Which of the following is a benefit of having a flexible exchange rate? a. Crowding-out effects created by fiscal policies could be avoided b. Current account is more likely to be positive O C. More control over monetary policies O d. Fiscal and monetary policy coordination is required for this country

Which of the following is a benefit of having a flexible exchange rate? a. Crowding-out effects created by fiscal policies could be avoided b. Current account is more likely to be positive O C. More control over monetary policies O d. Fiscal and monetary policy coordination is required for this country

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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"In a small open economy with perfect capital mobility, if the government implements a fiscal expansion policy, what is the likely impact on the national interest rate and net exports under a fixed exchange rate regime? A. Increase in interest rate, increase in net exports B. Increase in interest rate, decrease in net exports C. No change in interest rate, increase in net exports D. No change in interest rate, decrease in net exports"
3. If a rise in trade deficit results from a decrease in the quality of your country's products. a. How would this affect net exports at any given exchange rate? b. Use a three-panel diagram to show the effect of this shift in net exports on the real exchange rate and trade balance. c. Does a decline in the quality of your country's products have any effect on your standard of living? Give a clear elaboration with example or graphs or facts (Hint: When you sell goods to foreigners, what do you receive in return?)
A short-run increase in government spending causes the currency to and output to O appreciate; increase O appreciate; decrease O depreciate; increase O depreciate; decrease
Why would a country want to impose an exchange rate ceiling? a. A strong currency encourages imports and can be used to fight inflation. b. A strong currency stimulates an economy. c. A weak currency encourages imports and can be used to fight inflation. d. A weak currency will encourage exports and stimulate the economy.
Under a purely fiexible exchange rate system: a. Supply and demand set the exchange rates. b. Governments can set the exchange rate by buying or selling reserves. O. Governments can set exchange rates with fiscal policy. O d. Answers b. and c. are correct.
What is the difference between depreciation and devaluation? O There is no difference. O Depreciation refers to a fixed exchange rate, while devaluation refers to a floating exchange rate. O Depreciation refers to a floating exchange rate, while devaluation refers to a fixed exchange rate.
If for some reason Americans desired to increase their purchases of foreign assets, then other things the same A. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would rise. B. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would fall. C. the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign currency would fall. D. the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign currency would rise.
Using th equilibri of the money market and the purchasing power parity What ha if the GDP of the home country (H) decreases? а. The money supply goes up O b. The money supply goes down The exchange rate (EH/F) goes up The exchange rate (EH/F) goes down None of the above е.
What is the exports effect? The exports effect is the result that the lower the exchange rate, other things remaining the same, the O A. higher are the prices of Canadian-produced goods and services to foreigners and the greater is the volume of Canadian imports O B. lower are the prices of foreign-produced goods and services to Canadians and the greater is the volume of Canadian exports O C. higher are the prices of foreign-produced goods and services to Canadians and the greater is the volume of Canadian imports O D. lower are the prices of Canadian-produced goods and services to foreigners and the greater is the volume of Canadian exports Click to select your answer and then click Check Answer. All parts showing Clear All Check Answer P Type here to search 立
QUESTION 5 How can a central bank support a fixed exchange rate? Note: Multiple answers are possible. O A. by buying and selling foreign currency O B. by changing the interest rate O C. by increasing government spending O D. by investing in infrastructure
If Canada is said to have a balance of payments deficit,this means thatOA.the Bank of Canada decreased its reserves of foreign exchangeB.theBank of Canada purchased some ofthe gold that it uses to back the Canadian dollarc.theBank of Canada used Canadian dollars to buy foreign exchange on the foreign exchange markets. O D. the Bank of Canada issued foreign exchange
Question 2 of 25 In which situation is a country most likely to choose a flexible exchange rate for its currency? O A. A country believes that its currency will be in low demand in global markets. B. A country worries that the value of its currency could rise and fall unpredictably. C. A country has a reputation for having a strong and stable economy over time. O D. A country wants to make sure that its currency is stable in all economic situations.