Question 1

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Accepted Answer

A) True 
 B)False

Question 2

In an open economy,contractionary monetary policy will have a secondary effect on GDP because

Accepted Answer

A)  net exports will fall due to the lower foreign exchange value of the dollar. 
B)  net exports will rise due to the lower foreign exchange value of the dollar. 
C)  net exports will fall due to the higher foreign exchange value of the dollar. 
D)  net exports will rise due to the higher foreign exchange value of the dollar. 
A)  net exports will fall due to the lower foreign exchange value of the dollar. 
B)  net exports will rise due to the lower foreign exchange value of the dollar. 
C)  net exports will fall due to the higher foreign exchange value of the dollar. 
D)  net exports will rise due to the higher foreign exchange value of the dollar.

Question 3

Explain the difference between a floating exchange rate,a managed float,and a fixed exchange rate.

Accepted Answer

In a floating exchange rate system,there

Question 4

Graph the demand for and supply of Australian dollars for euros.Suppose the Reserve Bank of Australia decides to follow a contractionary monetary policy.Show graphically and explain the effect of this policy on the demand and supply of dollars and the resulting change in the exchange rate of euros for dollars.

Accepted Answer

@#IMG-DLM& Contractionary monetary policy will inc

Question 5

Purchasing power parity is the theory that,in the long run,exchange rates move to equalise

Accepted Answer

A)  nominal interest rates across countries. 
B)  real GDP across countries. 
C)  corporate profits across countries. 
D)  the relative purchasing power of currencies across countries. 
A)  nominal interest rates across countries. 
B)  real GDP across countries. 
C)  corporate profits across countries. 
D)  the relative purchasing power of currencies across countries.

Question 6

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

Accepted Answer

A) True 
 B)False

Question 7

When a country's exchange rate is allowed to vary within a particular target zone against the currencies of other countries,the country's exchange rate system is

Accepted Answer

A)  floating. 
B)  an adjustable peg system. 
C)  pegged. 
D)  a managed float. 
A)  floating. 
B)  an adjustable peg system. 
C)  pegged. 
D)  a managed float.

Question 8

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

Accepted Answer

A) True 
 B)False

Question 9

The record of a country's transactions in goods,services and assets with the rest of the world is its

Accepted Answer

A)  current account. 
B)  financial account. 
C)  balance of payments. 
D)  balance of trade. 
A)  current account. 
B)  financial account. 
C)  balance of payments. 
D)  balance of trade.

Question 10

Explain how a floating exchange rate can cause problems for countries that have a substantial number of foreign loans denominated in United States (US)dollars.How might a fixed exchange rate pegged to the US dollar help the country avoid these problems?

Accepted Answer

A country that has a substantial number

Question 11

With a common currency such as the euro:

Accepted Answer

A)  trade barriers between countries using the currency are increased. 
B)  individual countries using the currency are no longer able to run independent monetary policies. 
C)  the prices of goods across countries using the currency must always be the same, regardless of consumer preferences for goods across countries. 
D)  individual countries using the currency are no longer able to run independent fiscal policies. 
A)  trade barriers between countries using the currency are increased. 
B)  individual countries using the currency are no longer able to run independent monetary policies. 
C)  the prices of goods across countries using the currency must always be the same, regardless of consumer preferences for goods across countries. 
D)  individual countries using the currency are no longer able to run independent fiscal policies.

Question 12

Since the 1970s,Australia's imports and exports have both grown from approximately ________ of GDP,to approximately ________ of GDP by 2013.

Accepted Answer

A)  10 per cent; 15 per cent 
B)  15 per cent; 20 per cent 
C)  20 per cent; 30 per cent 
D)  40 per cent; 50 per cent 
A)  10 per cent; 15 per cent 
B)  15 per cent; 20 per cent 
C)  20 per cent; 30 per cent 
D)  40 per cent; 50 per cent

Question 13

Which of the following is not a source of demand for the Australian dollar?

Accepted Answer

A)  A German firm that wants to purchase agricultural products from Australia. 
B)  An Indian financier who wants to buy an Australian bond. 
C)  A currency trader who thinks the value of the dollar will be greater in the future relative to the value today. 
D)  An Australian bank that wants to buy a Japanese bond. 
A)  A German firm that wants to purchase agricultural products from Australia. 
B)  An Indian financier who wants to buy an Australian bond. 
C)  A currency trader who thinks the value of the dollar will be greater in the future relative to the value today. 
D)  An Australian bank that wants to buy a Japanese bond.

Question 14

Under a floating exchange rate,the exchange rate

Accepted Answer

A)  will change whenever the price of gold changes. 
B)  is controlled by central bank intervention. 
C)  is determined by the interaction of supply of the currency and demand for the currency. 
D)  is pegged against the euro. 
A)  will change whenever the price of gold changes. 
B)  is controlled by central bank intervention. 
C)  is determined by the interaction of supply of the currency and demand for the currency. 
D)  is pegged against the euro.

Question 15

Figure 19.4  
-Which of the following would cause the change depicted in Figure 19.4? Note that the figure depicts the quantity of euros traded.

Accepted Answer

A)  European productivity rises relative to Australian productivity. 
B)  Japanese decrease their preferences for goods produced in the EU relative to Australian goods. 
C)  The European Union increases its quotas on German wrist watches. 
D)  The price level of goods produced in the EU increases relative to the price level of goods produced in Australia. 
A)  European productivity rises relative to Australian productivity. 
B)  Japanese decrease their preferences for goods produced in the EU relative to Australian goods. 
C)  The European Union increases its quotas on German wrist watches. 
D)  The price level of goods produced in the EU increases relative to the price level of goods produced in Australia.

Question 16

Speculators who anticipate a(n)________ in the future value of the dollar relative to the future value of the yen will ________.

Accepted Answer

A)  increase; increase the demand for yen 
B)  increase; increase the demand for dollars 
C)  decrease; decrease the demand for yen 
D)  decrease; increase the demand for dollars 
A)  increase; increase the demand for yen 
B)  increase; increase the demand for dollars 
C)  decrease; decrease the demand for yen 
D)  decrease; increase the demand for dollars

Question 17

A floating exchange rate system is one in which

Accepted Answer

A)  the central bank does not intervene to adjust the exchange rate. 
B)  shortages of foreign exchange will result in an appreciation of the domestic currency. 
C)  foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency. 
D)  the government defines its currency to be worth a certain amount in terms of another currency, and ensures that the rate remains at that level. 
A)  the central bank does not intervene to adjust the exchange rate. 
B)  shortages of foreign exchange will result in an appreciation of the domestic currency. 
C)  foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency. 
D)  the government defines its currency to be worth a certain amount in terms of another currency, and ensures that the rate remains at that level.

Question 18

If inflation in Australia is higher than inflation in Japan,what will happen to the exchange rate between the Australian dollar and the Japanese yen in the long run,ceteris paribus?

Accepted Answer

A)  The dollar will appreciate against the yen. 
B)  The dollar will depreciate against the yen. 
C)  The dollar's value relative to the yen will not change. 
D)  Both the dollar and the yen will appreciate. 
A)  The dollar will appreciate against the yen. 
B)  The dollar will depreciate against the yen. 
C)  The dollar's value relative to the yen will not change. 
D)  Both the dollar and the yen will appreciate.

Question 19

Net exports in Australia are negative so Australia must be a net lender abroad.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a source of demand for Japanese yen?

Accepted Answer

A)  A Japanese firm that wants to purchase Australian beef. 
B)  A Chinese person who wants to buy Japanese financial securities. 
C)  A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D)  An Australian bank that wants to buy a Japanese bond. 
A)  A Japanese firm that wants to purchase Australian beef. 
B)  A Chinese person who wants to buy Japanese financial securities. 
C)  A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D)  An Australian bank that wants to buy a Japanese bond.

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

In an open economy,contractionary monetary policy will have a secondary effect on GDP because

Explain the difference between a floating exchange rate,a managed float,and a fixed exchange rate.

Purchasing power parity is the theory that,in the long run,exchange rates move to equalise

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

When a country's exchange rate is allowed to vary within a particular target zone against the currencies of other countries,the country's exchange rate system is

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

The record of a country's transactions in goods,services and assets with the rest of the world is its

Explain how a floating exchange rate can cause problems for countries that have a substantial number of foreign loans denominated in United States (US)dollars.How might a fixed exchange rate pegged to the US dollar help the country avoid these problems?

With a common currency such as the euro:

Since the 1970s,Australia's imports and exports have both grown from approximately of GDP,to approximately of GDP by 2013.

Which of the following is not a source of demand for the Australian dollar?

Under a floating exchange rate,the exchange rate

Figure 19.4 -Which of the following would cause the change depicted in Figure 19.4? Note that the figure depicts the quantity of euros traded.

Speculators who anticipate a(n) in the future value of the dollar relative to the future value of the yen will .

A floating exchange rate system is one in which

If inflation in Australia is higher than inflation in Japan,what will happen to the exchange rate between the Australian dollar and the Japanese yen in the long run,ceteris paribus?

Net exports in Australia are negative so Australia must be a net lender abroad.

Which of the following is not a source of demand for Japanese yen?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Exam 19: Comparative Advantage, international Trade, and Exchange Rates

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

In an open economy,contractionary monetary policy will have a secondary effect on GDP because

Explain the difference between a floating exchange rate,a managed float,and a fixed exchange rate.

Purchasing power parity is the theory that,in the long run,exchange rates move to equalise

Foreign currency prices of the Australian dollar are currently determined by a managed float exchange rate system.

When a country's exchange rate is allowed to vary within a particular target zone against the currencies of other countries,the country's exchange rate system is

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

The record of a country's transactions in goods,services and assets with the rest of the world is its

Explain how a floating exchange rate can cause problems for countries that have a substantial number of foreign loans denominated in United States (US)dollars.How might a fixed exchange rate pegged to the US dollar help the country avoid these problems?

With a common currency such as the euro:

Since the 1970s,Australia's imports and exports have both grown from approximately ________ of GDP,to approximately ________ of GDP by 2013.

Which of the following is not a source of demand for the Australian dollar?

Under a floating exchange rate,the exchange rate

Figure 19.4 -Which of the following would cause the change depicted in Figure 19.4? Note that the figure depicts the quantity of euros traded.

Speculators who anticipate a(n)________ in the future value of the dollar relative to the future value of the yen will ________.

A floating exchange rate system is one in which

If inflation in Australia is higher than inflation in Japan,what will happen to the exchange rate between the Australian dollar and the Japanese yen in the long run,ceteris paribus?

Net exports in Australia are negative so Australia must be a net lender abroad.

Which of the following is not a source of demand for Japanese yen?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Since the 1970s,Australia's imports and exports have both grown from approximately of GDP,to approximately of GDP by 2013.

Speculators who anticipate a(n) in the future value of the dollar relative to the future value of the yen will .