Question 1

Licensing systems that limit the right of individuals to buy foreign currency are: I. floating exchange rate regimes.
II) foreign exchange controls.
III) exchange market interventions.

Accepted Answer

Licensing systems that limit the right of individuals to buy foreign currency are foreign exchange controls. Floating exchange rate regimes and exchange market interventions are not licensing systems that restrict individuals' rights to buy foreign currency.

Question 2

Use the following to answer questions 
Scenario: Exchange Rates
The value of a euro goes from US$1.25 to US$1.50.
-(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The dollar has:

Accepted Answer

The value of the euro has increased relative to the dollar, which means that the dollar has depreciated.

Question 3

Government purchases or sales of currency in the foreign exchange market constitute: I. a floating exchange rate regime.
II) foreign exchange controls.
III) exchange market intervention.

Accepted Answer

Government purchases or sales of currency in the foreign exchange market constitute exchange market intervention, which can be used to either strengthen or weaken a country's currency. This does not necessarily indicate a floating exchange rate regime or imply the use of foreign exchange controls.

Question 4

Use the following to answer questions 
Scenario: Exchange Rates
The value of a euro goes from US$1.25 to US$1.50.
-(Scenario: Exchange Rates) Look at the scenario Exchange Rates. French exports to the United States will:

Accepted Answer

The increase in the value of the euro [from US$1.25 to US$1.50] means that the euro has become stronger in relation to the US dollar. As a result, French exports to the United States will become more expensive.

Question 5

Use the following to answer questions 
Scenario: Gizmovia
The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40.
-(Scenario: Gizmovia) Look at the scenario Gizmovia. If Gizmovia uses monetary policy to bring the exchange rate for the gizmo to $0.50, it should _____ interest rates by _____ the money supply.

Accepted Answer

To bring the exchange rate for the gizmo to $0.50, Gizmovia needs to increase the demand for the gizmo. This can be achieved by increasing interest rates, which makes holding the gizmo more attractive to foreign investors. However, increasing interest rates may lead to a decrease in the money supply, which can be counteracted by decreasing reserve requirements or conducting open market operations to inject more money into the economy. Therefore, to maintain the exchange rate of the gizmo at $0.50, Gizmovia should increase interest rates while decreasing the reserve requirements or conducting open market operations to increase the money supply.

Question 6

A fixed exchange rate is:

Accepted Answer

A fixed exchange rate is a rate that is set and maintained by the government, rather than being determined by market forces. The government may use various methods to maintain the fixed rate, such as buying or selling its own currency in foreign exchange markets. The International Monetary Fund may provide guidelines and support for countries choosing to adopt a fixed exchange rate, but it is ultimately the government's decision to set the rate. The United Nations does not have a direct role in setting exchange rates.

Question 7

The nominal exchange rate is: I. the evaluation and ranking of different global stock exchanges.
II) the price of a country's money in terms of another country's money.

Accepted Answer

The nominal exchange rate is the price of one country's currency in terms of another country's currency. Therefore, statement II is correct and statement I is incorrect.

Question 8

Use the following to answer questions 
Scenario: Exchange Rates
The value of a euro goes from US$1.25 to US$1.50.
-(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In Germany, exports will _____ and imports will _____.

Accepted Answer

The answer of Use the following to answer questions 
Scenario:...

Question 9

Fixed exchange rates are determined by the:

Accepted Answer

Fixed exchange rates are determined by the policies of the domestic government. The government sets a specific rate at which its currency is exchanged with other currencies and intervenes in the market to maintain that rate. This is in contrast to floating exchange rates, which are determined by the forces of demand and supply in the foreign exchange market.

Question 10

A system in which exchange rates are set by government policy is a ____ system.

Accepted Answer

In a fixed exchange rate system, the government sets the exchange rate of its currency in relation to another currency or a basket of currencies. This is in contrast to a floating exchange rate system in which the exchange rate is determined by market forces.

Question 11

Foreign exchange reserves are: I. stocks of foreign currency.
II) gold and silver.
III) bonds of foreign governments.

Accepted Answer

The answer of Foreign exchange reserves are: I. stocks of...

Question 12

A rule governing policy for the exchange rate is: I. the terms of trade.
II) an exchange rate regime.

Accepted Answer

The terms of trade can influence the exchange rate, but they are not a rule governing policy for the exchange rate. An exchange rate regime, on the other hand, sets the framework for how a country's exchange rate is determined and managed, making it a key policy rule for the exchange rate.

Question 13

If the U.S. dollar depreciates, other things being equal:

Accepted Answer

If the U.S. dollar depreciates, it means its value falls in relation to another currency (or currencies). Therefore, option C is correct. None of the other options necessarily follow a currency depreciation without further context.

Question 14

Use the following to answer questions 
Scenario: Exchange Rates
The value of a euro goes from US$1.25 to US$1.50.
-(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The exchange rate for the dollar has changed from:

Accepted Answer

The answer of Use the following to answer questions 
Scenario:...

Question 15

A floating exchange rate is:

Accepted Answer

A floating exchange rate is determined by the market forces of supply and demand. It is not set by the government, International Monetary Fund or United Nations.

Question 16

The rule that governs a country's policy toward its exchange rate is known as:

Accepted Answer

The rule that governs a country's policy toward its exchange rate is known as an exchange rate regime. The fixed and floating exchange rate systems are two types of exchange rate regimes, but they only describe the specific policies used within those regimes. "The rules of exchange" is not a commonly used term to describe exchange rate regimes.

Question 17

Use the following to answer questions 
Scenario: Gizmovia
The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40.
-(Scenario: Gizmovia) Look at the scenario Gizmovia. If Gizmovia uses monetary policy to bring the exchange rate for the gizmo to $0.50, it should _____ interest rates, which will _____ capital inflows of gizmos.

Accepted Answer

The answer of Use the following to answer questions 
Scenario:...

Question 18

Use the following to answer questions 
Scenario: Gizmovia
The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40.
-(Scenario: Gizmovia) Look at the scenario Gizmovia. If Gizmovia uses exchange market intervention to increase the value of its currency to $0.50, it should _____ gizmos and _____ dollars in the foreign exchange market.

Accepted Answer

If Gizmovia wants to increase the value of its currency, it needs to buy its own currency with dollars in the foreign exchange market. This will increase the demand for gizmos, resulting in an increase in their value. Therefore, Gizmovia should buy gizmos with dollars (buy) and sell gizmos for dollars (sell) to help maintain the exchange rate at $0.50. Hence, the correct answer is option C.

Question 19

Use the following to answer questions 
Scenario: Gizmovia
The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40.
-(Scenario: Gizmovia) Look at the scenario Gizmovia. At the target rate of $0.50:

Accepted Answer

The answer of Use the following to answer questions 
Scenario:...

Question 20

Use the following to answer questions 
Scenario: Exchange Rates
The value of a euro goes from US$1.25 to US$1.50.
-(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In the United States, exports will _____ and imports will _____.

Accepted Answer

The answer of Use the following to answer questions 
Scenario:...

Quiz 31: Open-Economy Macroeconomics

Licensing systems that limit the right of individuals to buy foreign currency are: I. floating exchange rate regimes. II) foreign exchange controls. III) exchange market interventions.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The dollar has:

Government purchases or sales of currency in the foreign exchange market constitute: I. a floating exchange rate regime. II) foreign exchange controls. III) exchange market intervention.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. French exports to the United States will:

A fixed exchange rate is:

The nominal exchange rate is: I. the evaluation and ranking of different global stock exchanges. II) the price of a country's money in terms of another country's money.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In Germany, exports will _ and imports will _.

Fixed exchange rates are determined by the:

A system in which exchange rates are set by government policy is a ____ system.

Foreign exchange reserves are: I. stocks of foreign currency. II) gold and silver. III) bonds of foreign governments.

A rule governing policy for the exchange rate is: I. the terms of trade. II) an exchange rate regime.

If the U.S. dollar depreciates, other things being equal:

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The exchange rate for the dollar has changed from:

A floating exchange rate is:

The rule that governs a country's policy toward its exchange rate is known as:

Use the following to answer questions Scenario: Gizmovia The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40. -(Scenario: Gizmovia) Look at the scenario Gizmovia. At the target rate of $0.50:

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In the United States, exports will _ and imports will _.

Quiz 31: Open-Economy Macroeconomics

Licensing systems that limit the right of individuals to buy foreign currency are: I. floating exchange rate regimes. II) foreign exchange controls. III) exchange market interventions.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The dollar has:

Government purchases or sales of currency in the foreign exchange market constitute: I. a floating exchange rate regime. II) foreign exchange controls. III) exchange market intervention.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. French exports to the United States will:

A fixed exchange rate is:

The nominal exchange rate is: I. the evaluation and ranking of different global stock exchanges. II) the price of a country's money in terms of another country's money.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In Germany, exports will _____ and imports will _____.

Fixed exchange rates are determined by the:

A system in which exchange rates are set by government policy is a ____ system.

Foreign exchange reserves are: I. stocks of foreign currency. II) gold and silver. III) bonds of foreign governments.

A rule governing policy for the exchange rate is: I. the terms of trade. II) an exchange rate regime.

If the U.S. dollar depreciates, other things being equal:

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. The exchange rate for the dollar has changed from:

A floating exchange rate is:

The rule that governs a country's policy toward its exchange rate is known as:

Use the following to answer questions Scenario: Gizmovia The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40. -(Scenario: Gizmovia) Look at the scenario Gizmovia. At the target rate of $0.50:

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In the United States, exports will _____ and imports will _____.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In Germany, exports will _ and imports will _.

Use the following to answer questions Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. -(Scenario: Exchange Rates) Look at the scenario Exchange Rates. In the United States, exports will _ and imports will _.