Q11. Ignoring transaction costs and based solely on the change in currency exchange rates, a speculator who sold short a three year contract for the Euro (receiving dollars) in January 1999 would have realized a profit upon the exercise of the contract in January 2002. a. true b. false Q12. A small economy country whose GDP is heavily dependent on trade with the United States could use a (an) ________ exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate. a. managed float b. pegged exchange rate with the United States c. independent floating d. pegged exchange rate with the Euro Q13. Which of the following is a way in which the Euro affects markets? a. Consumers and business enjoy price transparency and increased price-based competition. b. Countries within the Euro zone enjoy cheaper transaction costs. c. Currency risks and costs related to exchange rate uncertainty are reduced. d. All of the above. Q14. A currency that has increased in foreign exchange value relative to a floating rate currency has ________. a. revalued b. violated international trade agreements c. deteriorated d. appreciated Q15. The Euro currency is fixed against other currencies on the international currency exchange markets, but allows member country currencies to float against each other. a. true b. false Q16. The 10 members that joined the European Union in May 2004 automatically assumed the euro as their national currency upon joining. a. true b. false Q17. Which of the following correctly identifies exchange rate regimes from less fixed to more fixed? a. exchange arrangements with no separate legal tender, currency board arrangement, crawling pegs b. independent floating, currency board arrangement, managed float c. independent floating, crawling pegs, exchange arrangements with no separate legal tender d. independent floating, currency board arrangement, crawling pegs Q18. On May 1, 2004 ________ countries joined the European Union enlarging it to a total of ________ members. a. 2030 b. 217 c. 515 d. 1025 Q19. World War I caused the suspension of the gold standard for fixed international exchange rates because the war a. lasted too long. b. cost too much money. c. interrupted the free movement of gold. d. used gold as the main ingredient in armament plating. Q20. The mechanism by which the European Central Bank will settle all cross-border payment in the conduct of EU banking business and regulation is known as ________. a. Wal-Mart b. TARGET c. the Bourse d. NATO