Question 1

Under a fixed-rate system,which of the following four alternatives to devaluation is most likely to succeed?

Accepted Answer

A) foreign borrowing 
B) austerity 
C) wage and price controls 
D) exchange controls 
A) foreign borrowing 
B) austerity 
C) wage and price controls 
D) exchange controls B

Question 2

A weak peso is most likely to cause

Accepted Answer

A) added employment and inflation in Mexico 
B) less unemployment but more inflation in Mexico 
C) more unemployment but less inflation in Mexico 
D) less unemployment and less inflation in Mexico 
A) added employment and inflation in Mexico 
B) less unemployment but more inflation in Mexico 
C) more unemployment but less inflation in Mexico 
D) less unemployment and less inflation in Mexico B

Question 3

Whengovernment intervention attempts to reduce for exporters and importers the uncertainty caused by disruptive exchange rate changes for the short and medium term,it is referred to as _________.

Accepted Answer

A) smoothing out daily fluctuations 
B) leaning against the wind 
C) unofficial pegging 
D) a dirty float 
A) smoothing out daily fluctuations 
B) leaning against the wind 
C) unofficial pegging 
D) a dirty float B

Question 4

Governments intervene in the foreign exchange markets for all of the following EXCEPT to

Accepted Answer

A) earn foreign exchange 
B) reduce economic uncertainty 
C) improve the nation's export competitiveness 
D) reduce inflation 
A) earn foreign exchange 
B) reduce economic uncertainty 
C) improve the nation's export competitiveness 
D) reduce inflation

Question 5

The rising dollar in the early 1980s can be attributed to

Accepted Answer

A) high real interest rates in the United States 
B) improved investment prospects in the United States 
C) the growing U.S.budget deficit 
D) a and b only 
A) high real interest rates in the United States 
B) improved investment prospects in the United States 
C) the growing U.S.budget deficit 
D) a and b only

Question 6

Assume you are a critic of the World Bank.Which one of the following would NOT be one of your criticisms?

Accepted Answer

A) World Bank projects do not come under the scrutiny of the global financial markets. 
B) The Bank should move its lending operations out of China. 
C) The Bank is financing projects that encourage governments to enact changes that make countries more attractive to private investors. 
D) The Bank is funding projects to countries without giving them any incentive to change inefficient operations in the economy. 
A) World Bank projects do not come under the scrutiny of the global financial markets. 
B) The Bank should move its lending operations out of China. 
C) The Bank is financing projects that encourage governments to enact changes that make countries more attractive to private investors. 
D) The Bank is funding projects to countries without giving them any incentive to change inefficient operations in the economy.

Question 7

What is the name given to profits earned by a central bank from money creation?

Accepted Answer

A) seigniorage 
B) interest arbitrage 
C) moral hazard 
D) fiat money 
A) seigniorage 
B) interest arbitrage 
C) moral hazard 
D) fiat money

Question 8

Managed floats do NOT fall into which of the following categories of central bank intervention?

Accepted Answer

A) smoothing out daily fluctuations 
B) leaning against the wind 
C) unofficial pegging 
D) letting market forces set exchange rates 
A) smoothing out daily fluctuations 
B) leaning against the wind 
C) unofficial pegging 
D) letting market forces set exchange rates

Question 9

Under a _________,countries adjust their national economic policies to maintain their exchange rates within a specific margin around agreed-upon,fixed central exchange rates.

Accepted Answer

A) managed float 
B) 'beggar-thy-neighbor" devaluation 
C) dirty float 
D) target-zone agreement 
A) managed float 
B) 'beggar-thy-neighbor" devaluation 
C) dirty float 
D) target-zone agreement

Question 10

What is the name of the policy aimed to lessen the need to monetize a government's budget deficit by reducing the expenditures often with the unintended outcome of increased unemployment?

Accepted Answer

A) fixed-rate system 
B) managed float 
C) target-zone arrangement 
D) austerity 
A) fixed-rate system 
B) managed float 
C) target-zone arrangement 
D) austerity

Question 11

Calls for a new gold standard reflect

Accepted Answer

A) fundamental distrust of government's willingness to maintain the integrity of fiat money 
B) a general willingness to accept fiat money 
C) a short memory of what actually transpired under the gold standard 
D) the durability and desirability of gold 
A) fundamental distrust of government's willingness to maintain the integrity of fiat money 
B) a general willingness to accept fiat money 
C) a short memory of what actually transpired under the gold standard 
D) the durability and desirability of gold

Question 12

Underlying the emerging markets currency crises,there is a fundamental conflict among policy objectives that the target nations have failed to resolve.Which one of the following is NOT in conflict?

Accepted Answer

A) IMF bailouts 
B) fixed exchange rates 
C) independent domestic monetary policy 
D) free capital movement 
A) IMF bailouts 
B) fixed exchange rates 
C) independent domestic monetary policy 
D) free capital movement

Question 13

The fall of the dollar beginning in 1985 can be attributed to

Accepted Answer

A) the growing U.S.budget deficit 
B) the large U.S.trade deficit 
C) rapid U.S.economic growth 
D) the slowdown in U.S.economic growth relative to growth overseas 
A) the growing U.S.budget deficit 
B) the large U.S.trade deficit 
C) rapid U.S.economic growth 
D) the slowdown in U.S.economic growth relative to growth overseas

Question 14

The Bretton Woods system

Accepted Answer

A) ended in 1971 
B) ended in 1939 when World War II began 
C) is currently the basis for the international monetary system 
D) is currently in use only by the major industrial nations 
A) ended in 1971 
B) ended in 1939 when World War II began 
C) is currently the basis for the international monetary system 
D) is currently in use only by the major industrial nations

Question 15

Under a fixed-rate system,a country that followed policies leading to a lower inflation rate than that experienced by its trading partners would

Accepted Answer

A) come under pressure to expand its money supply 
B) restrict the growth of its money supply 
C) experience a balance-of-payments deficit 
D) be forced to buy its currency in the foreign exchange market 
A) come under pressure to expand its money supply 
B) restrict the growth of its money supply 
C) experience a balance-of-payments deficit 
D) be forced to buy its currency in the foreign exchange market

Question 16

Under the classic gold standard,if prices began rising in the U.S.

Accepted Answer

A) the dollar value of the pound would rise 
B) the dollar value of the pound would fall 
C) the U.S.would begin running a balance of trade surplus 
D) gold would flow out of the U.S.and the U.S.money supply would drop 
A) the dollar value of the pound would rise 
B) the dollar value of the pound would fall 
C) the U.S.would begin running a balance of trade surplus 
D) gold would flow out of the U.S.and the U.S.money supply would drop

Question 17

The gold standard was dissolved in 1973 because

Accepted Answer

A) the U.S.printed too many dollars to maintain gold at $35/oz 
B) exchange markets preferred a floating rate system 
C) high interest rates raised the cost of holding gold 
D) some countries preferred to hold gold instead of dollars 
A) the U.S.printed too many dollars to maintain gold at $35/oz 
B) exchange markets preferred a floating rate system 
C) high interest rates raised the cost of holding gold 
D) some countries preferred to hold gold instead of dollars

Question 18

What is the name for the strategy used by governments where participants will adjust their current and expected future currency needs as price levels change,interest differentials appear,and economic growth occurs?

Accepted Answer

A) free float 
B) clean float 
C) managed float 
D) dirty float 
A) free float 
B) clean float 
C) managed float 
D) dirty float

Question 19

Under the gold standard

Accepted Answer

A) price levels rose dramatically 
B) price levels stayed constant over time 
C) the long-run stability of the price level includes alternating periods of inflation and deflation 
D) fiat money is more valuable 
A) price levels rose dramatically 
B) price levels stayed constant over time 
C) the long-run stability of the price level includes alternating periods of inflation and deflation 
D) fiat money is more valuable

Question 20

Under a fixed-rate system,a country that followed policies that would lead to a higher rate of inflation than that experienced by its trading partners would

Accepted Answer

A) experience a balance-of-payments surplus as its goods became more expensive 
B) see an decrease in the supply of its currency on the foreign exchange markets 
C) find its currency subject to upward pressure 
D) experience a balance-of-payments deficit as its goods became more expensive 
A) experience a balance-of-payments surplus as its goods became more expensive 
B) see an decrease in the supply of its currency on the foreign exchange markets 
C) find its currency subject to upward pressure 
D) experience a balance-of-payments deficit as its goods became more expensive

Under a fixed-rate system,which of the following four alternatives to devaluation is most likely to succeed?

A weak peso is most likely to cause

Whengovernment intervention attempts to reduce for exporters and importers the uncertainty caused by disruptive exchange rate changes for the short and medium term,it is referred to as _________.

Governments intervene in the foreign exchange markets for all of the following EXCEPT to

The rising dollar in the early 1980s can be attributed to

Assume you are a critic of the World Bank.Which one of the following would NOT be one of your criticisms?

What is the name given to profits earned by a central bank from money creation?

Managed floats do NOT fall into which of the following categories of central bank intervention?

Under a _________,countries adjust their national economic policies to maintain their exchange rates within a specific margin around agreed-upon,fixed central exchange rates.

What is the name of the policy aimed to lessen the need to monetize a government's budget deficit by reducing the expenditures often with the unintended outcome of increased unemployment?

Calls for a new gold standard reflect

Underlying the emerging markets currency crises,there is a fundamental conflict among policy objectives that the target nations have failed to resolve.Which one of the following is NOT in conflict?

The fall of the dollar beginning in 1985 can be attributed to

The Bretton Woods system

Under a fixed-rate system,a country that followed policies leading to a lower inflation rate than that experienced by its trading partners would

Under the classic gold standard,if prices began rising in the U.S.

The gold standard was dissolved in 1973 because

What is the name for the strategy used by governments where participants will adjust their current and expected future currency needs as price levels change,interest differentials appear,and economic growth occurs?

Under the gold standard

Under a fixed-rate system,a country that followed policies that would lead to a higher rate of inflation than that experienced by its trading partners would

Introduction

The Determination of Exchange Rates

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters

Exam 3: The International Monetary System

Under a fixed-rate system,which of the following four alternatives to devaluation is most likely to succeed?

A weak peso is most likely to cause

Whengovernment intervention attempts to reduce for exporters and importers the uncertainty caused by disruptive exchange rate changes for the short and medium term,it is referred to as _________.

Governments intervene in the foreign exchange markets for all of the following EXCEPT to

The rising dollar in the early 1980s can be attributed to

Assume you are a critic of the World Bank.Which one of the following would NOT be one of your criticisms?

What is the name given to profits earned by a central bank from money creation?

Managed floats do NOT fall into which of the following categories of central bank intervention?

Under a _________,countries adjust their national economic policies to maintain their exchange rates within a specific margin around agreed-upon,fixed central exchange rates.

What is the name of the policy aimed to lessen the need to monetize a government's budget deficit by reducing the expenditures often with the unintended outcome of increased unemployment?

Calls for a new gold standard reflect

Underlying the emerging markets currency crises,there is a fundamental conflict among policy objectives that the target nations have failed to resolve.Which one of the following is NOT in conflict?

The fall of the dollar beginning in 1985 can be attributed to

The Bretton Woods system

Under a fixed-rate system,a country that followed policies leading to a lower inflation rate than that experienced by its trading partners would

Under the classic gold standard,if prices began rising in the U.S.

The gold standard was dissolved in 1973 because

What is the name for the strategy used by governments where participants will adjust their current and expected future currency needs as price levels change,interest differentials appear,and economic growth occurs?

Under the gold standard

Under a fixed-rate system,a country that followed policies that would lead to a higher rate of inflation than that experienced by its trading partners would

Introduction

The Determination of Exchange Rates

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters