Sample questions for exam 2

Sample questions for exam 2 - Sample questions for exam 2 1...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Sample questions for exam 2 1. According to the video “The Crash” a major cause of financial crises was that: a. Small countries pegged their currencies to the US$ in order to encourage foreign investors. Easy credit in the US gave speculators like George Soros more money with which to speculate against foreign currencies. b. After the US lost a lot of money propping up the Mexican Peso when that country had a crisis, the US would not intervene to help other countries facing crisis. c. Both b and c are correct. d. None of the above was mentioned as a cause of international crises. 2. If a country with a relatively high inflation rate maintains a pegged exchange rate against the currency of a relatively low inflation country, very quickly the country will find: a. Its exports become less competitive on world markets. b. Its currency will depreciate. c. Its exports become more competitive on world markets. d. Its currency will sell at a discount. 3. A floating exchange rate has the advantage of : a. Not obligating a country to belong to the IMF. b. Allowing a country to follow monetary and fiscal policies without worrying about their effect on the balance of payments. c. Restraining the government from following inflationary policies. d. None of the above are advantages of floating exchange rates. 4. Pressures in the foreign exchange rate market are such as to cause the British pound to depreciate with respect to the U.S. dollar. The British government can only intervene in the foreign exchange market to maintain a fixed exchange rate with respect to the U.S. dollar for a limited period of time because:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/05/2010 for the course ECONOMICS ecn 306 taught by Professor Brada during the Spring '10 term at ASU.

Page1 / 3

Sample questions for exam 2 - Sample questions for exam 2 1...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online