19. What are some of the ways that fixed exchange rates can enhance stability in an economy?

Select one:

a.

Fixed exchange rates reduce uncertainty and make foreign trade easier.

b.

Fixed exchange rates reduce uncertainty and make foreign investment easier.

c.

Fixed exchange rates can help end financial crises and help establish a new central bank's credibility.

d.

All of these are ways that fixed exchange rates can enhance stability in an economy.

24 . You are an American citizen and are travelling to Europe to visit Disneyland Paris. This will require:

Select one:

a. Supplying euros and demanding dollars in the foreign exchange (FX) market

b. Supplying dollars and demanding euros in the foreign exchange (FX) market

c. Selling euros and buying dollars in the foreign exchange (FX) market

d. Saving dollars and selling euros in the foreign exchange (FX) market

26. When Americans buy goods from another country, they are _________________ in the foreign exchange (FX) market.

Select one:

a. demanding foreign currency

b. supplying foreign currency

c. demanding U.S. currency

d. making no demands

28. Under a system of floating exchange rates, which of the following conditions would tend to cause the U.S. dollar to appreciate in value against the Japanese yen?

I. The rate of inflation in Japan is higher than in the U.S.

II. Japanese banks offer higher rates of interest than U.S. banks

III. There is a rising demand for U.S. goods on the part of Japanese consumers

Select one:

a. I only

b. I and II only

c. I and III only

d. I, II, and III

29. When calculating the U.S. Balance of Payments, if the Current Account transactions do not balance with the Financial Account transactions:

I. A statistical discrepancy adjustment may be required

II. The U.S. must be running a merchandise trade deficit

III. Special Drawing Rights (SDRs) will need to be used

Select one:

a. I only

b. I and II only

c. I and III only

d. I, II, and III