances of worldwide recession. 
A)  it has proven impossible to achieve such coordination among the world's central banks. 
B)  sterilized interventions by themselves are unlikely to have a long-term effect on the exchange rate. 
C)  they can do so only at the cost of increasing the worldwide inflation rate. 
D)  they can do so only at the cost of significantly increasing the chances of worldwide recession.

Question 9

The euro is

Accepted Answer

A)  the currency of all nations in Europe. 
B)  the rate at which the French central bank makes discount loans. 
C)  a common currency of many European countries. 
D)  the name of the European central bank. 
A)  the currency of all nations in Europe. 
B)  the rate at which the French central bank makes discount loans. 
C)  a common currency of many European countries. 
D)  the name of the European central bank.

Question 10

A central bank might attempt to offset an increase in the cost of foreign goods by

Accepted Answer

A)  selling its own currency in the foreign-exchange market. 
B)  buying its own currency in the foreign-exchange market. 
C)  lowering domestic interest rates. 
D)  raising the prices of domestic goods by a similar amount. 
A)  selling its own currency in the foreign-exchange market. 
B)  buying its own currency in the foreign-exchange market. 
C)  lowering domestic interest rates. 
D)  raising the prices of domestic goods by a similar amount.

Why may a central bank intervene in the foreign exchange market when its currency is appreciating?

International reserves are

The gold standard probably made the Great Depression more severe in the United States because

The speculative attack on the British pound in 1967 succeeded because

Countries in which region experienced disruptive capital flows in 1997-98?

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Which of the following is true of the U.S.balance of payments?

Although coordinated changes in monetary policy are likely to affect the exchange rate,

The euro is

A central bank might attempt to offset an increase in the cost of foreign goods by

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

Why may a central bank intervene in the foreign exchange market when its currency is appreciating?

International reserves are

The gold standard probably made the Great Depression more severe in the United States because

The speculative attack on the British pound in 1967 succeeded because

Countries in which region experienced disruptive capital flows in 1997-98?

What alternative to restrictions on capital inflows do some economists recommend to minimize the possibility of increased lending booms and risk taking by domestic banks?

Which of the following is true of the U.S.balance of payments?

Although coordinated changes in monetary policy are likely to affect the exchange rate,

The euro is

A central bank might attempt to offset an increase in the cost of foreign goods by

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