Site MapHelpFeedbackMultiple Choice Quiz
Multiple Choice Quiz
(See related pages)



1

Suppose a decrease in U.S. income reduces U.S. demand for Chinese products. This should decrease the __________ yuan and ultimately lead to a(n) __________ of the dollar.
A)demand for; appreciation
B)demand for; depreciation
C)supply of; appreciation
D)supply of; depreciation
2

The process by which consumers increase consumption of imports and decrease consumption of domestic goods in response to an appreciation is known as
A)partial exchange rate pass-through.
B)expenditure switching.
C)inelastic import demand.
D)complete exchange rate pass-through.
3

Demand for foreign currency is said to be "derived" because
A)foreign currency is a Giffen good.
B)the foreign currency must be derived indirectly from the gold standard.
C)the foreign currency that is demanded is actually a means to acquiring other things, such as goods.
D)demand for foreign currency is not "derived."
4

The supply of foreign currency curve is
A)upward sloping.
B)downward sloping.
C)downward sloping or upward sloping.
D)horizontal.
5

An equilibrium in the foreign exchange market may be unstable when
A)the demand for foreign exchange is downward sloping and the supply curve is downward sloping.
B)the supply for foreign exchange is downward sloping and the downward curve is upward sloping.
C)the demand for foreign exchange is downward sloping and the supply curve is upward sloping.
D)the demand for foreign exchange is upward sloping and the supply curve is upward sloping.
E)none of the above: equilibria in the foreign exchange market are always stable.
6

Suppose that, as a result of a dollar depreciation the U.S., price falls from $75 to $60, and quantity of imports demanded rises from 1100 to 1500 units. The arc elasticity of demand for imports is
A).364.
B)2.75.
C)1.38.
D)0.25.
7

The Marshall-Lerner condition describes the circumstances under which
A)the foreign exchange market is stable.
B)the elasticity of export supply is zero.
C)import demand is stable.
D)the elasticity of export supply is negative.
8

When a depreciation of the currency leads to a worsening of the current account deficit in the short term but a narrowing of the deficit eventually, a graph of the current account balance over time resembles the letter
A)N.
B)J.
C)W.
D)U, but upside down.
9

Under the gold standard, the upper break-even price at which the supply and demand for foreign exchange becomes perfectly elastic is known as the
A)pegged rate point.
B)Marshall-Lerner point.
C)gold import point.
D)gold export point.
10

Under a pegged exchange rate system,
A)the government must be prepared to intervene in the foreign exchange market to maintain the exchange rate.
B)the exchange rate is fixed.
C)the monetary authorities lose the ability to use monetary policy to affect the economy.
D)all of the above.





To learn more about the book this website supports, please visit its Information Center.
(c)2006 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


International EconomicsOnline Learning Center

Home > Chapter 23 > Multiple Choice Quiz