018StudyGuideQuestions

018StudyGuideQuestions - Study Guide Questions on Review...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Study Guide Questions on Review Material for Commentary on Chapter 18 SG1. According to the Commentary, if we view the world as an ideal market system, then in terms of fixed or flexible exchange rates: a. A flexible exchange rate regime would be better, since ideal markets are all about flexibility; b. A fixed exchange rate regime would be better, since orderliness and predictability is crucial to establishing property rights; c. We would automatically have a single global currency; d. It would not matter much, since choice of exchange rate regime becomes important largely in a less-than-ideal world. Answer: d. SG2. According to the Commentary, an ideal world for flexible exchange rates would seem to require: a. Uniform inflation rates across countries; b. Purchasing Power Parity to hold; c. Both (a) and (b); d. None of the above, since an ideal world has no prerequisites for the exchange rate environment. Answer: b. SG3. According to the Commentary, the least-coordinated form of exchange rate is, in the actual world, a: a. Pure flexible or floating exchange rate; b. Pure fixed exchange rate; c. Single world money; d. Operating under a worldwide entity such as the International Monetary Fund. Answer: a. SG4. According to the Commentary, if Purchasing Power Parity held at all points of time in a floating, or flexible, exchange rate regime then we’d predict that: a. All countries in the world would experience the same rate of inflation; b. Money would be neutral between countries, thus having no real effects at that level; c. Both (a) and (b); d. None of the above. Answer: b. SG5. According to the Commentary, if Purchasing Power parity holds then: a. Each country can experience its own rate of inflation; b. Money is neutral across countries, with no real effects at that level; c. Exchange rates adjust to exactly offset inflation differentials between countries; d. All of the above. Answer: d.
Background image of page 1

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

View Full DocumentRight Arrow Icon
SG6. According to the Commentary, Purchasing Power Parity is best described empirically as holding extremely well: a. In all possible environments and for all possible time periods; b. Between developed countries, such as the U.S. and the Eurozone; c. In cases of where there are strong and sustained international capital flows;
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

018StudyGuideQuestions - Study Guide Questions on Review...

This preview shows document pages 1 - 3. Sign up to view the full document.

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