Question 1

The Eurozone includes each of the following countries except

Accepted Answer

Switzerland is not part of the Eurozone; it has retained its own currency, the Swiss Franc (CHF), instead of adopting the euro.

Question 2

As a country works toward freeing up its financial markets and joining the other major world financial and monetary systems, it must open up which of the following areas?

Accepted Answer

The correct answer is D because all of the areas listed are necessary for a country to open up in order to free up its financial markets and join the other major world financial and monetary systems.

Question 3

Sterilized intervention

Accepted Answer

Sterilized intervention is less effective in highly integrated financial markets because such markets quickly arbitrage away any temporary discrepancies caused by the intervention.

Question 4

The Eurozone includes each of the following countries except

Accepted Answer

England does not use the Euro as its currency; it uses the Pound Sterling. The other countries listed are part of the Eurozone and use the Euro.

Question 5

If a central bank were to undergo sterilized foreign exchange intervention, it would offset an unwanted appreciation of its currency by

Accepted Answer

In a sterilized intervention, the central bank sells foreign reserves to counteract currency appreciation and simultaneously buys domestic assets to neutralize the impact on the money supply.

Question 6

The Eurozone includes each of the following countries except

Accepted Answer

Switzerland is not part of the Eurozone; it uses the Swiss Franc (CHF) as its currency, not the Euro.

Question 7

Under the Bretton Woods Agreement, appreciation of a country's currency against the dollar necessitated

Accepted Answer

Under the Bretton Woods system, countries would buy dollar securities to increase the supply of their own currency, thus depreciating it and maintaining the fixed exchange rate.

Question 8

The world financial and monetary system consists of several large economies with sophisticated financial markets. The currencies of four major participants include all but the

Accepted Answer

The major participants in the world financial and monetary system typically include economies with the most traded and globally recognized currencies, such as the yen (Japan), dollar (United States), pound (United Kingdom), and euro (European Union). The peso, while being the currency of several countries, is not considered a major currency in the global financial and monetary system in comparison to the others listed.

Question 9

The world financial and monetary system consists of several large

Accepted Answer

The answer of The world financial and monetary system consists...

Question 10

Each of the following countries has sophisticated, intergrated financial markets except

Accepted Answer

China, while having significant financial markets, does not have as open and integrated financial markets as the other options listed. Its markets are subject to more stringent controls and regulations by the government, making them less integrated with the global financial system compared to markets in Britain, the Eurozone, Japan, and the United States.

Question 11

A country defining its monetary units in terms of gold or silver would experience each of the following conditions except

Accepted Answer

The answer of A country defining its monetary units in...

Question 12

Which of the following countries has tight controls on the movement of currency and securities across its borders?

Accepted Answer

The People's Republic of China has tight controls on the movement of currency and securities across its borders, implementing various regulations to manage its exchange rate and control capital flows.

Question 13

Central banks in large industrialized nations

Accepted Answer

Central banks in large industrialized nations often hold large portfolios of U.S. government Treasury securities and securities issued by other governments as part of their foreign exchange reserves. These reserves are used, among other things, to manage their own currency's value. While central banks may attempt to influence exchange rates through various means, it is not accurate to say they seldom try to influence each other's exchange rates, as coordinated interventions do occur. Therefore, options A and B are correct, making E the correct choice.

Question 14

Countries with inconvertible currencies generally have no need to

Accepted Answer

The answer of Countries with inconvertible currencies generally have no...

Question 15

Holders of each of the following currencies can freely move reserves between countries in extremely fluid, free markets except the

Accepted Answer

The Chinese yuan (Renminbi) is subject to capital controls by the Chinese government, which restricts the free movement of the currency between countries compared to the other currencies listed (pound, euro, yen, and dollar), which can be freely traded and moved in global financial markets.

Question 16

Which of the following correctly distinguishes between depreciation and devaluation?

Accepted Answer

Depreciation refers to the decrease in a currency's value due to market forces, such as supply and demand. Devaluation, on the other hand, is a deliberate policy action by a government to reduce the value of its currency relative to other currencies.

Question 17

The intervention currency of the Bretton Woods system was

Accepted Answer

The Bretton Woods system established the U.S. dollar as the primary reserve currency linked to gold, making it the main intervention currency for stabilizing exchange rates among member countries.

Question 18

Economic factors that put pressure on fixed exchange rates include

Accepted Answer

Different rates of growth of productivity and different rates of inflation in two or more countries can put pressure on fixed exchange rates, as they affect the relative value of currencies and can lead to imbalances that are unsustainable under a fixed exchange rate system.

Question 19

When a country's currency is devalued,

Accepted Answer

Devaluation makes a country's exports cheaper and more competitive in the global market, potentially benefiting export industries.

Question 20

All of the following statements are correct except which one?

Accepted Answer

The answer of All of the following statements are correct...

Quiz 18: Macroeconomic Policy in the World Economy

The Eurozone includes each of the following countries except

As a country works toward freeing up its financial markets and joining the other major world financial and monetary systems, it must open up which of the following areas?

Sterilized intervention

The Eurozone includes each of the following countries except

If a central bank were to undergo sterilized foreign exchange intervention, it would offset an unwanted appreciation of its currency by

The Eurozone includes each of the following countries except

Under the Bretton Woods Agreement, appreciation of a country's currency against the dollar necessitated

The world financial and monetary system consists of several large economies with sophisticated financial markets. The currencies of four major participants include all but the

The world financial and monetary system consists of several large

Each of the following countries has sophisticated, intergrated financial markets except

A country defining its monetary units in terms of gold or silver would experience each of the following conditions except

Which of the following countries has tight controls on the movement of currency and securities across its borders?

Central banks in large industrialized nations

Countries with inconvertible currencies generally have no need to

Holders of each of the following currencies can freely move reserves between countries in extremely fluid, free markets except the

Which of the following correctly distinguishes between depreciation and devaluation?

The intervention currency of the Bretton Woods system was

Economic factors that put pressure on fixed exchange rates include

When a country's currency is devalued,

All of the following statements are correct except which one?