MCQOPTIONS
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MCQOPTIONS
This section includes 10 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Small nations whose trade and financial relationships are mainly with a single partner tend to utilize ? |
| A. | pegged exchange rates |
| B. | freely floating exchange rates |
| C. | managed floating exchange rates |
| D. | crawling exchange rates |
| Answer» B. freely floating exchange rates | |
| 2. |
Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ? |
| A. | appreciates against foreign currencies |
| B. | depreciates against foreign currencies |
| C. | be officially revalued by the government |
| D. | be officially devalued by the government |
| Answer» B. depreciates against foreign currencies | |
| 3. |
Under a pegged exchange rate system which does not explain why a country would have a balance of payments deficit ? |
| A. | very high rates of inflation occur domestically |
| B. | foreigners discriminate against domestic products |
| C. | technological advance is superior abroad |
| D. | the domestic currency is undervalued relative to other currencies |
| Answer» E. | |
| 4. |
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 |
| Answer» B. managed floating exchange rates | |
| 5. |
Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners ? |
| A. | U.S exports tend to rise, and imports tend to fall |
| B. | U.S imports tend to rise, and exports tend to fall |
| C. | U.S foreign exchange reserves tend to rise |
| D. | U.S foreign exchange reserves remain constant |
| Answer» C. U.S foreign exchange reserves tend to rise | |
| 6. |
Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium ? |
| A. | dual exchange rate |
| B. | adjustable pegged exchange rates |
| C. | managed floating exchange rates |
| D. | crawling pegged exchange rates |
| Answer» E. | |
| 7. |
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 |
| Answer» B. pegged exchanged rates | |
| 8. |
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 |
| Answer» C. managed floating exchange rates | |
| 9. |
Small nations with more than one major trading partner tend to peg the value of their currencies to ? |
| A. | gold |
| B. | silver |
| C. | a single currency |
| D. | a basket of currencies |
| Answer» E. | |
| 10. |
The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is ? |
| A. | freely fluctuating exchange rates |
| B. | adjustable pegged exchange rates |
| C. | managed floating exchange rates |
| D. | pegged or fixed exchange rates |
| Answer» D. pegged or fixed exchange rates | |