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Multiple Choice Quiz
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1
When capital flows freely across a country's borders it can have a fixed exchange rate without giving up domestic monetary policy.
A)True
B)False
2
A decrease in U.S. interest rates relative to those in the euro area would result in a depreciation of the U.S. dollar relative to the euro.
A)True
B)False
3
If a country fixes its currency to that of another country then it must also adopt the other country's interest-rate policy.
A)True
B)False
4
The International Monetary Fund (IMF) was created to manage the Bretton Woods System of fixed exchange rates and was dissolved when that system fell apart.
A)True
B)False
5
Dollarization is different than monetary union because dollarization involves shared governance, while monetary union does not.
A)True
B)False





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