 |
1 | |
The major benefit of the gold standard was that it avoided _________, and the major drawback was that monetary policy was ____________ |
|
| | A) | inflation, ineffective |
| | B) | recession, effective |
| | C) | inflation, effective |
| | D) | recession, ineffective |
|
2 | |
Under the gold standard, a country fixed the par value of its currency against _______, and linked ___________ to gold stocks at the central bank |
|
| | A) | silver, the interest rate |
| | B) | bonds, the price level |
| | C) | gold, banks credit creation |
| | D) | gold, domestic money supply |
|
3 | |
The purchasing power parity of the nominal exchange rate maintains constant ________ by offsetting differential _________ across countries |
|
| | A) | prices, interest rates |
| | B) | competitiveness, inflation |
| | C) | prices, wage costs |
| | D) | competitiveness, interest rates |
|
4 | |
In the short run, the level of floating exchange rates is determined mainly by _________ |
|
| | A) | interest rates |
| | B) | competitiveness |
| | C) | trade |
| | D) | speculation |
|
5 | |
If one country, with floating exchange rates, has higher inflation than its competitors, we would expect its exchange rate to __________ |
|
| | A) | appreciate |
| | B) | depreciate |
| | C) | revalue |
| | D) | be in short supply |
|
6 | |
Floating exchange rates are _________ in the short run |
|
| | A) | stable |
| | B) | predictable |
| | C) | volatile |
| | D) | depreciating |
|
7 | |
The main features of the European Monetary system are |
|
| | A) | the ECU |
| | B) | currency swap agreement between member countries |
| | C) | the exchange rate mechanism |
| | D) | all of the above |
|
8 | |
In the ERM, each country fixed ____________ against each other ERM participant. Collectively the group _________ against the rest of the world |
|
| | A) | a nominal exchange rate, floated |
| | B) | a real exchange rate, pegged |
| | C) | a purchasing power parity, pegged |
| | D) | a real exchange rate, floated |
|
9 | |
An adjustable peg is a fixed change rate which never changes |
|
| | A) | TRUE |
| | B) | FALSE |
|
10 | |
In the long run, floating exchange rates return to their purchasing power parity |
|
| | A) | TRUE |
| | B) | FALSE |
|
11 | |
Fixed exchange rates permit a country to have permanently higher inflation |
|
| | A) | TRUE |
| | B) | FALSE |
|
12 | |
International policy co-ordination allows policy-makers to commit to policies they would otherwise avoid |
|
| | A) | TRUE |
| | B) | FALSE |
2002 A McGraw-Hill Online Learning Centre