Question 1

Which of the following best describes circumstances surrounding the breakdown of the Bretton Woods system?

Accepted Answer

A) The United States was enjoying a persistent trade surplus. 
B) There was too much dependence on the dollar because no other country had a stable currency. 
C) Germany,with its strong currency,refused to defend the dollar. 
D) Speculators were betting on the fall of the dollar. 
E) All the other nations basically wished their currencies to appreciate,which was impossible under the system. 
A) The United States was enjoying a persistent trade surplus. 
B) There was too much dependence on the dollar because no other country had a stable currency. 
C) Germany,with its strong currency,refused to defend the dollar. 
D) Speculators were betting on the fall of the dollar. 
E) All the other nations basically wished their currencies to appreciate,which was impossible under the system.

Question 2

The demand for foreign currency in the United States

Accepted Answer

A) increases as the level of imports increases 
B) increases as the level of exports increases 
C) decreases with the lowering of the inflation rate abroad 
D) decreases as foreign interest rates rise 
E) is unaffected by U.S.demand for goods and services abroad 
A) increases as the level of imports increases 
B) increases as the level of exports increases 
C) decreases with the lowering of the inflation rate abroad 
D) decreases as foreign interest rates rise 
E) is unaffected by U.S.demand for goods and services abroad

Question 3

International reserves include all except one of the following.Which is the exception?

Accepted Answer

A) gold 
B) dollars 
C) yen 
D) Special Drawing Rights 
E) oil 
A) gold 
B) dollars 
C) yen 
D) Special Drawing Rights 
E) oil

Question 4

An arbitrageur in foreign exchange is a person who

Accepted Answer

A) buys foreign currency,hoping to profit by selling it at a higher exchange rate at some later date 
B) earns illegal profit by manipulating foreign exchange 
C) causes differences in exchange rates in different geographic markets 
D) simultaneously buys large amounts of a currency in one market and sells it in another market 
E) mediates disputes when there is no agreement on exchange rates in international currency markets 
A) buys foreign currency,hoping to profit by selling it at a higher exchange rate at some later date 
B) earns illegal profit by manipulating foreign exchange 
C) causes differences in exchange rates in different geographic markets 
D) simultaneously buys large amounts of a currency in one market and sells it in another market 
E) mediates disputes when there is no agreement on exchange rates in international currency markets

Question 5

Which of the following is not a credit item (+)in the U.S.balance of payments?

Accepted Answer

A) imports of cars from Japan 
B) any transaction that results in an inflow of dollars 
C) a capital outflow 
D) a U.S.firm's purchase of steel from a European steel mill 
E) an increase in American vacations abroad 
A) imports of cars from Japan 
B) any transaction that results in an inflow of dollars 
C) a capital outflow 
D) a U.S.firm's purchase of steel from a European steel mill 
E) an increase in American vacations abroad

Question 6

Mary Green takes a summer course in London,England.She doesn't buy British pounds at the U.S.airport,where the rate is 1 pound = $1.60.Upon arrival in London,she finds that she can buy pounds for $1.65 each.Which of the following is true?

Accepted Answer

A) Green would have been better off if she had bought pounds in the United States where U.S.dollars were cheaper. 
B) Green would have been better off if she had bought pounds in the United States where pounds were less expensive. 
C) The pounds were more expensive in London because a currency is always most valued in its home country. 
D) The pounds were more expensive in the United States because they are less available there. 
E) It doesn't matter where she buys the pounds,since she can't use U.S.money anyway once she's in England. 
A) Green would have been better off if she had bought pounds in the United States where U.S.dollars were cheaper. 
B) Green would have been better off if she had bought pounds in the United States where pounds were less expensive. 
C) The pounds were more expensive in London because a currency is always most valued in its home country. 
D) The pounds were more expensive in the United States because they are less available there. 
E) It doesn't matter where she buys the pounds,since she can't use U.S.money anyway once she's in England.

Question 7

International reserves are

Accepted Answer

A) foreign exchange held by governments only 
B) foreign exchange held by central banks only 
C) foreign exchange held by governments or central banks 
D) gold only 
E) various internationally acceptable assets 
A) foreign exchange held by governments only 
B) foreign exchange held by central banks only 
C) foreign exchange held by governments or central banks 
D) gold only 
E) various internationally acceptable assets

Question 8

When faced with a continual excess demand for foreign exchange,which of the following options can the government choose to eliminate the disequilibrium situation?

Accepted Answer

A) increase the peg or devalue 
B) engage in fiscal policy and raise the country's income level 
C) engage in monetary policy and lower interest rates 
D) increase the inflation rate 
E) decrease the peg or revalue 
A) increase the peg or devalue 
B) engage in fiscal policy and raise the country's income level 
C) engage in monetary policy and lower interest rates 
D) increase the inflation rate 
E) decrease the peg or revalue

Question 9

The U.S.demand curve for foreign currency is drawn holding constant all except one of the following factors.Which is the exception?

Accepted Answer

A) income in the United States 
B) the inflation rate in the United States 
C) incomes in the rest of the world 
D) the interest rate in the United States relative to the rest of the world 
E) tastes and preferences of Americans for foreign goods 
A) income in the United States 
B) the inflation rate in the United States 
C) incomes in the rest of the world 
D) the interest rate in the United States relative to the rest of the world 
E) tastes and preferences of Americans for foreign goods

Question 10

Which of the following contributed to the collapse of the Bretton Woods system?

Accepted Answer

A) chronic U.S.trade surpluses 
B) fixed exchange rates 
C) an insufficient gold supply 
D) West Germany's allowing the dollar to float against the mark 
E) West Germany's not wanting the dollar to appreciate 
A) chronic U.S.trade surpluses 
B) fixed exchange rates 
C) an insufficient gold supply 
D) West Germany's allowing the dollar to float against the mark 
E) West Germany's not wanting the dollar to appreciate

Question 11

If U.S.monetary authorities want to strengthen the dollar,they will

Accepted Answer

A) sell dollars in the foreign exchange market 
B) buy dollars in the foreign exchange market 
C) declare the dollar devalued 
D) sell dollars and buy only Euros in the foreign exchange market 
E) encourage other central bankers to sell dollars in the foreign exchange market 
A) sell dollars in the foreign exchange market 
B) buy dollars in the foreign exchange market 
C) declare the dollar devalued 
D) sell dollars and buy only Euros in the foreign exchange market 
E) encourage other central bankers to sell dollars in the foreign exchange market

Question 12

Which of the following is not assumed constant along the U.S.demand curve for foreign exchange?

Accepted Answer

A) the exchange rate 
B) U.S.interest rates 
C) expected U.S.inflation 
D) expected foreign inflation 
E) increase in U.S.income 
A) the exchange rate 
B) U.S.interest rates 
C) expected U.S.inflation 
D) expected foreign inflation 
E) increase in U.S.income

Which of the following best describes circumstances surrounding the breakdown of the Bretton Woods system?

The demand for foreign currency in the United States

International reserves include all except one of the following.Which is the exception?

An arbitrageur in foreign exchange is a person who

Which of the following is not a credit item (+)in the U.S.balance of payments?

Mary Green takes a summer course in London,England.She doesn't buy British pounds at the U.S.airport,where the rate is 1 pound = $1.60.Upon arrival in London,she finds that she can buy pounds for $1.65 each.Which of the following is true?

International reserves are

When faced with a continual excess demand for foreign exchange,which of the following options can the government choose to eliminate the disequilibrium situation?

The U.S.demand curve for foreign currency is drawn holding constant all except one of the following factors.Which is the exception?

Which of the following contributed to the collapse of the Bretton Woods system?

If U.S.monetary authorities want to strengthen the dollar,they will

Which of the following is not assumed constant along the U.S.demand curve for foreign exchange?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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Exam 20: International Finance

Which of the following best describes circumstances surrounding the breakdown of the Bretton Woods system?

The demand for foreign currency in the United States

International reserves include all except one of the following.Which is the exception?

An arbitrageur in foreign exchange is a person who

Which of the following is not a credit item (+)in the U.S.balance of payments?

Mary Green takes a summer course in London,England.She doesn't buy British pounds at the U.S.airport,where the rate is 1 pound = $1.60.Upon arrival in London,she finds that she can buy pounds for $1.65 each.Which of the following is true?

International reserves are

When faced with a continual excess demand for foreign exchange,which of the following options can the government choose to eliminate the disequilibrium situation?

The U.S.demand curve for foreign currency is drawn holding constant all except one of the following factors.Which is the exception?

Which of the following contributed to the collapse of the Bretton Woods system?

If U.S.monetary authorities want to strengthen the dollar,they will

Which of the following is not assumed constant along the U.S.demand curve for foreign exchange?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters