Assume that a country's government influences the exchange rate through active central bank intervention, with no pre-announced path. This policy is known as a(n):
a. floating exchange-rate policy.
b. managed floating exchange-rate policy.
c. fixed exchange-rate policy.
d. crawling-peg exchange-rate policy.
e. interventionist exchange-rate policy.
Question 2The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.
a. True
b. False
Indicate whether the statement is true or false
Question 3The idea of rational ignorance implies that people are fully informed about their market purchases but uninformed about political issues.
a. True
b. False
Indicate whether the statement is true or false
Question 4What is a currency board?
a. A fixed exchange rate that, by law, exchanges domestic currency for a specified foreign currency at a fixed exchange rate.
b. A floating exchange rate.
c. A managed floating exchange-rate policy that the government adjusts periodically according to some economic indicator.
d. A laissez-faire exchange-rate policy.
e. An interventionist exchange-rate policy.
Question 5The dollar appreciates when U.S. demands for foreign currencies decrease.
a. True
b. False
Indicate whether the statement is true or false
Question 6When you add payroll taxes and Medicare, the tax system becomes more progressive than when we solely consider the federal income tax.
a. True
b. False
Indicate whether the statement is true or false
Question 7The IMF mostly receives its funds from:
a. the subscription fees paid by the member nations.
b. selling of bonds.
c. the loans given by the World Bank.
d. the central banks of the major industrialized nations.
e. the gold reserves available with the Fed.
Question 8The demand for foreign currency is derived from the demand for that country's goods and services.
a. True
b. False
Indicate whether the statement is true or false
Question 9The benefits received principle means those with the least ability to pay should be the ones to receive the benefits.
a. True
b. False
Indicate whether the statement is true or false
Question 10The primary function of the World Bank is to:
a. lend money to the World Trade Organization.
b. provide loans to countries experiencing huge budget deficit.
c. finance economic development in poor countries.
d. assist countries experiencing balance of payments deficits.
e. finance the fiscal stabilization program of the U.S. government.
Question 11A foreigner buying U.S. goods must buy dollars to purchase them.
a. True
b. False
Indicate whether the statement is true or false
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