Chapter 20

Front 1

________ are in place when a country's government places restrictions on the conversion of domestic currency into foreign currency or vice versa.

Back 1

Exchange Controls

Front 2

Which of the following are in place when government imposes limits on or requires approvals for payments related to some (or all) international financial activities?

Back 2

Capital Controls.

Front 3

With a(n)________________, government allows the market to determine the exchange rate of currency.

Back 3

clean float

Front 4

Under which of the following policies does the government enter the foreign exchange market and buy or sell foreign currency in order to influence the market-determined exchange rate of the domestic currency?

Back 4

Official interventions.

Front 5

Which of the following terms describes and exchange rate regime in which the government intervenes in the foreign exchange market in order to influence the market determined exchange rate?

Back 5

Managed float.

Front 6

Which of the following statements is true?

Back 6

the special drawing right is a basket of currencies made up of US dollars, euros, British pounds and Japanese yen.

Front 7

Which of the following terms is used to describe an exchange rate regime in which the rate is fixed to a currency or basket of currencies?

Back 7

Pegged Exchange rate.

Front 8

An exchange rate regime in which the government may change the fixed rate in the face of a significant disequilibrium in the country's international position is called a(n)...

Back 8

adjustable peg.

Front 9

If a country with a relatively high inflation rate maintains a pegged exchange rate against the currency of a relatively low inflation country, very quickly the country will find...

Back 9

its exports become less competitive on world markets.

Front 10

For a country which has a relatively high rate of inflation and wants some form of pegged exchange rate, which of the following exchange rate regimes is the best choice?

Back 10

Crawling Peg

Front 11

Which of the following is NOT a means by which a country can defend a fixed exchange rate?

Back 11

the government can allow the currency to float and the resulting market rate will be equal to the intended rate in the fixed exchange rate regime.

Front 12

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the US dollar. If Britain is trying to maintain a fixed exchange rate with respect to the US dollar, which of the following interventions will stem the pressures for depreciation of the pound?

Back 12

Britain should buy bonds and sell dollars

Front 13

Pressures in the foreign exchange market are such as to cause the British pound to appreciate with respect to the U.S. dollar.If Britain is trying to maintain a fixed exchange rate with respect to the U.S. dollar, which of the following interventions will stem the pressures for appreciation of the pound?

Back 13

Britain should sell pounds and buy dollars

Front 14

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the U.S. dollar. If the British government intervenes in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar, it can be concluded that:

Back 14

Britain is financing a deficit in their balance of payments.

Front 15

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the U.S. dollar. If the British government uses unsterilized intervention in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar , it can be concluded that:

Back 15

the British money supply will fall.

Front 16

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the U.S. dollar. If the British government uses sterilized intervention in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar , it can be concluded that:

Back 16

the British money supply will remain unchanged.

Front 17

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the U.S. dollar. If the British government uses sterilized intervention in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar:

Back 17

British monetary authorities will be buying bonds.

Front 18

Pressures in the foreign exchange market are such as to cause the British pound to depreciate with respect to the U.S. dollar. If the British government uses sterilized intervention in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar:

Back 18

the British government will run out of foreign reserves.

Front 19

If a country's currency is _________, then it can borrow from other countries by issuing assets that will be held as reserves by the central banks of other countries.

Back 19

A reserve Currency.

Front 20

Which of the following best describes a situation in which a country buys domestic currency in order to defend a pegged exchange rate, but then carries out a policy in domestic economy in order to keep the domestic money supply form changing?

Back 20

Sterilized intervention.