1) a foreign exchange intervention with an offsetting open market operation that leaves
the monetary base unchanged is called
a.an unsterilized foreign exchange intervention
b.a sterilized foreign exchange intervention
c.a balance-of-payment exchange rate rule
d.monetary neutrality
2) u.s. banks created shell branches by
a.having a bank branch located in offshore banking center
b.created a branch to deal only with non-residents
c.setting up an international banking facility in a domestic branch
d.merging with foreign banks to create offshore banks
3) assume that china and the u.s. are in a managed floating exchange rate agreement.
suppose that the fed decreases the money supply by 50%. chinas central bank lets the
exchange rate partly adjust and also intervenes in foreign exchange market. what would
happen to the foreign reserve position for the u.s. and the exchange rate $/yuan?
a.foreign reserves decrease and exchange rate decreases
b.foreign reserves increases and exchange rate increases
c.foreign reserves decrease and exchange rate increases
d.foreign reserves increase and exchange rate decreases.
4) which of the following is considered as a capital inflow to the u.s.?
a.a sale of u.s. financial assets to a foreign buyer
b.a loan from u.s. bank to a foreign borrower
c.a purchase of foreign financial assets by a u.s. buyer
d.a u.s. company deposits $1 million in a bank account in switzerland
5) the portfolio-balance approach assumes:
a.imperfect capital mobility
b.perfectly elastic demand for foreign bonds
c.interest rate equalization across countries
d.imperfect substitution between domestic and foreign bonds