QUESTION In which kind of exchange rate system are the values of a set of currencies set against each other at some mutually agreed on exchange rate? A. Clean float B. Floating C. Fixed D. Dirty-float E. Pegged ANSWER C
Date: September 3rd, 2020
QUESTION The International Monetary Fund can force countries to adopt the policies required to correct economic mismanagement. Indicate whether the statement is true or false. ANSWER FALSE The International Monetary Fund (IMF) cannot force countries to adopt the policies required to correct economic mismanagement. While a government may commit to taking corrective action in […]
Date: September 3rd, 2020
QUESTION Which of the following refers to the gold standard? A. Pegging currencies to gold and guaranteeing convertibility B. Conducting international trade by physically exchanging gold C. The most valuable currency in the world at any given point in time D. The common global standard of gold quality to be maintained E. The quality of […]
Date: September 3rd, 2020
QUESTION The activities of the International Monetary Fund have declined after the collapse of the Bretton Woods system in 1973. Indicate whether the statement is true or false. ANSWER FALSE The activities of the International Monetary Fund (IMF) have expanded over the past 30 years. By 2014, the IMF had 188 members, 52 of […]
Date: September 3rd, 2020
QUESTION Which of the following is a great strength of the gold standard? A. It helped establish the dollar as a predominant vehicle currency. B. It helped governments raise foreign exchange reserves thereby increasing economic stability. C. It contained a powerful mechanism for achieving balance-of-trade equilibrium by all countries. D. It helped reduce inflation to […]
Date: September 3rd, 2020
QUESTION A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate. Indicate whether the statement is true or false. ANSWER TRUE A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency […]
Date: September 3rd, 2020
QUESTION Under a currency board system, the government has the absolute authority to set interest rates. Indicate whether the statement is true or false. ANSWER FALSE Currency boards have their drawbacks. Under a currency board system, government lacks the ability to set interest rates.
Date: September 3rd, 2020
QUESTION Contracting out manufacturing may be more appropriate for high-value-added manufacturing Indicate whether the statement is true or false. ANSWER FALSE Contracting out manufacturing may be less appropriate for high-value-added manufacturing, in which firm-specific technology and skills add significant value to the product (e.g., the heavy equipment industry) and in which switching costs are […]
Date: September 3rd, 2020
QUESTION In the face of unpredictable exchange rate movements, a firm should pursue strategies that reduce its economic exposure. Indicate whether the statement is true or false. ANSWER TRUE The forward market tends to offer coverage for exchange rate changes a few months—not years—ahead. Given this, it makes sense to pursue strategies that will […]
Date: September 3rd, 2020
QUESTION The forward exchange market is an accurate predictor of future exchange rates. Indicate whether the statement is true or false. ANSWER FALSE The forward exchange market is far from perfect as a predictor of future exchange rates. The forward market tends to offer coverage for exchange rate changes a few months—not years—ahead. Given […]
Date: September 3rd, 2020
