When a central bank buys foreign currency, its international reserves ________. A) decrease B) increase C) remain unchanged D) are difficult to determine ANSWER Answer: B
Date: September 19th, 2020
Why would a central bank buy or sell foreign currency? What will be an ideal response? ANSWER Answer: When a central bank buys (sells) foreign currency, its international reserves increase (decrease), and the money supply increases (decreases) simultaneously.
Date: September 19th, 2020
What is the cost of marginal investment in accounts receivable under the proposed plan? (See Table 14.7) A) $313,460 B) $276,500 C) $246,875 D) $368,314 ANSWER C
Date: September 19th, 2020
Describe the Bretton Woods currency system? What will be an ideal response? ANSWER Answer: In the Bretton Woods System, in place between 1944 and 1973, the participating countries agreed to an exchange rate regime that linked their exchange rates to the dollar. They could fluctuate in a 1% band around a fixed parity. […]
Date: September 19th, 2020
In fixed exchange rate systems, the tendency is for the domestic currency to be ________. A) undervalued B) at parity C) overvalued D) unchanged relative to the rest of the world’s currencies ANSWER Answer: C
Date: September 19th, 2020
The phenomenon of foreign currency driving out local currencies as a means of payment and a savings vehicle is known as ________. A) seigniorage B) dollarization C) sterilization D) devaluation ANSWER Answer: B
Date: September 19th, 2020
What is the name of the unit of account created by the IMF which is sometimes used to denominate contracts? A) European currency unit B) special drawing right C) floating currencies D) basket of currencies ANSWER Answer: B
Date: September 19th, 2020
What is the marginal investment in accounts receivable under the proposed plan? (See Table 14.7) A) $1,234,375 B) $1,382,500 C) $1,567,300 D) $1,841,570 ANSWER A
Date: September 19th, 2020
When the central bank attempts to influence the supply of money in a country by the sale or purchase of government bonds, the practice is known as ________. A) open market operations B) a sterilized float C) a dirty float D) changing the required reserves ANSWER Answer: A
Date: September 19th, 2020
Which of the following would NOT be a major component of a country’s official reserves? A) foreign exchange B) IMF-related reserve assets C) gold D) government bonds ANSWER Answer: D
Date: September 19th, 2020
