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1.

In an open economy with global capital markets and mobile capital:

A) a country has control over both its domestic money supply and exchange rate.

B) a country has control of either its domestic money supply or exchange, but not both.

C) a country only has control over its domestic money supply.

D) a country only has control over its exchange rate.

 

2.

An overvalued fixed exchange rate can be maintained only as long as:

A) the country's central bank reserves are available to support currency intervention in the foreign exchange market.

B) the country's central bank can increase the domestic money supply.

C) the country's government increases debt financing.

D) none of the above.

 

3.

The decrease in demand faced by McDonald's during 2001-2002 can be attributed to:

A) decrease in consumer preference for high-fat content food.

B) increase in lawsuits.

C) increase in competitive pressures.

D) all of the above.

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019
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Related questions

In an open economy with global capital markets and mobile capital:

a. a country has control over both its domestic money supply and exchange rate.
b. a country has control of either its domestic money supply or exchange, but not both.
c. a country only has control over its domestic money supply.
d. a country only has control over its exchange rate.

6) Which of the following would be the most pessimistic with regard to the ability of the government to reduce unemployment by monetary of fiscal policy? a. Monetarists b. Keynesians c. rational expectations school d. Klingons e. supply-siders

7) Which of the following would tend to increase a country's imports?

a. an increase in the domestic rate of interest

b. an increase in the exchange rate ( i.e an increase in the price of foreign exchange)

c. an increase in domestic income

d. an increase in foreign prices

e. none of the above

8) Which of the following would decrease a country's exports ?

a. a decrease in the exchange rate( i.e a an decrease in the price of foreign exchange)

b. an increase in the domestic rate of interest

c. an increase in domestic price

d. an increase in domestic income

e. none of the above

9) Which of the following would indicate a conflict between the goals of full employment and balance of payments equilibrium ?

a. inflation and a balance of payments deficit

b. unemployment and a balance of payments surplus

c. unemployment and a balance of payments deficit

d. full employment and a balance of payments surplus

e. none of the above would indicate a conflict

10) Which of the following would result if the county's currency depreciated ? a. an increase in both imports and exports

b. a decrease in both imports and exports

c. an increase in imports and a decrease in exports

d. a decrease in imports and an increase in exports

e. a decrease in net capital inflows

11) Under the gold standard, if a nation had a balance of payments surplus, the difference would have been resolved by:

a. gold shipments from the surplus to the deficit country

b.gold shipments from the deficit to the surplus country

c. appreciation of the country's currency in the foreign exchange markets

d. depreciation of the country's currency in the foreign exchange markets

e. human sacrifices in the deficit country

12.Under a system of flexible exchange rates, if a nation had a balance of payments deficit, which of the following would occur ?

a. gold shipment from the surplus to the deficit country

b. gold shipments from the deficit to the surplus country

c. appreciation of the current in the foreign exchange markets

d. depreciation of the currency in the foreign exchange markets

e. the money supply increase

13. Depreciation of a country's currency would generally result in:

a. the aggregate demand curve shifting to the left

b. the aggregate demand curve shifting to the right

c. the aggregate supply curve shifting to the left

d. the aggregate supply curve shifting to the right.

e) both A and B

Which answer from the highlighted is correct?

1. According to Positive Money, in the traditional money multiplier model, 

A. If the reserve ratio is 10%, the money supply will be about 100 times the economy's base money.

B. If the reserve ratio is 10%, the money supply will be about 10% of the output in the economy.

C. If the money multiplier is 10, a £100 increase in the money supply will increase output by £1000.

D. If the reserve ratio is 10%, the money supply will be about 10 times the base money in the economy.

E. If the money multiplier is 10, a £100 increase in government spending will increase output by £1000.

 

2. According to Positive Money, in 2006, for the British pound, bank-created money was

A. zero, and it was 14 times base money after the latest global financial crisis and the Bank of England's quantitative easing.

B. 14 times base money, and it was 14 times base money after the latest global financial crisis and the Bank of England's quantitative easing.

C. 80 times base money, and it was 14 times base money after the latest global financial crisis and the Bank of England's quantitative easing.

D. negative, and it was 80 times base money after the latest global financial crisis and the Bank of England's quantitative easing.

E. 14 times base money, and it was 80 times base money after the latest global financial crisis and the Bank of England's quantitative easing.

 

3. Consider the risk premium, as defined in the lecture and in the textbook. If the domestic central bank has a fixed exchange rate policy that the markets find credible, then

A. Nominal interest rates should be the same in the domestic country and the foreign one only if that risk premium is zero.

B. Nominal interest rates should be the same in the domestic country and the foreign one only if that risk premium is nonzero.

C. Nominal interest rates should be the same in the domestic country and the foreign one only if that risk premium is negative.

D. Nominal interest rates should be the same in the domestic country and the foreign one only if that risk premium is positive.

E. Nominal interest rates in the domestic country and the foreign one cannot be the same, even if that risk premium is zero since there is another term in the uncovered interest parity formula.

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