Which of the following is true? If a central bank runs out of reserve assets, then:
a. Actually, it is impossible for a nation to run out of reserve assets because the central bank could always print more money to increase it.
b. It cannot intervene in the foreign exchange market to raise the value of the nation's currency.
c. It must fix its exchange rate to a strong currency because the central bank can no longer allow the currency to fluctuate.
d. The central bank must borrow from its Treasury to increase the nation's reserve assets.
e. It cannot intervene in the foreign exchange market to lower the value of the nation's currency.
Question 2 - The U.S. outsourcing debate reminds us that:
a. International trade is a zero-sum game.
b. Outsourcing provides few, if any, benefits to the nation from which outsourcing occurs.
c. Outsourcing is a way for companies to transform fixed costs into variable costs.
d. All of these statements are correct.
Question 3 - Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, what effect would these flows have had on Venezuela's overall balance and reserves account?
a. Overall balance would rise and reserves account would fall.
b. Overall balance and reserves account would both equal zero.
c. Overall balance would fall and reserves account would equal zero.
d. Overall balance would equal zero and reserves account would fall.
e. Overall balance would fall and reserves account would rise.
Question 4 - Sarah Jones works 10 hours a week, but she would like to work a full workweek. Sarah is considered to be:
a. Employed.
b. Unemployed.
c. Not part of the workforce.
d. Employed but not part of the workforce.
e. None of the above.
Question 5 - Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had fixed exchange rates, what effect would these flows have had on Venezuela's overall balance and reserves account?
a. Overall balance would rise and reserves account would fall.
b. Overall balance would not change and reserves account would fall.
c. Overall balance would fall and reserves account would rise.
d. Overall balance would fall and reserves account would fall.
e. Overall balance would fall and reserves account would rise.
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