QUESTION Under a pegged exchange rate regime, a country will peg the value of its currency to that of a major currency, so that if the reference currency rises in value, its own currency rises too. Indicate whether the statement is true or false. ANSWER TRUE Under a pegged exchange rate regime, a country […]
Date: September 3rd, 2020
QUESTION A pegged exchange rate means the value of the currency is fixed relative to a reference currency, and then the exchange rate between that currency and other currencies is determined by the reference currency exchange rate. Indicate whether the statement is true or false. ANSWER TRUE Many of the world’s developing nations peg […]
Date: September 3rd, 2020
QUESTION The disadvantage of a pegged exchange rate regime is that it aggravates inflationary pressures in a country. Indicate whether the statement is true or false. ANSWER FALSE Under a pegged exchange rate regime, a country will peg the value of its currency to that of a major currency so that, for example, as […]
Date: September 3rd, 2020
QUESTION In a fixed exchange rate system, the central bank of a country will intervene in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency. Indicate whether the statement is true or false. ANSWER FALSE A dirty float (as opposed […]
Date: September 3rd, 2020
QUESTION Under a floating exchange rate system, a country’s ability to expand or contract its money supply as it sees fit is limited by the need to maintain exchange rate parity. Indicate whether the statement is true or false. ANSWER FALSE It is argued that under a fixed system, a country’s ability to expand […]
Date: September 3rd, 2020
QUESTION Given a common gold standard, the value of any currency in units of any other currency (the exchange rate) was easy to determine. Indicate whether the statement is true or false. ANSWER TRUE Pegging currencies to gold and guaranteeing convertibility is known as the gold standard. By 1880, most of the world’s major […]
Date: September 3rd, 2020
QUESTION Under a floating exchange rate regime, market forces have produced a volatile dollar exchange rate. Indicate whether the statement is true or false. ANSWER TRUE In recent history, the value of the dollar has been determined by both market forces and government intervention. Under a floating exchange rate regime, market forces have produced […]
Date: September 3rd, 2020
QUESTION A country is said to be in balance-of-trade equilibrium when the income its residents earn from exports is greater than the money its residents pay to other countries for imports. Indicate whether the statement is true or false. ANSWER FALSE The great strength claimed for the gold standard was that it contained a […]
Date: September 3rd, 2020
QUESTION According to the Bretton Woods agreement, if a currency became too weak to defend, a devaluation of up to 10 percent would be allowed without any formal approval by the International Monetary Fund. Indicate whether the statement is true or false. ANSWER TRUE An aspect of the Bretton Woods agreement was a commitment […]
Date: September 3rd, 2020
QUESTION Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a customs union? A. CARICOM B. Central American Free Trade Agreement C. Central American Common Market D. Free Trade Area of the Americas E. Caribbean Single Market and Economy ANSWER A
Date: September 3rd, 2020
