IBUS 401 FINAL EXAM
BULLINGTON CORRECT 100%
A weak dollar is normally expected to cause: - ANSWER low unemployment and high
inflation in the U.S.
A primary result of the Bretton Woods Agreement was: - ANSWER establishing that
exchange rates of most major currencies were able to be allowed to fluctuate 1% above
or below their initially set values.
A primary result of the Smithsonian Agreement was: - ANSWER establishing that
exchange rates of most major countries were to be allowed to fluctuate 2.25% above or
below their initially set values.
Under a fixed exchange rate system: - ANSWER central bank intervention in the foreign
exchange market is often necessary.
The value of the Canadian dollar, Japanese yen, and Australian dollar with the respect
to the U.S. dollar are apart of a: - ANSWER managed float system
The interest rate if a country with a currency board: - ANSWER will move in tandem with
the interest rate of the curency to which it is tied.
Assume a central bank exchanged it's currency for the other foreign currencies in the
foreign exchange market, but does not adjust for the resulting change in the money
supply. This is an example of: - ANSWER nonsteralized intervention
If the Fed desires to weaken the dollar without affecting the dollar money supply, it
should: - ANSWER exchange dollars for foreign currencies, and sell some of its existing
Treasury security holdings for dollars.
Which of the following is an example of direct intervention in foreign exchange markets?
- ANSWER exchanging dollars for foreign currency
A strong dollar places_____ pressure on inflation, which in turn places_______
pressure on the dollar. - ANSWER downward;upward
The Fed may use a stimulative monetary policy with least concern about causing
inflation if the dollars value is expected to: - ANSWER strengthen
A weaker dollar places_____ pressure on the U.S. inflation, which in turn places____
pressure on U.S. interest rates, which places______ pressure on the U.S. bond prices. -
ANSWER upward;upward;downward
,The euro is the currency: - ANSWER none of the above
The euro has not been adopted by the: - ANSWER U.K.
Countries that have adopted the euro must agree on a single_____ policy. - ANSWER
monetary
Countries that have adopted the euro tend to have very similar_______. - ANSWER
interest rates
The risk-free interest rates among countries that have adopted the euro should: -
ANSWER not necessarily be similar to risk-free rates in other countries.
It has been argued that the exchange can be used as a policy tool. Assume that the
U.S. government would like to reduce unemployment. Which of the following is an
appropriate action given this scenario? - ANSWER weaken the dollar
It has been argued that the exchange rate can be used as a policy tool. Assume the
U.S. government would like to reduce inflation. Which of the following is an appropriate
action given this scenario? - ANSWER Buy dollars with foreign currency
To strengthen the dollar using sterilized intervention, the Fed would _____ dollars and
simultaneously____ treasury securities. - ANSWER buy;buy
As foreign exchange activity has grown, a given degree of central bank intervention has
become: - ANSWER less effective
When using indirect intervention, a central bank is likely to focus on: - ANSWER interest
rates
Which of the following countries was probably the least affected (directly or indirectly) by
the Asian crisis? - ANSWER China
Which of the following is not true regarding Thailand? - ANSWER Thailand was one of
the slowest growing countries before the Asian crisis?
China's yuan is presently: - ANSWER allowed to fluctuate but with central bank
intervention
During the period 1944-1971, the U.S. used a ________ system. - ANSWER fixed
Which of the following are example of currency controls? - ANSWER All of the above
, From a financial management perspective, which of the following is true regarding the
introduction of the euro? - ANSWER Transactions costs decline for MNC's that conduct
transactions within Europe.
Which of the following countries have no adopted the euro? - ANSWER Switzerland
Which of the following is true about the Southeast Asian currency crisis? - ANSWER It
was preceded by several years of large capital inflows to Asia
Which on is not a disadvantage of a freely floating exchange rate system? - ANSWER
The government may intervene to change the value of a given currency.
The European Central Bank is located in: - ANSWER Frankfort
Which of the following is not true regarding the eurozone? - ANSWER Members cannot
apply their own fiscal policies
Which of the following is not a reason for devaluation of a currency? - ANSWER high
inflation
Which of the following is most likely reason for revaluation of a currency? - ANSWER To
reduce inflation
To weaken the dollar using sterilized intervention, the Fed will ______ U.S. dollar and
simultaneously ______ Treasury securities. - ANSWER sell;sell
If the Fed desires to strengthen the dollar without affecting the dollar money supply it
should: - ANSWER exchange foreign currencies for dollars, and buy existing Treasury
securities with dollars.
Assume the Fed intervened by exchanging dollars for euros in the foreign exchange
market. This will cause an ______ U.S. dollars and an ______ euros. - ANSWER
outward shift in supply of;outward shift in demand for
If the Fed _____ the interest rates when inflationary expectations remain unchanged,
the most likely result is that value of the dollar will _____ and the economy may _____. -
ANSWER increases;appreciate;weaken
If a speculator expects that the Fed will intervene by exchanging euros for the U.S.
dollars, she would most likely____ to capitalize on this intervention. - ANSWER
purchase yen call options
A strong dollar places _____ pressure on U.S. inflation, which in turn places ____
pressure on U.S. interest rates, which in turn place ______ pressure on U.S. bond
prices. - ANSWER downward;downward;upward
BULLINGTON CORRECT 100%
A weak dollar is normally expected to cause: - ANSWER low unemployment and high
inflation in the U.S.
A primary result of the Bretton Woods Agreement was: - ANSWER establishing that
exchange rates of most major currencies were able to be allowed to fluctuate 1% above
or below their initially set values.
A primary result of the Smithsonian Agreement was: - ANSWER establishing that
exchange rates of most major countries were to be allowed to fluctuate 2.25% above or
below their initially set values.
Under a fixed exchange rate system: - ANSWER central bank intervention in the foreign
exchange market is often necessary.
The value of the Canadian dollar, Japanese yen, and Australian dollar with the respect
to the U.S. dollar are apart of a: - ANSWER managed float system
The interest rate if a country with a currency board: - ANSWER will move in tandem with
the interest rate of the curency to which it is tied.
Assume a central bank exchanged it's currency for the other foreign currencies in the
foreign exchange market, but does not adjust for the resulting change in the money
supply. This is an example of: - ANSWER nonsteralized intervention
If the Fed desires to weaken the dollar without affecting the dollar money supply, it
should: - ANSWER exchange dollars for foreign currencies, and sell some of its existing
Treasury security holdings for dollars.
Which of the following is an example of direct intervention in foreign exchange markets?
- ANSWER exchanging dollars for foreign currency
A strong dollar places_____ pressure on inflation, which in turn places_______
pressure on the dollar. - ANSWER downward;upward
The Fed may use a stimulative monetary policy with least concern about causing
inflation if the dollars value is expected to: - ANSWER strengthen
A weaker dollar places_____ pressure on the U.S. inflation, which in turn places____
pressure on U.S. interest rates, which places______ pressure on the U.S. bond prices. -
ANSWER upward;upward;downward
,The euro is the currency: - ANSWER none of the above
The euro has not been adopted by the: - ANSWER U.K.
Countries that have adopted the euro must agree on a single_____ policy. - ANSWER
monetary
Countries that have adopted the euro tend to have very similar_______. - ANSWER
interest rates
The risk-free interest rates among countries that have adopted the euro should: -
ANSWER not necessarily be similar to risk-free rates in other countries.
It has been argued that the exchange can be used as a policy tool. Assume that the
U.S. government would like to reduce unemployment. Which of the following is an
appropriate action given this scenario? - ANSWER weaken the dollar
It has been argued that the exchange rate can be used as a policy tool. Assume the
U.S. government would like to reduce inflation. Which of the following is an appropriate
action given this scenario? - ANSWER Buy dollars with foreign currency
To strengthen the dollar using sterilized intervention, the Fed would _____ dollars and
simultaneously____ treasury securities. - ANSWER buy;buy
As foreign exchange activity has grown, a given degree of central bank intervention has
become: - ANSWER less effective
When using indirect intervention, a central bank is likely to focus on: - ANSWER interest
rates
Which of the following countries was probably the least affected (directly or indirectly) by
the Asian crisis? - ANSWER China
Which of the following is not true regarding Thailand? - ANSWER Thailand was one of
the slowest growing countries before the Asian crisis?
China's yuan is presently: - ANSWER allowed to fluctuate but with central bank
intervention
During the period 1944-1971, the U.S. used a ________ system. - ANSWER fixed
Which of the following are example of currency controls? - ANSWER All of the above
, From a financial management perspective, which of the following is true regarding the
introduction of the euro? - ANSWER Transactions costs decline for MNC's that conduct
transactions within Europe.
Which of the following countries have no adopted the euro? - ANSWER Switzerland
Which of the following is true about the Southeast Asian currency crisis? - ANSWER It
was preceded by several years of large capital inflows to Asia
Which on is not a disadvantage of a freely floating exchange rate system? - ANSWER
The government may intervene to change the value of a given currency.
The European Central Bank is located in: - ANSWER Frankfort
Which of the following is not true regarding the eurozone? - ANSWER Members cannot
apply their own fiscal policies
Which of the following is not a reason for devaluation of a currency? - ANSWER high
inflation
Which of the following is most likely reason for revaluation of a currency? - ANSWER To
reduce inflation
To weaken the dollar using sterilized intervention, the Fed will ______ U.S. dollar and
simultaneously ______ Treasury securities. - ANSWER sell;sell
If the Fed desires to strengthen the dollar without affecting the dollar money supply it
should: - ANSWER exchange foreign currencies for dollars, and buy existing Treasury
securities with dollars.
Assume the Fed intervened by exchanging dollars for euros in the foreign exchange
market. This will cause an ______ U.S. dollars and an ______ euros. - ANSWER
outward shift in supply of;outward shift in demand for
If the Fed _____ the interest rates when inflationary expectations remain unchanged,
the most likely result is that value of the dollar will _____ and the economy may _____. -
ANSWER increases;appreciate;weaken
If a speculator expects that the Fed will intervene by exchanging euros for the U.S.
dollars, she would most likely____ to capitalize on this intervention. - ANSWER
purchase yen call options
A strong dollar places _____ pressure on U.S. inflation, which in turn places ____
pressure on U.S. interest rates, which in turn place ______ pressure on U.S. bond
prices. - ANSWER downward;downward;upward
