Question 15 (1 point) A country that commits to a maximum and minimum allowable

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Question 15 (1 point)

A country that commits to a maximum and minimum allowable exchange rate at a given time uses a

Question 15 options:

dirty float.

managed fixed exchange rate.

specie standard.

all of the above.

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Question 16 (1 point)

Which of the following is a difference between Keynes liquidity preference theory and the modern quantity theory of money?

Question 16 options:

The modern quantity theory of money specifies 1 asset instead of 3 assets like the liquidity preference theory.

The liquidity preference theory assumes the return on money to be 1, unlike the modern quantity theory of money.

The liquidity preference theory assumes velocity to be constant, unlike the modern quantity theory of money.

The modern quantity theory predicts that interest rate changes have little effect on money demand unlike the liquidity preference theory.

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Question 17 (1 point)

A sterilized purchase of international reserves by a central bank is meant to make its currency

Question 17 options:

appreciate.

depreciate.

offset the purcahse or sale of international reserves with a domestic sale or purchase

it is unsure if it will appreciate or depreciate a currency

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Question 18 (1 point)

Which of the following could explain an increase in velocity?

Question 18 options:

credit cards

wire transfers

cash management accounts

all of the above

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Question 19 (1 point)

what was one of the assumptions to the quantity theory of money that proved to be problematic?

Question 19 options:

the money supply stays constant

foreign exchange rates don't matter as they are fixed due to the gold standard

money velocity is constant

it uses real GDP rather than nominal GDP in its identity

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Question 20 (1 point)

An unsterilized sale of international reserves by a central bank is meant to make its currency

Question 20 options:

appreciate.

depreciate.

neither appreciate nor depreciate.

cannot be determined.

dirty float.

managed fixed exchange rate.

specie standard.

all of the above.

Explanation / Answer

15. Answer- Specie standered

We know that the specie standered is a pure gold standered system.

16. Answer- The modern quantity theory of money predicts that Interest rate changes have little effect on money demand unlike the liquidity preference theory

17. Answer- Offset the purchase or sale of international reserve with a domestic sale or purchase.

18. Answer- All the above

We know that the velocity of money means that the average number of times one unit of money is spend to buy goods and services per unit of time.

19. Answer- The money velocity is constant

20. Answer- cannot be determined

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