3 Under a flexible-rate system, when the BP curve is flatter than the LM curve (i.e., there is relative capital mobility),…

3

Under a flexible-rate system, when the BP curve is flatter than the LM curve (i.e., there is relative capital mobility), an autonomous increase in foreign interest rates will have what impacts on the domestic interest rate and domestic national income?

Select one:

[removed]a. domestic interest rate will increase, domestic national income will decrease

[removed]b. domestic interest rate will increase, domestic national income will not change

[removed]c. domestic interest rate will increase, domestic national income will increase

[removed]d. domestic interest rate will not change, domestic national income will decrease

 

4

Suppose that Canada decides to peg its dollar ($C or the loonie) to the US dollar at an exchange rate of $C1 =$US1. What will happen to Canadian interest rates as a result of the leftward shift in the US IS curve?

Select one:

[removed]a. They will rise.

[removed]b. They will fall.

[removed]c. They will not change.

[removed]d. The IS curve will show an increase.

 

6

When a nation chooses to fix or float its currency exchange rate, it should consider

Select one:

[removed]a. only its domestic banks, importers, and exports.

[removed]b. only whether it has a great deal of economic integration.

[removed]c. only whether it has similar circumstances in terms of demand or supply shocks with its trading partners.

[removed]d. both the level of economic integration and the similarity of demand or supply shocks.

 

10

In a situation of stagflation, the use of demand-oriented macro policy to address the problem of the rising price level would, at least in the short run, ________ the price level and _______ the level of output in the economy.

Select one:

[removed]a. increase / increase

[removed]b. increase / decrease

[removed]c. decrease / increase

[removed]d. decrease / decrease

 

11

If a country ties its currency to a specific foreign currency and allows its holdings of that currency to govern the country’s money supply, this arrangement is known as a

Select one:

[removed]a. currency board.

[removed]b. floating exchange rate.

[removed]c. monetary union.

[removed]d. Special Drawing Right.

 

12

If a country’s currency’s external value is tied or pegged to the currency values of the country’s leading trading partners, this arrangement is known as a

Select one:

[removed]a. peg against the SDR.

[removed]b. managed float.

[removed]c. peg against a “basket” of currencies or a “composite.”

[removed]d. currency board.

 

13

Suppose that country A (with a flexible exchange rate) undertakes expansionary monetary policy. Especially if short-term funds are extremely mobile between countries, A’s currency will tend to _______ because of this policy.

This result suggests that A’s monetary policy will be ________ effective in influencing national income than if A had a fixed exchange rate rather than a flexible exchange rate.

Select one:

[removed]a. appreciate / less

[removed]b. appreciate / more

[removed]c. depreciate / less

[removed]d. depreciate / more

 

14

In the economic and monetary union in Europe (EMU), the member countries

Select one:

[removed]a. tie their currencies to the US dollar.

[removed]b. use a common currency (the euro).

[removed]c. tie their currencies to the SDR.

[removed]d. have completely flexible exchange rates with each other.

 

15-

Under the Bretton Woods system set up at the end of World War II, exchange rates were

Select one:

[removed]a. absolutely fixed (i.e., no deviations from parity were permitted).

[removed]b. permitted to vary 1% above or below parity.

[removed]c. permitted to vary 2.25% above or below parity.

[removed]d. completely flexible (i.e., continuous rate changes of any magnitude were permitted).

 

16-

The IS/LM/BP analysis suggests that, if the BP curve is flatter than the LM curve and the exchange rate is flexible, expansionary fiscal policy will lead to _______ of the country’s currency.

This will make the fiscal policy _______ effective in influencing national income than if the country had a fixed exchange rate.

Select one:

[removed]a. a depreciation / more

[removed]b. a depreciation / less

[removed]c. an appreciation / more

[removed]d. an appreciation / less

 

17-

Proponents of fixed exchange rates would find the most support for their position in which one of the following empirical results regarding the relationship between exchange rate variations and the volume of international trade?

(Assume that the empirical tests adequately account for other factors that influence the volume of trade.)

Select one:

[removed]a. no discernible relationship between exchange rate variations and the volume of trade

[removed]b. a negative relationship between exchange rate variations and the volume of trade

[removed]c. a mildly positive relationship between exchange rate variations and the volume of trade

[removed]d. a strongly positive relationship between exchange rate variations and the volume of trade

 

18-

Under the international monetary system as it actually operated between 1947 and 1971, the emergence of seemingly chronic deficits and surpluses in various countries’ balance-of-payments positions (i.e., deficits and surpluses which did not seem to get eliminated) was called the _______ problem.

Select one:

[removed]a. liquidity

[removed]b. confidence

[removed]c. adjustment

[removed]d. IMF

 

19- A situation where a country announces a parity value for its currency and permits small variations around that value, but also adjusts the parity regularly by small amounts according to various indicators, is known as

Select one:

[removed]a. a dirty float.

[removed]b. a crawling peg.

[removed]c. a managed float strategy of “leaning against the wind.”

[removed]d. a “wider band.”

 

20-

The collapse of the Bretton Woods system of fixed exchange rates during the 1970s prompted the European Community (EC) to establish its own system. It was called

 

Select one:

 

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount!
Use Discount Code “Newclient” for a 15% Discount!

NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.

The post 3 Under a flexible-rate system, when the BP curve is flatter than the LM curve (i.e., there is relative capital mobility),… appeared first on The Nursing TermPaper.