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Which of the following could be considered as a disadvantage of using floating exchange rates? I. There is no certainty when it comes to the future value of a particular currency. II. There is no speculation in the foreign currency markets when exchange rates are floating. III. There will always be a certain amount of risk due to changing exchange rates.

Select one:

A. I and II onlyB. I and III onlyC. II and III onlyD. I, II, and III

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The foreign-exchange system adopted at the Bretton Woods Conference can be characterized as a Select one:

A. traditional gold standard.B. floating exchange standard.C. fixed exchange standard.D. non-interventionist standard.

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Which of the following currencies were established by the Bretton Woods Accord as the international "key currency" to which the major world currencies were fixed in value? Select one:

A. The U.S. dollarB. The British poundC. The German markD. The French franc

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Which of the following events characterized most of the 1930s to the end of World War II? Select one:

A. Worldwide economic depressionB. The collapse of world tradeC. No uniform system of international monetary exchangeD. All of the above

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A fall in U.S. interest rates relative to foreign rates would tend to _________ foreign demand for U.S. securities and the ___________ dollars. Select one:

A. increase, supply ofB. increase, demand forC. decrease, supply ofD. decrease, demand for

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According to purchasing power parity theory, if inflation in Korea is 6% and the U.S. is 4%, the U.S. dollar will appreciate by ____ to offset the higher inflation in Korea.

Select one:

A. 8%B. 6%C. 4%D. 2%

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The __________ is a record of the international flow of funds for purchases and sales of goods, services and securities in a given country. Select one:

A. balance of paymentsB. balance of tradeC. balance of capital accountsD. balance in current account

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The exchange rate is

Select one:

A. the dollar cost of a foreign product.B. the number of units of foreign currency that can be acquired with one unit of domestic currency.C. the supply of foreign exchange.D. the supply of foreign currency.

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The exchange rate links the domestic and foreign markets for goods, services, and securities. If the U.S. dollar depreciates in value Select one:

A. imports from other countries, which are now cheaper, will increase.B. imports from other countries, which are now more expensive, will decrease.C. exports to other countries, which are now cheaper, will decrease.D. exports to other countries, which are now more expensive, will decrease.

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The exchange rate in terms of U.S. dollars is the Select one:

A. dollar cost of a foreign currency.B. supply of foreign goods.C. interest rate for foreign currency.D. trade surplus or deficit.stion41

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To increase exchange rate stability among Western Europe, the ______________ was created in 1979 in which individual currencies had limited flexibility and the central bank intervened when exchange rate moved beyond the narrow band. Select one:

A. Maastricht TreatyB. European Monetary SystemC. Purchasing Power ParityD. none of the above

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The supply of dollars in international markets originates from Select one:

A. an increase in the value of the dollar relative to foreign currencies.B. a decrease in the value of the dollar relative to foreign currencies.C. foreign purchases of U.S. goods, services and securities.D. domestic purchases of foreign goods, services and securities.

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The current international monetary system can be more correctly called Select one:

A. a managed float exchange rate system because currencies are allowed to fluctuate but government central banks intervene when a currency is over valued or undervalued.B. a fixed exchange rate system because the value of a currency is set by the G-7 participating countries.C. a free float exchange rate system because the value of a currency is freely determined in the international monetary market without any government controls.D. None of the above.

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In relation to foreign exchange, interest rate parity exists when Select one:

A. the demand for and the supply of a foreign currency is in equilibrium.B. interest rates have adjusted so that rates between currencies differ only by the expected appreciation or depreciation of the currency.C. all foreign currencies have the same value in the international foreign exchange market.D. None of the above.

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The _____ is the oldest international financial organization that was originally established to monitor and administer war reparations. Select one:

A. Bank for International SettlementsB. International Monetary FundC. World BankD. European Monetary Union

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The foreign exchange market Select one:

A. is the market to buy and sell securities denominated in foreign goods and services.B. is located on Wall Street in New York City.C. is the market to buy and sell foreign currencies.D. is the market to buy and sell foreign stocks and bonds.

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The current exchange rate of the U.S dollar Select one:

A. is determined by the demand and supply of dollars in the world market.B. is pegged to gold at a rate of 1 ounce of gold to $42.C. is fixed and controlled by the Federal Reserve Bank according to the government economic policy.D. All of the above.

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The World Bank is composed of two organizations, International Bank for Reconstruction and Development and ______________________. Select one:

A. International Development AssociationB. International Monetary FundC. Bank for International SettlementsD. Morgan Guaranty Trust

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When a currency can buy more foreign currency than before, the currency has ________. Select one:

A. devaluedB. appreciatedC. depreciatedD. balanced

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Expectations of _______ US interest rates tend to ________ the value of the dollar.

Select one:

a. higher; decreaseb. higher; increasec. lower; increased. higher or lower, have no effect on