Econ 335 final exam ch.15 questions
well answered already passed
The exchange-rate system that best characterizes the present international monetary
arrangement used by industrialized countries is:
a.
Freely fluctuating exchange rates
b.
Adjustable pegged exchange rates
c.
Managed floating exchange rates
d.
Pegged or fixed exchange rates - correct answer ✔✔c.
Managed floating exchange rates
Which exchange-rate mechanism is intended to insulate the balance of payments from short-
term capital movements while providing exchange rate stability for commercial transactions?
a.
Dual exchange rates
,b.
Managed floating exchange rates
c.
Adjustable pegged exchange rates
d.
Crawling pegged exchange rates - correct answer ✔✔a.
Dual exchange rates
Which exchange-rate mechanism calls for frequent redefining of the par value by small amounts
to remove a payments disequilibrium?
a.
Dual exchange rates
b.
Adjustable pegged exchange rates
c.
Managed floating exchange rates
d.
Crawling pegged exchange rates - correct answer ✔✔d.
Crawling pegged exchange rates
,Under managed floating exchange rates, if the rate of inflation in the United States is less than
the rate of inflation of its trading partners, the dollar will likely:
a.
Appreciate against foreign currencies
b.
Depreciate against foreign currencies
c.
Be officially revalued by the government
d.
Be officially devalued by the government - correct answer ✔✔a.
Appreciate against foreign currencies
Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the
rate of inflation of its trading partners:
a.
U.S. exports tend to rise and imports tend to fall
b.
U.S. imports tend to rise and exports tend to fall
c.
U.S. foreign exchange reserves tend to rise
, d.
U.S. foreign exchange reserves remain constant - correct answer ✔✔b.
U.S. imports tend to rise and exports tend to fall
Under a pegged exchange-rate system, which does not explain why a country would have a
balance-of-payments deficit?
a.
Very high rates of inflation occur domestically
b.
Foreigners discriminate against domestic products
c.
Technological advance is superior abroad
d.
The domestic currency is undervalued relative to other currencies - correct answer ✔✔d.
The domestic currency is undervalued relative to other currencies
Which exchange-rate system does not require monetary reserves for official exchange-rate
intervention?
a.
Floating exchange rates
well answered already passed
The exchange-rate system that best characterizes the present international monetary
arrangement used by industrialized countries is:
a.
Freely fluctuating exchange rates
b.
Adjustable pegged exchange rates
c.
Managed floating exchange rates
d.
Pegged or fixed exchange rates - correct answer ✔✔c.
Managed floating exchange rates
Which exchange-rate mechanism is intended to insulate the balance of payments from short-
term capital movements while providing exchange rate stability for commercial transactions?
a.
Dual exchange rates
,b.
Managed floating exchange rates
c.
Adjustable pegged exchange rates
d.
Crawling pegged exchange rates - correct answer ✔✔a.
Dual exchange rates
Which exchange-rate mechanism calls for frequent redefining of the par value by small amounts
to remove a payments disequilibrium?
a.
Dual exchange rates
b.
Adjustable pegged exchange rates
c.
Managed floating exchange rates
d.
Crawling pegged exchange rates - correct answer ✔✔d.
Crawling pegged exchange rates
,Under managed floating exchange rates, if the rate of inflation in the United States is less than
the rate of inflation of its trading partners, the dollar will likely:
a.
Appreciate against foreign currencies
b.
Depreciate against foreign currencies
c.
Be officially revalued by the government
d.
Be officially devalued by the government - correct answer ✔✔a.
Appreciate against foreign currencies
Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the
rate of inflation of its trading partners:
a.
U.S. exports tend to rise and imports tend to fall
b.
U.S. imports tend to rise and exports tend to fall
c.
U.S. foreign exchange reserves tend to rise
, d.
U.S. foreign exchange reserves remain constant - correct answer ✔✔b.
U.S. imports tend to rise and exports tend to fall
Under a pegged exchange-rate system, which does not explain why a country would have a
balance-of-payments deficit?
a.
Very high rates of inflation occur domestically
b.
Foreigners discriminate against domestic products
c.
Technological advance is superior abroad
d.
The domestic currency is undervalued relative to other currencies - correct answer ✔✔d.
The domestic currency is undervalued relative to other currencies
Which exchange-rate system does not require monetary reserves for official exchange-rate
intervention?
a.
Floating exchange rates
