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6FNCE005W Lecture 2 quiz Flashcards | StudBud
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6FNCE005W Lecture 2 quiz
6FNCE005W Lecture 2 quiz
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1
Under Bretton Woods, each country was responsible for maintaining its exchange rate within ±1% of the par value by
increasing or decreasing their money supply as necessary.
expanding or contracting the supply of loanable funds as necessary.
buying or selling gold as necessary.
buying or selling foreign exchanges as necessary.
2
When money can move freely across borders, policy makers must choose between
exchange-rate stability and inflation.
exchange-rate stability and an independent monetary policy.
exchange-rate stability and an economic growth.
exchange-rate stability and capital controls.
3
Once capital markets are integrated, it is difficult for a country to maintain a fixed exchange rate. Why?
Portfolio managers will not invest in countries with fixed exchange rates.
Because of the Tobin Tax.
Market forces are stronger than FX interventions the government can muster.
None of the options.
4
Question:
your competitive position is likely improved.
your competitive position is likely worsened.
your competitive position is unchanged.
none of the above.
5
Prior to World War I ending, the dominant global currency was the:
British pound.
Japanese yen.
U.S. dollar.
German mark.
6
Under Bretton Woods, each country established a par value for its currency with the USD. The USD was pegged to gold at
$35 per ounce
$350 per ounce
$900 per ounce
$1 per ounce
7
Since the end of World War I, the dominant global currency has been the:
Japanese yen.
Euro.
U.S. dollar.
British pound.
8
The main cost of a monetary union (e.g. EMU) is
increased exchange rate uncertainty.
greater flow of capital and people.
lessened political integration.
the loss of national monetary and exchange rate policy independence.
9
The choice between the alternative exchange rate regimes (fixed or floating) is likely to involve a trade-off between
national monetary policy autonomy and international economic integration.
unemployment and inflation.
balance of payments autonomy and inflation.
exchange rate uncertainty and national politics.
10
About how many countries have a FLOATING exchange rate regime?
90
120
60
30
11
In the years leading to the collapse of the Bretton Woods system, it became clear that the dollar was
overvalued.
undervalued.
