ch14 - Financial Markets and Institutions, 6e...

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Unformatted text preview: Financial Markets and Institutions, 6e (Mishkin/Eakins) Chapter 14 1 The Internationa l Financial System 14.1 Multi ple Choi ce 1) A central bank sale of _________ to purchase _________ in the foreign exchange market results in an equal rise in its international reserves and the monetary base. A) foreign assets; domestic currency B) foreign assets; foreign currency C) domestic currency; foreign assets D) domestic currency; domestic currency Answer: C Question Status: Previous Edition 2) A central bank sale of _________ to purchase _________ in the foreign exchange market results in an equal decline in its international reserves and the monetary base. A) foreign assets; domestic currency B) foreign assets; foreign currency C) domestic currency; foreign assets D) domestic currency; domestic currency Answer: A Question Status: Previous Edition 3) A central bank _________ of domestic currency and corresponding _________ of foreign assets in the foreign exchange market leads to an equal _________ in its international reserves and the monetary base. A) sale; purchase; decline B) sale; sale; increase C) purchase; sale; increase D) purchase; sale; decline Answer: D Question Status: Previous Edition 4) A central bank _________ of domestic currency and corresponding _________ of foreign assets in the foreign exchange market leads to an equal _________ in its international reserves and the monetary base. A) sale; purchase; increase B) sale; sale; decline C) purchase; sale; increase D) purchase; purchase; decline Answer: A Question Status: Previous Edition 5) When the central bank allows the purchase or sale of domestic currency to have an effect on the monetary base, it is called A) a sterilized foreign exchange intervention. B) an unsterilized foreign exchange intervention. C) an exchange rate feedback rule. D) a money neutral foreign exchange intervention. Answer: B Question Status: Previous Edition 6) A foreign exchange intervention with an offsetting open market operation that leaves the monetary base unchanged is called A) an unsterilized foreign exchange intervention. B) a sterilized foreign exchange intervention. C) an exchange rate feedback rule. D) a money neutral foreign exchange intervention. Answer: B Question Status: Previous Edition 7) An unsterilized intervention in which domestic currency is sold to purchase foreign assets leads to A) a gain in international reserves. B) an increase in the money supply. C) an appreciation in the domestic currency. D) all of the above. E) only A and B of the above. Answer: E Question Status: Previous Edition 8) An...
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This note was uploaded on 10/17/2011 for the course ECON 317 taught by Professor Guidry during the Spring '11 term at Nicholls State.

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ch14 - Financial Markets and Institutions, 6e...

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