1. To avoid currency crisis in the face of fully integrated capital markets, a country can: (Points : 1) have a floating exchange rate. have a fixed exchange rate. have a fixed exchange rate that adjusts. a) and b) can both help to avoid currency crises. Question 2.2. Monetary policy for the countries using the euro as a currency is now conducted by: (Points : 1) the Federal Reserve. the Bundesbank. European Central Bank. none of the above. Question 3.3. When money can move freely across borders, policy makers must choose between: (Points : 1) exchange-rate stability and an economic growth. exchange-rate stability and inflation. exchange-rate stability and an independent monetary policy. exchange-rate stability and capital controls. Question 4.4. If the United States imports more than it exports, this means that: (Points : 1) the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus. the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus. the U.S. dollar would be under pressure to appreciate against other currencies. both b) and c) are correct. Question 5.5. Advantages of a flexible exchange rates include: (Points : 1) national policy autonomy. easier external adjustments. the government can use monetary and fiscal policies to pursue whatever economic goals it chooses. all of the above. Question 6.6. A "good" (or ideal) international monetary system should provide: (Points : 1) liquidity, elasticity, and flexibility. elasticity, sensitivity, and reliability. liquidity, adjustments, and confidence. none of the above. Question 7.7. Under a purely flexible exchange rate system: (Points : 1) supply and demand set the exchange rates. governments can set the exchange rate by buying or selling reserves. governments can set exchange rates with fiscal policy. answers b) and c) are correct. Question 8.8. The massive privatization that is currently taking place in formerly socialist countries, will likely: (Points : 1) eventually enhance the standard of living for these countries' citizens. depend on private investment. increase the opportunities available to these countries' citizens. all of the above. Question 9.9. Since the end of World War I, the dominant global currency has been the: (Points : 1) British pound. Japanese yen. Euro. U.S. dollar. Question 10.10. Privatization: (Points : 1) has spurred a tremendous increase in cross-border investment. has allowed many governments to have the funds to nationalize important industries. has guaranteed that new ownership will be limited to the local citizens. has generally decreased the efficiency of the enterprise.