Equilibrium in the foreign exchange market occurs:

Equilibrium in the foreign exchange market occurs:
 a. at the point where the foreign exchange demand and supply curves intersect.
  b. at the point where the foreign exchange demand and supply curves reach maximum separation.
  c. when two nations' economic leaders agree on the appropriate exchange rate.
  d. when two nations' diplomatic leaders agree on an exchange rate that meets both countries' needs.
  e. only by chance, if at all, because they change very frequently.

Question 2

If there is a surplus of euros at the current exchange rate, the exchange value of euros will tend to fall.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 3

The self-interest assumption is central to the analysis of behavior in both private and public sectors.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 4

Which of the following exchange rate systems have a legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate?
 a. Gold standard
  b. Gold exchange standard
  c. Crawling band
  d. Horizontal band
  e. Currency board

Question 5

The supply of foreign currencies is upward sloping and the demand for foreign currencies is downward sloping.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 6

When decisions are made by majority rule, the individual consumption-payment link is broken.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 7

Under the _____ arrangement, the exchange rate is adjusted periodically by small amounts at a fixed, pre-announced rate or in response to certain indicators.
 a. currency board
  b. crawling peg
  c. reserve currency
  d. conventional fixed peg
  e. independent float

Question 8

Margaret, who lives in Des Moines, has been saving for years in order to take a trip to England this summer. She would be happy if the dollar suddenly depreciates in value against the pound.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 9

The median voter model predicts a strong tendency for both candidates to choose a position away from the middle of distribution.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 10

When the exchange rate fluctuates around a fixed central target, allowing for a moderate amount of fluctuation, while tying the currency to the target central rate, the exchange rate is under:
 a. a horizontal band.
  b. a crawling peg.
  c. a managed float.
  d. an independent float.
  e. a currency board.

Question 11

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 12

The motivation for an individual citizen to spend the necessary time and effort to resist an interest group is minimal, even if she had a guarantee that this resistance would be effective.
 a. True
  b. False
  Indicate whether the statement is true or false