Question 1

The 1944 Bretton Woods agreement established a system of fixed exchange rates among major currencies.

Accepted Answer

A) True 
 B)False

Question 2

A fixed exchange rate means that supply and demand of the currency determine its exchange rate.

Accepted Answer

A) True 
 B)False

Question 3

The Canadian dollar is a floating currency.If the exchange rate for the Canadian dollar changes from CAD $0.95 to CAD $0.98,the Canadian dollar has appreciated.

Accepted Answer

A) True 
 B)False

Question 4

If the exchange rate is 8 yuan per Canadian dollar,the Canadian price index is 145,and the Chinese price index is 206,the real exchange rate is _____ yuan.

Accepted Answer

A)   11.36
B)   7.62
C)   5.63
D)   0.08E) All of the above
F) C) and D)

Question 5

Foreign exchange controls are systems of a common currency used by a group of countries,such as the Asian Tigers.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions:
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) Refer to Scenario: Gizmovia.If Gizmovia uses foreign exchange controls,it should require licences to _____ gizmos and _____ dollars.

Accepted Answer

A)   buy;buy
B)   buy;sell
C)   sell;sell
D)   sell;buyE) A) and B)
F) None of the above

Question 7

A revaluation of a currency,holding everything else constant:

Accepted Answer

A)   makes foreign goods more attractive in the domestic economy.
B)   leads to an increase in aggregate demand and can therefore be expansionary.
C)   increases the balance of payments account towards a surplus.
D)   leads to a merchandise trade surplus.E) B) and D)
F) B) and C)

Question 8

When a currency appreciates,the prices of its imports from other countries will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   fluctuate randomly.E) A) and B)
F) A) and C)

Question 9

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

A)   I only
B)   II only
C)   III only
D)   I,II,and IIIE) None of the above
F) A) and C)

Question 10

Use the following to answer questions:
A car costs $30 000 in Canada and the exchange rate is $1 = £0.50.The same car costs £12 000 in Britain.
-(Scenario: Purchasing Power Parity) Refer To Scenario: Purchasing Power Parity.What is the purchasing power parity of the pound?

Accepted Answer

A)   $5
B)   $2.50
C)   $1.25
D)   $0.80E) A) and C)
F) A) and B)

Question 11

If the target exchange rate of a fixed currency is above the equilibrium exchange rate,to reach the target rate,the government should sell that currency and buy foreign currencies.

Accepted Answer

A) True 
 B)False

Question 12

Canada exports corn to other nations.In the Canadian balance of payments account,this transaction is entered as a payment _____ foreigners in the _____ account.

Accepted Answer

A)   from;current
B)   from;financial
C)   to;current
D)   to;financialE) None of the above
F) A) and D)

Question 13

Use the following to answer questions:
A car costs $30 000 in Canada and the exchange rate is $1 = £0.50.The same car costs £12 000 in Britain.
-(Scenario: Purchasing Power Parity) Refer To Scenario: Purchasing Power Parity.For there to be purchasing power parity,the nominal exchange rate for the dollar must be:

Accepted Answer

A)   £2.
B)   £1.25.
C)   £1.
D)   £0.40.E) B) and D)
F) A) and C)

Question 14

According to purchasing power parity,if the price of a Big Mac is lower in India and China than in Europe,then the currencies of India and China are undervalued.

Accepted Answer

A) True 
 B)False

Question 15

Which statement is NOT true of a fixed exchange rate system?

Accepted Answer

A)   It is good for business.
B)   Foreign exchange reserves are costly.
C)   It keeps a country from using inflationary policies.
D)   It makes pursuing domestic macroeconomic objectives easier.E) All of the above
F) None of the above

Question 16

After a devaluation,all other things being equal,a country's balance of payments on the current account will likely increase.

Accepted Answer

A) True 
 B)False

Question 17

When the U.S.dollar appreciates relative to the Canadian dollar:

Accepted Answer

A)   Canadian goods become more expensive in the United States.
B)   U.S.goods become more expensive in Canada.
C)   U.S.residents tend to buy more from Canada,since the United States has a weak currency.
D)   the United States sells more goods to Canada.E) All of the above
F) A) and B)

Question 18

The Bretton Woods agreement called for:

Accepted Answer

A)   each currency's value to be flexible relative to other currencies.
B)   maintaining fixed exchange rates by government intervention.
C)   most nations to adopt the euro as their official currency.
D)   what amounted to a floating exchange rate.E) A) and B)
F) All of the above

Question 19

The relationship between a country's balance of payments on current account (CA) and its balance of payments on financial account (FA) is NOT described by:

Accepted Answer

A)   CA + FA = 0.
B)   CA = FA.
C)   CA = - FA.
D)   FA = - CA.E) None of the above
F) A) and B)

Question 20

Use the following to answer questions:
The value of a euro goes from C$1.25 to C$1.50.
-(Scenario: Exchange Rates) Refer to Scenario: Exchange Rates.In Canada,exports will _____ and imports will _____.

Accepted Answer

A)   increase;decrease
B)   increase;increase
C)   decrease;increase
D)   decrease;decreaseE) None of the above
F) All of the above

Exam 18: International Macroeconomics

Use the following to answer questions: A car costs $30 000 in Canada and the exchange rate is $1 = £0.50.The same car costs £12 000 in Britain. -(Scenario: Purchasing Power Parity) Refer To Scenario: Purchasing Power Parity.What is the purchasing power parity of the pound?

Correct Answer
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According to purchasing power parity,if the price of a Big Mac is lower in India and China than in Europe,then the currencies of India and China are undervalued.

Correct Answer
verified

The Bretton Woods agreement called for:

Correct Answer
verified

When the U.S.dollar appreciates relative to the Canadian dollar:

Correct Answer
verified

The Canadian dollar is a floating currency.If the exchange rate for the Canadian dollar changes from CAD $0.95 to CAD $0.98,the Canadian dollar has appreciated.

Correct Answer
verified

The relationship between a country's balance of payments on current account (CA) and its balance of payments on financial account (FA) is NOT described by:

Correct Answer
verified

A revaluation of a currency,holding everything else constant:

Correct Answer
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If the exchange rate is 8 yuan per Canadian dollar,the Canadian price index is 145,and the Chinese price index is 206,the real exchange rate is _____ yuan.

Correct Answer
verified

After a devaluation,all other things being equal,a country's balance of payments on the current account will likely increase.

Correct Answer
verified

The 1944 Bretton Woods agreement established a system of fixed exchange rates among major currencies.

Correct Answer
verified

If the target exchange rate of a fixed currency is above the equilibrium exchange rate,to reach the target rate,the government should sell that currency and buy foreign currencies.

Correct Answer
verified

Canada exports corn to other nations.In the Canadian balance of payments account,this transaction is entered as a payment _ foreigners in the _ account.

Correct Answer
verified

When a currency appreciates,the prices of its imports from other countries will:

Correct Answer
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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.

Correct Answer
verified

Use the following to answer questions: The value of a euro goes from C$1.25 to C$1.50. -(Scenario: Exchange Rates) Refer to Scenario: Exchange Rates.In Canada,exports will _ and imports will _.

Correct Answer
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Correct Answer
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Which statement is NOT true of a fixed exchange rate system?

Correct Answer
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Correct Answer
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A fixed exchange rate means that supply and demand of the currency determine its exchange rate.

Correct Answer
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Foreign exchange controls are systems of a common currency used by a group of countries,such as the Asian Tigers.

Correct Answer
verified

Exam 18: International Macroeconomics

Use the following to answer questions: A car costs $30 000 in Canada and the exchange rate is $1 = £0.50.The same car costs £12 000 in Britain. -(Scenario: Purchasing Power Parity) Refer To Scenario: Purchasing Power Parity.What is the purchasing power parity of the pound?

Correct AnswerverifiedShow Answer

According to purchasing power parity,if the price of a Big Mac is lower in India and China than in Europe,then the currencies of India and China are undervalued.

Correct AnswerverifiedShow Answer

The Bretton Woods agreement called for:

Correct AnswerverifiedShow Answer

When the U.S.dollar appreciates relative to the Canadian dollar:

Correct AnswerverifiedShow Answer

The Canadian dollar is a floating currency.If the exchange rate for the Canadian dollar changes from CAD $0.95 to CAD $0.98,the Canadian dollar has appreciated.

Correct AnswerverifiedShow Answer

The relationship between a country's balance of payments on current account (CA) and its balance of payments on financial account (FA) is NOT described by:

Correct AnswerverifiedShow Answer

A revaluation of a currency,holding everything else constant:

Correct AnswerverifiedShow Answer

If the exchange rate is 8 yuan per Canadian dollar,the Canadian price index is 145,and the Chinese price index is 206,the real exchange rate is _____ yuan.

Correct AnswerverifiedShow Answer

After a devaluation,all other things being equal,a country's balance of payments on the current account will likely increase.

Correct AnswerverifiedShow Answer

The 1944 Bretton Woods agreement established a system of fixed exchange rates among major currencies.

Correct AnswerverifiedShow Answer

If the target exchange rate of a fixed currency is above the equilibrium exchange rate,to reach the target rate,the government should sell that currency and buy foreign currencies.

Correct AnswerverifiedShow Answer

Canada exports corn to other nations.In the Canadian balance of payments account,this transaction is entered as a payment _____ foreigners in the _____ account.

Correct AnswerverifiedShow Answer

When a currency appreciates,the prices of its imports from other countries will:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Use the following to answer questions: The value of a euro goes from C$1.25 to C$1.50. -(Scenario: Exchange Rates) Refer to Scenario: Exchange Rates.In Canada,exports will _____ and imports will _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement is NOT true of a fixed exchange rate system?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A fixed exchange rate means that supply and demand of the currency determine its exchange rate.

Correct AnswerverifiedShow Answer

Foreign exchange controls are systems of a common currency used by a group of countries,such as the Asian Tigers.

Correct AnswerverifiedShow Answer

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Canada exports corn to other nations.In the Canadian balance of payments account,this transaction is entered as a payment _ foreigners in the _ account.

Correct Answer
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Correct Answer
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Correct Answer
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Use the following to answer questions: The value of a euro goes from C$1.25 to C$1.50. -(Scenario: Exchange Rates) Refer to Scenario: Exchange Rates.In Canada,exports will _ and imports will _.

Correct Answer
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