3lfa Brazilian citizen worki × Balance of payments Wi x Li Fundamentals of Macro

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3lfa Brazilian citizen worki × Balance of payments Wi x Li Fundamentals of Macroe x Quiz: Chapter 19 Post-lect x 3 The sale of American-max c Dangel.bfwpub.com/section/content/default.asp?WCI=pgDisplay-Quiz&VVCE;=take&wCU-CRSCNT;&ENTRY-ID;=9d5225c200694e1d9a509cfbe36073 16 st rates s a fixed exchange rate when vernment keeps the exchange rate near a particular target. vernment allows the exchange rate to be set by market forces change rate fluctuates according to changes in supply and demand 15. A D. tne exchange rate responds to changes in market conditions 16. The stocks of foreign currency that governments use to buy and sell their own currency are known as A. foreign exchange controls OR. foreign exchange reserves C. foreign exchange inventory D. intervention inventory 17. Which of the following statements is TRUE? A. A floating exchange rate creates a more stable environment for international business transactions B. A fixed exchange rate allows more flexibility in conducting monetary policy c. Foreign exchange controls distort incentives for international trade D. The creation of the euro was motivated by the advantages of a floating exchange rate 18. Which of the following is NOT a strategy for maintaining a fixed exchange rate at a level other than its equilibrium value? A. Buying or selling the currency through exchange market intervention B. Allowing the exchange rate to be determined by market forces c. Shifting the supply and demand curves for the domestic currency D. Implementing foreign exchange controls 19 Consider the trade relation between the U.S. and Japan. The accompanying graph shows the demand for U.S. dollars in the foreign exchange market. The exchange rate measured along the vertical axis is the exchange rate between the Japanese yen and the U.S. dollar, quoted as yen per U.S. dollar. The current exchange rate is 100 yen per dollar, shown by point A on the demand for U.S. dollar curve 9:06 PM 5/2/2014

Explanation / Answer

C

B

A
C

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