Economics MCQs

Page No. 199

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize ?


apegged exchange rates


bfreely floating exchange rates


cmanaged floating exchange rates


dcrawling exchange rates


View Answer pegged exchange rates

Under a pegged exchange rate system which does not explain why a country would have a balance of payments deficit ?


avery high rates of inflation occur domestically


bforeigners discriminate against domestic products


ctechnological advance is superior abroad


d the domestic currency is undervalued relative to other currencies



Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ?


aappreciates against foreign currencies


bdepreciates against foreign currencies


cbe officially revalued by the government


dbe officially devalued by the government



Which exchange rate mechanism in intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions ?


adual exchange rates


bmanaged floating exchange rates


cadjustable pegged exchange rates


d crawling pegged exchange rates


View Answer dual exchange rates

Which exchange rate system involves a leaning against the wind|| strategy in which short-term fluctuations in exchange rates are reduced without adhering to any particular exchange rate over the long run ?


apegged of fixed exchange rates


badjustable pegged exchange rates


c managed floating exchange rates


d free floating exchange rates



Small nations with more than one major trading partner tend to peg the value of their currencies to ?


agold


bsilver


ca single currency


da basket of currencies



Which exchange rate system does not require monetary reserves for official exchange rate intervention ?


a floating exchange rates


bpegged exchanged rates


c managed floating exchange rates


ddual exchange rates



Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners ?


aU.S exports tend to rise, and imports tend to fall


bU.S imports tend to rise, and exports tend to fall


cU.S foreign exchange reserves tend to rise


dU.S foreign exchange reserves remain constant



Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium ?


adual exchange rate


badjustable pegged exchange rates


cmanaged floating exchange rates


dcrawling pegged exchange rates



The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is ?


a freely fluctuating exchange rates


b adjustable pegged exchange rates


cmanaged floating exchange rates


dpegged or fixed exchange rates



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