Which of the following could not reasonably be considered an advantage of a mana

Question

Which of the following could not reasonably be considered an advantage of a managed exchange rate?

A. Stability in that nations international goods market

B. Low cost to implement

C. Control over exchange rates

D. None

2. The recent "Quantitative Easing" policy involved the FED purchasing from private banking a number of unconventional assets. All things being equal this should have ___ the value of the US Dollar on the foreign exchange?

A. Increased

B. Decreased

C. Had no effect

D. No way to tell

3. The problem with attempting to control interest rates while also controlling the exchange rate and maintaining free and open international capital flows is that

A. Capital will flow into those countries that maintain a rate of interest above the global mean rate (risk adjusted) causing the nation to move off the peg

B. Capital will flow out of those countries that maintain a rate of interest below the global mean (risk adjusted) causing the nation to move off the peg

C. Any attempt to fix the rate of interest will almost certainly cause the exchange rate to adjust

D. All of above

4. If a nation is currently running a trade deficit (Current account deficit) and if foreigners have no desire to hold any of that nations assets then which of the following is also true?

A. There is likely to be upward pressure on the Nations exchange rate

B. There is likely to be downward pressure on the Nations exchange rate

C. There is likely to be a worsening of the current account

D. None of the above

5. In terms of accounting for international transactions asset transfers can be found

A. on either the capital or financial account

B. on either the current or financial account

C. On either the current or capital account

D. None of the above

6. Monetary policy is impacted by the foreign sector through

A. The additional investment choice of foreign assets

B. The ability to move and hold wealth internationally

C. Interest rates potentially attracting foreign capital

D. All the above

7. If we expect our exchange rate to depreciate against another currency then which of the following is also true?

A. We should invest in local assets demoniated in out currency

B. We should invest in foreign assets denominated in the other currency

C. We should hold cash (domestic)

D. None of the aboice

8. which of the following could not reasonably be considered an advantage of a flexible exchange rate?

A. stability in that nations international good market

B. low cost to implement

C. control over domestic interest rated

D. non of the above

9. Using a basic Keynesian Cross model if we can safely say Y=c0+c1(Y)+I+G+EX-im0-im1(Y) and the propensity to consume is 80% and the propensity to import is 30% then the associated fishcal policy multiplier is going to be about

A. 5

B. 3

C. 2

D. None of the aboce

10. In the above model taxes impact

A. Comsumption

B. Business investment

C. Government spending

D. None of the above

11. If we were to expand this model and say that a) Business Investment is negatively correlated with the rate of interest and b) every 2% increase in incomes results in a .5% increase in interest rate the impact on incomes (multiplier) from a given fiscal action would be:

A. larger

B. smaller

C. no charge

D. not enough information to say

12. Which nation is NOT a major trading partner with US

A. Mexico

B. Canada

C. China

D. None of the above

13. IS-LM models like the one we developed in class do not consider

A. Supply-Side impacts

B. changes to costs of production associated with changed in output

C. prices expections

D. All of the above

Explanation / Answer

1 ) Option B is correct. Low cost to implement could not reasonably be considered an advantage of a managed exchange rate

2) Option B is correct. The recent "Quantitative Easing" policy involved the FED purchasing from private banking a number of unconventional assets. All things being equal this should have _decreased__ the value of the US Dollar on the foreign exchange?

3) Option a is correct. The problem with attempting to control interest rates while also controlling the exchange rate and maintaining free and open international capital flows is that Capital will flow into those countries that maintain a rate of interest above the global mean rate (risk adjusted) causing the nation to move off the peg

4) Option c is correct. If a nation is currently running a trade deficit (Current account deficit) and if foreigners have no desire to hold any of that nations assets then There is likely to be a worsening of the current account.

5) Option B is correct. In terms of accounting for international transactions asset transfers can be found on either the current or financial account.

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