University of Cincinnati - EXAM 3

Question 1)Which of the following is true of the Single European Act?

•  Question 2

Without currency devaluation, a country in "fundamental disequilibrium" would

experience:

•  Question 3

How does a country that introduces a currency board make its commitment to converting its domestic currency on demand into another currency at a fixed exchange rate credible?

•  Question 4

According to the noted economist Jeffrey Sachs, the International Monetary Fund should:

•  Question 5

Which of the following is an argument for a fixed exchange rate system?

•  Question 6

Which of the following enables organizations to conduct international trade without having to resort to barter?

•  Question 7

Which of the following is true of inflation?

•  Question 8

Which of the following occurs when a government increases the money supply?

•  Question 9

Which of the following refers to the institutional arrangements that govern exchange rates?

•  Question 10

How are spot exchange rates determined?

•  Question 11

Which of the following is a feature of a common market?

•  Question 12

Which of the following refers to carry trade?

•  Question 13

Which of the following transactions is used to move out of one currency and into another for a limited period without incurring foreign exchange risk?

•  Question 14

Under the Plaza Accord of 1985, the Group of Five major industrial countries concluded that it would be desirable if:

•  Question 15

which of the following is a major consideration that underlay the establishment of the European Community?

•  Question 16

In the 1930s, countries were devaluing their currencies at will in order to boost exports, thus shattering confidence in the:

•  Question 17

Which of the following refers to a system under which the exchange rate for converting one currency into another is continuously adjusted depending on the laws of supply and demand?

•  Question 18

Establishment of which of the following would hold a coordinating bureaucracy accountable to the citizens of member nations?

•  Question 19

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?

•  Question 20

Which of the following is a reason for the failure of the purchasing power parity (PPP) theory to predict exchange rates accurately?

•  Question 21

Which of the following is a great strength of the gold standard?

•  Question 22

Which of the following refers to currency speculation?

•  Question 23

Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market. Which of the following is true of the foreign dealers' market expectations about the dollar over the next 30 days?

•  Question 24

When dominant enterprises in an industry exercise a degree of pricing power, setting different prices in different markets to reflect varying demand conditions, it is referred to as:

•  Question 25

Which of the following statements is true about the various exchange rate systems?

•  Question 26

Which of the following is a function of the foreign exchange market?

•  Question 27

Which of the following occurs when residents and nonresidents of a country rush to convert their holdings of a domestic currency into a foreign currency?

•  Question 28

Which of the following are significant trade blocs in Europe?

•  Question 29

Which of the following refers to the gold standard?

•  Question 30

In comparison to a floating exchange rate regime, a fixed exchange rate system is characterized by:

•  Question 31

Which of the following is a way in which an enterprise with some market power might limit arbitrage so that their price discrimination policy works?

•  Question 32

Which of the following supports the economic case for regional economic integration?

•  Question 33

According to the Fisher effect, if the "real" rate of interest in a country is 4 percent and the expected annual inflation is 9 percent, what would the "nominal' interest rate be?

•  Question 34

Which of the following was abandoned as per the Jamaica agreement of 1976?

•  Question 35

The European Community became the European Union in 1993 following the ratification of the:

•  Question 36

Which of the following approaches to forecasting exchange rate movements uses price an/d volume data to determine past trends?

•  Question 37

Which of the following was an announcement made by U.S. President Nixon to enable the devaluation of the dollar during the increase in inflation in 1971 in the United States?

•  Question 38

Which of the following is a key feature of the foreign exchange market?

•  Question 39

Which of the following was the weakness of the Bretton Woods system?

•  Question 40

Which of the following refers to the extent to which the reported consolidated results and balance sheets of a corporation are affected by fluctuations in foreign

exchange values?