41

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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

Question42

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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.

Question43

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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.

Question44

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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.

Question45

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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

Question46

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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.

Question47

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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.

Question48

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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

Question49

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

A. devaluedB. appreciatedC. depreciatedD. balanced

Question50

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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