MCQs of Economics - Exchange-Rate Systems And Currency Crises – Multiple Choice Question

Question 1 of 10

1. Question

The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is:

freely fluctuating exchange rates
adjustable pegged exchange rates
managed floating exchange rates
pegged or fixed exchange rates

Question 2 of 10

2. Question

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?

dual exchange rates
managed floating exchange rates
adjustable pegged exchange rates
crawling pegged exchange rates

Question 3 of 10

3. Question

Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium?

dual exchange rate
adjustable pegged exchange rates
managed floating exchange rates
crawling pegged exchange rates

Question 4 of 10

4. Question

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:

appreciate against foreign currencies
depreciate against foreign currencies
be officially revalued by the government
be officially devalued by the government

Question 5 of 10

5. Question

Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners:

U.S exports tend to rise and imports tend to fall
U.S imports tend to rise and exports tend to fall
U.S foreign exchange reserves tend to rise
U.S foreign exchange reserves remain constant

Question 6 of 10

6. Question

Under a pegged exchange rate system which does not explain why a country would have a balance of payments deficit?

very high rates of inflation occur domestically
foreigners discriminate against domestic products
technological advance is superior abroad
the domestic currency is undervalued relative to other currencies

Question 7 of 10

7. Question

Which exchange rate system does not require monetary reserves for official exchange rate intervention?

floating exchange rates
pegged exchanged rates
managed floating exchange rates
dual exchange rates

Question 8 of 10

8. Question

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize

pegged exchange rates
freely floating exchange rates
managed floating exchanged rates
crawling exchange rates

Question 9 of 10

9. Question

Small nations with more than one major trading partner tend to peg the value of their currencies to:

gold
silver
a single currency
a basket of currencies

Question 10 of 10

10. Question

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?

pegged of fixed exchange rates
adjustable pegged exchange rates
managed floating exchange rates
free floating exchange rates

MCQs of Economics – Exchange-Rate Systems And Currency Crises

Economics - Exchange-Rate Systems And Currency Crises

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