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Page 1
1. A nation experiences internal balance if it achieves:
a.
Full employment
b.
Price stability
c.
Full employment and price stability
d.
Unemployment and price instability
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Economic Objectives of Nations
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
2. A nation experiences external balance if it achieves:
a.
No net changes in its international gold stocks
b.
Productivity levels equal to those of its trading partners
c.
An increase in its money supply equal to increases overseas
d.
Equilibrium in its balance of payments
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Economic Objectives of Nations
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
3. A nation experiences overall balance if it achieves:
a.
b.
c.
d.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 2
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Economic Objectives of Nations
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
4. Most industrial countries generally considered ____ as the most important economic goal.
a.
External balance
b.
Internal balance
c.
Maximum efficiency for business
d.
Maximum efficiency for labor
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Economic Objectives of Nations
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
5. Which policies are expenditure-changing policies?
a.
Currency devaluation and revaluation
b.
Import quotas and tariffs
c.
Monetary and fiscal policy
d.
Wage and price controls
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Policy Instruments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
6. Which policy is an expenditure-switching policy?
a.
Increase in the money supply
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b.
Decrease in government expenditures
c.
Increase in business and household taxes
d.
Decrease in import tariffs
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Policy Instruments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
7. An expenditure-increasing policy would consist of an increase in:
a.
Import tariffs
b.
Import quotas
c.
Governmental taxes
d.
The money supply
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Policy Instruments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
8. An expenditure-reducing policy would consist of a decrease in:
a.
The par value of a currency
b.
Government expenditures
c.
Import duties
d.
Business or household taxes
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
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Page 4
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Policy Instruments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
9. Given fixed exchange rates, assume Mexico initiates expansionary monetary and fiscal policies to combat recession.
These policies will also:
a.
Increase both imports and exports
b.
Increase exports and reduce imports
c.
Reduce a balance-of-payments surplus
d.
Reduce a balance-of-payments deficit
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
10. Given fixed exchange rates, assume Mexico initiates contractionary monetary and fiscal policies to combat inflation.
These policies will also:
a.
Reduce a balance-of-payments surplus
b.
Reduce a balance-of-payments deficit
c.
Increases both imports and exports
d.
Decrease both imports and exports
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
11. The appropriate expenditure-switching policy to correct a current account surplus is:
a.
Currency revaluation
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b.
Currency devaluation
c.
Expansionary monetary policy
d.
Contractionary fiscal policy
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
12. The appropriate expenditure-switching policy to correct a current account deficit is:
a.
Contractionary monetary policy
b.
Expansionary fiscal policy
c.
Currency devaluation
d.
Currency revaluation
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
13. Suppose the United States faces domestic recession and a current account deficit. Should the United States devalue the
dollar, one would expect the:
a.
Recession to become less severe—deficit to become less severe
b.
Recession to become more severe—deficit to become less severe
c.
Recession to become less severe—deficit to become more severe
d.
Recession to become more severe—deficit to become more severe
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
Copyright Cengage Learning. Powered by Cognero.
Page 6
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
14. Suppose the United States faces domestic inflation and a current account surplus. Should the United States revalue the
dollar, one would expect the:
a.
Inflation to become more severe—surplus to become less severe
b.
Inflation to become less severe—surplus to become less severe
c.
Inflation to become less severe—surplus to become more severe
d.
Inflation to become more severe—surplus to become more severe
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
15. Suppose Brazil faces domestic recession and a current account surplus. Should Brazil revalue its currency, one would
expect the:
a.
Recession to become less severe—surplus to become less severe
b.
Recession to become more severe—surplus to become more severe
c.
Recession to become more severe—surplus to become less severe
d.
Recession to become less severe—surplus to become more severe
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
16. Suppose that Brazil faces domestic inflation and a current account deficit. Should Brazil devalue its currency, one
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Page 7
would expect the:
a.
Inflation to become more severe—deficit to become less severe
b.
Inflation to become more severe—deficit to become more severe
c.
Inflation to become less severe—deficit to become less severe
d.
Inflation to become less severe—deficit to become more severe
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
17. In a closed economy, which of the following will cause the economy’s aggregate demand curve to shift to the right?
a.
decreases and wages and salaries paid to employees
b.
increases in the prices of oil and natural gas
c.
decreases in income taxes for households
d.
decreases in the productivity of labor
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in a Closed Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
18. Given an open economy with high capital mobility and floating exchange rates, suppose an expansionary monetary
policy is implemented to combat recession. The initial and secondary effects of the policy
a.
cause aggregate demand to increase, thus strengthening the policy’s expansionary effect on real output
b.
cause aggregate demand to decrease, thus eliminating the policy’s expansionary effect on real output
c.
have conflicting effects on aggregate demand, thus weakening the policy’s expansionary effect on real output
d.
have conflicting effects on aggregate demand, thus strengthening the policy’s expansionary effect on real
output
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
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Page 8
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
19. A problem that economic policy makers confront when attempting to promote both internal and external balance for
the nation is that monetary or fiscal policies aimed at the domestic sector also have impacts on:
a.
Trade flows only
b.
Capital flows only
c.
both trade flows and capital flows
d.
Neither trade flows nor capital flows
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
20. Given an open economy with high capital mobility and floating exchange rates, suppose an expansionary fiscal policy
is implemented to combat recession. The initial and secondary effects of the policy
a.
cause aggregate demand to increase, thus strengthening the policy’s expansionary effect on real output
b.
cause aggregate demand to decrease, thus eliminating the policy’s expansionary effect on real output
c.
have conflicting effects on aggregate demand, thus weakening the policy’s expansionary effect on real output
d.
have conflicting effects on aggregate demand, thus strengthening the policy’s expansionary effect on real
output
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
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Page 9
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
21. A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:
a.
Expansionary fiscal policy
b.
Expansionary monetary policy
c.
Contractionary fiscal policy
d.
Contractionary monetary policy
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
22. A system of floating exchange rates and high capital mobility strengthens which policy in combating a recession:
a.
Expansionary fiscal policy
b.
Expansionary monetary policy
c.
Contractionary fiscal policy
d.
Contractionary monetary policy
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
23. Given an open economy with high capital mobility, all of the following statements are true except:
a.
fiscal policy is strengthened under fixed exchange rates
b.
monetary policy is weakened under fixed exchange rates
c.
monetary policy is strengthened under floating exchange rates
d.
fiscal policy is strengthened under floating exchange rates
ANSWER:
d
POINTS:
1
Copyright Cengage Learning. Powered by Cognero.
Page 10
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
24. Under a system of managed-floating exchange rates with heavy exchange rate intervention:
a.
Fiscal policy is successful in promoting internal balance, while monetary policy is unsuccessful
b.
Monetary policy is successful in promoting internal balance, while fiscal policy is unsuccessful
c.
Both fiscal policy and monetary policy are successful in promoting internal balance
d.
Neither fiscal policy nor monetary policy are successful in promoting internal balance
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
25. Given a system of floating exchange rates, an expansionary monetary policy by the Federal Reserve will cause
a.
the dollar to appreciate and will decrease U.S. net exports
b.
the dollar to appreciate and will increase U.S. net exports
c.
the dollar to depreciate and will increase U.S. net exports
d.
the dollar to depreciate and will decrease U.S. net exports
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
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Page 11
26. Given a system of floating exchange rates, a contractionary monetary policy by the Federal Reserve will cause
a.
the dollar to appreciate and will decrease U.S. net exports
b.
the dollar to appreciate and will increase U.S. net exports
c.
the dollar to depreciate and will increase U.S. net exports
d.
the dollar to depreciate and will decrease U.S. net exports
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
27. All of the following are obstacles to international economic policy coordination except:
a.
Different national objectives and institutions
b.
Different national political climates
c.
Different phases in the business cycle
d.
Different national currencies
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
International Economic Policy Coordination
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
28. Suppose a central bank prevents a depreciation of its currency by intervening in the foreign exchange market and
buying its currency with foreign currency. This causes the
a.
domestic money supply to decrease and a decline in aggregate demand
b.
domestic money supply to increase and a decline in aggregate demand
c.
domestic money supply to decrease and a rise in aggregate demand
d.
domestic money supply to increase and a rise in aggregate demand
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
Copyright Cengage Learning. Powered by Cognero.
Page 12
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
29. At the ____, the Group-of-Five nations agreed to intervene in the currency markets to promote a depreciation in the
U.S. dollar’s exchange value.
a.
Plaza Agreement of 1985
b.
Louvre Accord of 1987
c.
Bonn Summit of 1978
d.
Tokyo Summit of 1962
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Inflation With Unemployment
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
30. The Plaza Agreement of 1985 and Louvre Accord of 1987 are examples of:
a.
Tariff trade barrier formation
b.
Nontariff trade barrier formation
c.
International economic policy coordination
d.
Beggar-thy-neighbor policies
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
International Economic Policy Coordination
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
Copyright Cengage Learning. Powered by Cognero.
Page 13
Exhibit 16.1
At the Plaza Accord of 1985, the Group-of-Five nations agreed to drive the value of the dollar downward (i.e.,
depreciation) so as to help reduce the U.S. trade deficit. Answer the following question(s) on the basis of this information.
31. Refer to Exhibit 16.1. To help drive the dollar’s exchange value downward, the Federal Reserve would:
a.
Reduce taxes
b.
Increase taxes
c.
Decrease the money supply
d.
Increase the money supply
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Exhibit 16.1
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
32. Refer to Exhibit 16.1. The Federal Reserve might refuse to support the accord on the grounds that when helping to
drive the dollar’s exchange value downward, it promotes an increase in the U.S.:
a.
Rate of inflation
b.
Budget deficit
c.
Unemployment level
d.
Economic growth rate
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Exhibit 16.1
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
33. Under a fixed exchange-rate system and high capital mobility, an expansion in the domestic money supply leads to:
a.
Trade-account deficit and a capital-account surplus
Copyright Cengage Learning. Powered by Cognero.
Page 14
b.
Trade-account deficit and a capital-account deficit
c.
Trade-account surplus and a capital-account surplus
d.
Trade-account surplus and a capital-account deficit
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Macroeconomic Stability and the Current Account: Policy Agreement vs Policy Conflict
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
34. Under a fixed exchange-rate system and high capital mobility, a contraction in the domestic money supply leads to a:
a.
Trade-account deficit and a capital-account surplus
b.
Trade-account deficit and a capital-account deficit
c.
Trade-account surplus and a capital-account surplus
d.
Trade-account surplus and a capital-account deficit
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Monetary and Fiscal Policy in an Open Economy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:27 PM
DATE MODIFIED:
6/22/2016 3:27 PM
35. Under a fixed exchange-rate system and high capital mobility, an expansionary fiscal policy leads to a:
a.
Trade-account deficit and a capital-account surplus
b.
Trade-account deficit and a capital-account deficit
c.
Trade-account surplus and a capital-account surplus
d.
Trade-account surplus and a capital-account deficit
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic