A. enhances
B. undermines
C. encourages
D. facilitates
Related Mcqs:
- When capital mobility is perfect interest rate differentials will tend to be offset by ?
A. Price difference
B. balance of payments difference
C. current account differences
D. expected exchange rate changes - perfect international capital mobility suggests that international funds will be responsive to ________ differentials?
A. current account
B. interest rate
C. tax
D. price - Which exchange rate system does not require monetary reserves for official exchange rate intervention ?
A. floating exchange rates
B. pegged exchanged rates
C. managed floating exchange rates
D. dual exchange rates - Which exchange rate system involves a leaning against the wind|| strategy in which short-term fluctuations in exchange rates are reduced without adhering to any particular exchange rate over the long run ?
A. pegged of fixed exchange rates
B. adjustable pegged exchange rates
C. managed floating exchange rates
D. free floating exchange rates - In a fixed exchange rate regime, the central the exchange rate ?
A. selling, increase
B. buying reduce
C. selling, reduce
D. buying increase
E. A and B
F. C and D - If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?
A. an increase in the level of output
B. a decrease in the unemployment rate
C. an increase in the rate of inflation
D. All of these answers - Which exchange rate mechanism in intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions ?
A. dual exchange rates
B. managed floating exchange rates
C. adjustable pegged exchange rates
D. crawling pegged exchange rates - In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?
A. decrease; depreciate
B. decrease; appreciate
C. increase; depreciate
D. increase; appreciate - One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?
A. rise; increase, increase
B. rise, falls, increase
C. rise, increase, falls
D. rise, falls, falls - Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will _______ and ________ ?
A. buy foreign exchange, sell domestic currency
B. sell foreign exchange buy domestic currency
C. buy foreign exchange buy domestic currency
D. sell foreign exchange sell domestic currency
