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ECO 213- Final Exam | Questions with Answers 100% Verified Correct|
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ECO 213- Final Exam | Questions with Answers 100% Verified Correct|
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ECO 213- Final Exam | Questions with Answers100% Verified Correct|
If currencies around the world are based on the gold standard, and the Eu lowers the amount
of gold for which the euro will trade, then holding all else constant, - ✔✔the euro will
depreciate against the dollar
Because the value of the euro is determined by factors that affect the entire euro zone, during
the recession of 2007-2009, individual countries using the euro - ✔✔were unable to have
their exchange rates depreciate
If one US dollar could be exchanged for One Australian dollar in 1970, and one US dollar can
now be exchanged for .98 Australian dollars, - ✔✔The Australian dollar gained value against
the US dollar
China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan has been
________ at the pegged exchange rate, the Chinese government ________ its reserves of
dollars as the government purchased more ________ to maintain the pegged exchange rate. -
✔✔undervalued, dollars, dollars
The "Big Mac Theory of Exchange Rates" test the accuracy of purchasing power parity theory. -
✔✔24.27 rupees per dollar
In 2011, a number of Canadians purchased homes in Arizona. Which of the following would not
be a logical explanation for this? - ✔✔The US dollar appreciated relative to the Canadian
dollar during this time.
A persistent surplus of pounds at a given fixed exchange rate (in dollars per pound) is evidence
that the pound is _________ versus the dollar. This surplus can be reduced of eliminated
through a ________- - ✔✔Overvalued, Devaluation
, If a country sets a pegged exchange rate that is above the equilibrium exchange rate, how can
the country maintain the peg - ✔✔By purchasing surplus domestic currency at the pegged
rate.
Figure 19-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central
Bank pegs its currency at $1.00/euro. Speculators expect that the value of euro will rise and this
shifts the demand curve for euro to D2. - ✔✔After this shift, there is a shortage of euros
equal to 800 million
Fluctuating exchange rates can alter a multinational firm profits and losses. The US automobile
manufacturer Tesla produces vehicles in the United States and sells them in Norway. -
✔✔Fall, Fall
In 1931, the first major country to abandon the gold standard - in order to increase its policy
options in face of the Great Depression- was - ✔✔Great Britain
Under the Bretton Woods exchange rate system, the US government agreed to buy or sell gold
at a fixed price of ________ per ounce - ✔✔$35
Why did the United States abandon the gold standard in the 1930's - ✔✔The government
wanted to rapidly expand the money supply in response to the Great Depression
You decide to work in Japan for the next 10 years, accumulate some savings, then move back to
the US and convert your savings from yen to dollars. - ✔✔You should be encouraged as the
growing US preference for Japanese goods should increase the value of the yen to the dollar
and raise the value of your savings when converted to dollars.
During the Chinese experience with pegging the yuan to the dollar, the yuan was __________.
As a result, there was a _________ of dollars on the market, and the Chinese government had
to purchase dollars to maintain the peg. - ✔✔Undervalued, Surplus
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