Chapter 2 Finance
A __________-_____________ exchange rate is one which is allowed to change or
float based on changes in currency supply and demand, but in which governments may
occasionally alter the outcome. - correct answerManaged-float system
A good ______ should provide (i) liquidity, (ii) adjustment, and (iii) confidence. - correct
answerinternational monetary system
A tax on financial transactions that would both generate revenue and restrict capital
flows is known as a ______ tax. - correct answerTobin tax
Although there is no clear consensus on the causes of the Argentine crisis, there are at
least three factors that are related to the collapse of the economic crisis. Which of the
following is not considered a possible factor? - correct answercontagion from the
financial crises in the United States
An international gold standard can be said to exist when which of the following hold?
-Private citizens may not own gold other than through currency.
-Gold may be freely exported or imported.
-There is two-way convertibility between gold and national currencies at a stable ratio.
-Gold alone is assured of unrestricted coinage. - correct answer-Gold may be freely
exported or imported.
-There is two-way convertibility between gold and national currencies at a stable ratio.
-Gold alone is assured of unrestricted coinage.
An optimal currency area within which exchange rates are fixed is ______ an individual
country. - correct answernot necessarily
An optimum currency area comprises two or more countries that maintain ______
exchange rates between each other but ______ exchange rates with trading partners
outside the area. - correct answerfixed; flexible
As illustrated in the exhibit, the Bretton Woods system can be described as a
________-based, __________-exchange standard. - correct answerdollar-based, gold-
exchange
Beginning in 2005, the RMB was allowed to do what? - correct answergradually
appreciate against the dollar for the next three years
Central bank _________ currencies are a new form of digital central bank money that
can be distinguished from reserves or settlement balances held by commercial banks at
central banks. - correct answerCentral Bank Digital Currency
Digital currencies that use distributed ledgers and cryptographic puzzles to verify
transactions are known as - correct answercryptocurrency
, During the Mexican peso crisis, - correct answerthe United States and the International
Monetary Fund lent Mexico around $50 billion to stabilize their foreign reserves.
Exchange rates under the gold system were: - correct answerhighly
From the following list, select all the examples of cryptocurrencies.
-Ethereum
-Litecoin
-Bitcoin
-PayPal - correct answer-Ethereum
-Litecoin
-Bitcoin
Historically, China maintained a fixed exchange rate of ______ RMB per U.S. dollar. -
correct answer8.27
If under the gold standard, Great Britain exported more to France than it imported, what
would be true about the resulting flow of gold and the price level?
-There would be a net flow of gold from France to Great Britain.
-The price level in France would rise.
-There would be no change in price levels.
-There would be no net flow of gold.
-The price level in Britain would rise. - correct answer-There would be a net flow of gold
from France to Great Britain.
-The price level in Britain would rise.
In 1973, under the Smithsonian Agreement II, the exchange rate boundaries were
______ and the exchange rates of the major currencies were allowed to ________. -
correct answereliminated; float freely
In 1973, under the Smithsonian Agreement II, the exchange rate boundaries were
______ and the exchange rates of the major currencies were allowed to________.
-widened again; appreciate
-narrowed; depreciate
-eliminated; float freely
-eliminated; move together - correct answer-eliminated; float freely
Key institutions developed at Bretton Woods in 1944 included the
-Asian Development Bank (ADB)
-International Monetary Fund (IMF)
-International Bank for Reconstruction and Development (World Bank)
-European Central Bank (ECB)
A __________-_____________ exchange rate is one which is allowed to change or
float based on changes in currency supply and demand, but in which governments may
occasionally alter the outcome. - correct answerManaged-float system
A good ______ should provide (i) liquidity, (ii) adjustment, and (iii) confidence. - correct
answerinternational monetary system
A tax on financial transactions that would both generate revenue and restrict capital
flows is known as a ______ tax. - correct answerTobin tax
Although there is no clear consensus on the causes of the Argentine crisis, there are at
least three factors that are related to the collapse of the economic crisis. Which of the
following is not considered a possible factor? - correct answercontagion from the
financial crises in the United States
An international gold standard can be said to exist when which of the following hold?
-Private citizens may not own gold other than through currency.
-Gold may be freely exported or imported.
-There is two-way convertibility between gold and national currencies at a stable ratio.
-Gold alone is assured of unrestricted coinage. - correct answer-Gold may be freely
exported or imported.
-There is two-way convertibility between gold and national currencies at a stable ratio.
-Gold alone is assured of unrestricted coinage.
An optimal currency area within which exchange rates are fixed is ______ an individual
country. - correct answernot necessarily
An optimum currency area comprises two or more countries that maintain ______
exchange rates between each other but ______ exchange rates with trading partners
outside the area. - correct answerfixed; flexible
As illustrated in the exhibit, the Bretton Woods system can be described as a
________-based, __________-exchange standard. - correct answerdollar-based, gold-
exchange
Beginning in 2005, the RMB was allowed to do what? - correct answergradually
appreciate against the dollar for the next three years
Central bank _________ currencies are a new form of digital central bank money that
can be distinguished from reserves or settlement balances held by commercial banks at
central banks. - correct answerCentral Bank Digital Currency
Digital currencies that use distributed ledgers and cryptographic puzzles to verify
transactions are known as - correct answercryptocurrency
, During the Mexican peso crisis, - correct answerthe United States and the International
Monetary Fund lent Mexico around $50 billion to stabilize their foreign reserves.
Exchange rates under the gold system were: - correct answerhighly
From the following list, select all the examples of cryptocurrencies.
-Ethereum
-Litecoin
-Bitcoin
-PayPal - correct answer-Ethereum
-Litecoin
-Bitcoin
Historically, China maintained a fixed exchange rate of ______ RMB per U.S. dollar. -
correct answer8.27
If under the gold standard, Great Britain exported more to France than it imported, what
would be true about the resulting flow of gold and the price level?
-There would be a net flow of gold from France to Great Britain.
-The price level in France would rise.
-There would be no change in price levels.
-There would be no net flow of gold.
-The price level in Britain would rise. - correct answer-There would be a net flow of gold
from France to Great Britain.
-The price level in Britain would rise.
In 1973, under the Smithsonian Agreement II, the exchange rate boundaries were
______ and the exchange rates of the major currencies were allowed to ________. -
correct answereliminated; float freely
In 1973, under the Smithsonian Agreement II, the exchange rate boundaries were
______ and the exchange rates of the major currencies were allowed to________.
-widened again; appreciate
-narrowed; depreciate
-eliminated; float freely
-eliminated; move together - correct answer-eliminated; float freely
Key institutions developed at Bretton Woods in 1944 included the
-Asian Development Bank (ADB)
-International Monetary Fund (IMF)
-International Bank for Reconstruction and Development (World Bank)
-European Central Bank (ECB)
