60) For the three years from early 2002 to early 2005, the euro maintained a str
ID: 2743130 • Letter: 6
Question
60) For the three years from early 2002 to early 2005, the euro maintained a strong and steady rise in value against the U.S. dollar (USD). Which of the following were NOT a contributing factor in the assent of the euro and the decline in the dollar? 60) ______ A) A general weakening of the dollar after the attacks of September 11, 2001. B) Severe U.S. balance of payments deficits. C) Large U.S. balance of payment surpluses. D) All of the above were contributing factors. 61) In January 2002, the Argentine Peso changed in value from Peso1.00/$ to Peso1.40/$, thus, the Argentine Peso ________ against the U.S. dollar. 61) ______ A) remained neutral B) strengthened C) weakened D) all of the above 62) In January 2000 Ecuador officially replaced its national currency, the Ecuadorian sucre, with the U.S. dollar. This practice is known as ________. 62) ______ A) dollarization. B) a Yankee bailout. C) bi-currencyism. D) sucrerization. 63) The United States currently uses a ________ exchange rate regime. 63) ______ A) pegged B) crawling peg C) fixed D) floating 64) Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true? 64) ______ A) Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate. B) Fixed rates provide stability in international prices for the conduct of trade. C) Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies. D) Stable prices aid in the growth of international trade and lessen exchange rate risks for businesses. 65) Which of the following is NOT an attribute of the "ideal" currency? 65) ______ A) Monetary independence. B) Exchange rate stability. C) Full financial integration. D) All are attributes of an ideal currency. 66) World War I caused the suspension of the gold standard for fixed international exchange rates because the war 66) ______I A) cost too much money. B) used gold as the main ingredient in armament plating. C) lasted too long. D) interrupted the free movement of gold. 67) The post WWII international monetary agreement that was developed in 1944 is known as the ________. 67) ______I A) Yalta Agreement. B) Bretton Woods Agreement. C) League of Nations. D) United Nations. 68) Another name for the International Bank for Reconstruction and Development is ________. 68) ______ A) the World Bank B) the Recon Bank C) the Marshall Plan D) the European Monetary System 69) The International Monetary Fund (IMF) 69) ______I A) in recent years has provided large loans to Russia, South Korea, and Brazil. B) aids countries with balance of payment and exchange rate problems. C) was created as a result of the Bretton Woods Agreement. D) is all of the above. 70) Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods? 70) ______I A) Differential rates of inflation across member nations. B) Widely divergent national monetary and fiscal policies among member nations. C) Several unexpected economic shocks to member nations. D) all of the above 26) ________ is the cross-border purchase of assets that are then managed in a way that hides the movement of money and its ownership. 26) ______ A) Capital flight B) Money laundering C) Irrational exuberance D) Capital mobility 27) Which of the following is NOT likely to occur in the quantity adjustment phase of the J-Curve adjustment path ? 27) ______ A) Exports become relatively less expensive. B) Imports become relatively more expensive. C) The balance of trade gets worse. D) All of the above are true. 28) The effect of an imbalance in the BOP is the same for countries on a fixed exchange rate regime as for those on a floating exchange rate regime. 28) ______ A) True B) False 29) Under a floating exchange rate system, the government bears the responsibility to ensure that the BOP is near zero. 29) ______ A) True B) False 30) Imports have the potential to lower a country's inflation rate because of each of the following EXCEPT: 30) ______ A) the higher prices of foreign goods spurs domestic competitors to cut prices. B) the import of lower priced services limits what domestic competitors can charge for services. C) the import of lower priced goods limits what domestic competitors can charge for goods. D) of all of the above 31) The BOP should always balance. 31) ______ A) True B) False 32) Which of the following statements about the balance of payments is NOT true? 32) ______ A) Although the BOP must always balance in theory, in practice there are substantial imbalances as a result of statistical errors and misreporting of current account and financial account flows. B) The BOP is the summary statement of all international transactions between one country and all other countries. C) The BOP is a flow statement, summarizing all international transactions that occur across the geographic borders over a period of time, typically a year. D) All of the above are true. 33) Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt. 33) ______ A) True B) False 34) The financial account consists COMPLETELY of which three components? 34) ______ A) Direct investment, stock investment, and bond investment. B) Direct investment, portfolio investment, and other asset investment. C) Stock investment, bond investment, and mutual fund investment. D) Mutual fund investment, portfolio investment, and stock investment. 35) When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset. 35) ______ A) direct investment; indirect investment B) portfolio investment; direct investment C) portfolio investment; indirect investment D) direct investment; portfolio investment 44) In 2007 the United States posted a current account deficit of -$731 billion. The bulk of the negative value came from 44) ______ A) a goods trade deficit. B) an income trade deficit. C) a net transfer deficit. D) an income balance deficit. 46) The BOP must be in balance but the current account need not be. 46) ______ A) True B) False 50) Which of the following would NOT be considered a typical BOP transaction? 50) ______ A) A U.S. tourist purchases gifts at a museum in London. B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. C) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. D) All are example of BOP transactions. 55) Regime structures like the gold standard required no cooperative policies among countries, only the assurance that all would abide by the "rules of the game." 55) ______ A) True B) False 57) In the decade since 2000, the U.S. has experienced its largest bilateral trade deficits with the countries of China and Japan. 57) ______ A) True B) False
Explanation / Answer
Answer 60 is C.
Large U.S. balance of payment surpluses does not contribute factor in the assent of the euro and the decline in the dollar.
Answer 61 is C.
In January 2002, the Argentine Peso changed in value from Peso1.00/$ to Peso1.40/$, thus, the Argentine Peso weakened against the U.S. dollar.
Answer 62 is A.
In January 2000 Ecuador officially replaced its national currency, the Ecuadorian sucre, with the U.S. dollar. This practice is known as Dollarization.
Answer 63 is D.
US currently uses a floating exchange rate regime.
Answer 64 is C.
Answer 65 is D.
All are attributes of an ideal currency.
Answer 66 is D.
The war Interrupted the free movement of gold
Answer 67 is B.
The post WWII international monetary agreement that was developed in 1944 is known as the Bretton Woods Agreement.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.