14
. Suppose that with the upcoming Winter Olympics in Russia, US citizens decide that they want to buy numerous Russian souvenirs associated with the Olympics. This would shift the
a. supply of dollars curve upward and to the left and lead to an appreciation in the value of the dollar.
b. demand for dollars curve upward and to the right and lead to an appreciation in the value of the dollar.
c. supply of dollars curve to the right and lead to a depreciation in the value of the dollar.
d. demand for dollars curve downward and to the left and lead to a depreciation in the value of the dollar.
15. If, as a part of monetary policy, the Federal Reserve pursues policies that raise the interest rate, one of the following is predicted, other things equal:
a. capital inflows will decrease and the dollar will appreciate.
b. capital outflows will decrease and the dollar will appreciate.
c. capital outflows will increase and the dollar will depreciate.
d. capital flows will not be affected, because they respond only to real economic conditions..
16. The monetarists� prescription for the monetary policy is called the �monetary rule.� The monetary rule means that:
a) monetary policy does not have an impact on the economy until 6 to 9 months after the money supply is changed.
b) expansionary fiscal policy should be accompanied by an easy monetary policy.
c) the annual rate of increase in the money supply should be equal to the long-term increase in the price level.
d) The annual rate of increase in the money supply should be equal the potential annual growth rate of real GDP.
17. If a country is borrowing from the IMF in order to maintain the current value of its currency in international markets then:
a. Its currency current value is below its equilibrium value and it has an excess supply of its currency in the market.
b. Its currency current value is below its equilibrium value and it has an excess demand for its currency in the market
c. Its currency current value is above its equilibrium value and it has an excess supply of its currency in the market
d. Its currency current value is above its equilibrium value and it has an excess demand for its currency in the market
14
. Suppose that with the upcoming Winter Olympics in Russia, US citizens decide that they want to buy numerous Russian souvenirs associated with the Olympics. This would shift the
a. supply of dollars curve upward and to the left and lead to an appreciation in the value of the dollar.
b. demand for dollars curve upward and to the right and lead to an appreciation in the value of the dollar.
c. supply of dollars curve to the right and lead to a depreciation in the value of the dollar.
d. demand for dollars curve downward and to the left and lead to a depreciation in the value of the dollar.
15. If, as a part of monetary policy, the Federal Reserve pursues policies that raise the interest rate, one of the following is predicted, other things equal:
a. capital inflows will decrease and the dollar will appreciate.
b. capital outflows will decrease and the dollar will appreciate.
c. capital outflows will increase and the dollar will depreciate.
d. capital flows will not be affected, because they respond only to real economic conditions..
16. The monetarists� prescription for the monetary policy is called the �monetary rule.� The monetary rule means that:
a) monetary policy does not have an impact on the economy until 6 to 9 months after the money supply is changed.
b) expansionary fiscal policy should be accompanied by an easy monetary policy.
c) the annual rate of increase in the money supply should be equal to the long-term increase in the price level.
d) The annual rate of increase in the money supply should be equal the potential annual growth rate of real GDP.
17. If a country is borrowing from the IMF in order to maintain the current value of its currency in international markets then:
a. Its currency current value is below its equilibrium value and it has an excess supply of its currency in the market.
b. Its currency current value is below its equilibrium value and it has an excess demand for its currency in the market
c. Its currency current value is above its equilibrium value and it has an excess supply of its currency in the market
d. Its currency current value is above its equilibrium value and it has an excess demand for its currency in the market
