We argued that the e asian and russian crises would

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17.We argued that the E. Asian and Russian crises would map to our foreign exchange market analysis as a decrease in the supply of dollars resulting in a stronger US dollar.A) TrueB) FalseCorrect Answer(s):False
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18.During the Reagan Administration, the current account became a major economic issue. In particular, the US began running a large current account surplus where US exports were much larger than US imports.
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19.Export oriented countries prefer a weaker currency relative to a stronger currency.
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20.If there is pressure for the Chinese yuan to appreciate against the US dollar, then China can 'fight' this appreciation by buying $ with their yuan.
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21.We argued that one reason that interest rates are low on government securities is due to China's exchange rate regime.A) TrueB) FalseCorrect Answer(s):True
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22.Monetary policy is thought to be stronger in an open economy relative to a closed economy since if the Fed, forexample, wanted to prevent the economy from overheating, they would raise interest rates. Along with the normal closed economy impact on consumption and investment, we also would have a stronger dollar which would lower net exports, adding to the power of monetary policy.
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23.One reason fiscal policy is thought to be stronger in an open economy relative to a closed economy is due to the fact that in an open economy setting, the change in the interest rate effects the exchange rate and thus, adds power to fiscal policy through this exchange rate channel.
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24.A rush to the safe haven of $ US during a financial crisis is depicted in the supply/demand model in the $ US market as an increase in the demand to exchange foreign currencies in for $. The end result should be $ US appreciation, all else constant.
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25.We argued that the $ US was appreciating in the early years of the Reagan Administration due to the expansionary fiscal policy during this time.A) TrueB) FalseCorrect Answer(s):True
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26.When people refer to the twin deficits in the US they are most likely referring to the new economy years since this was the time twin deficits occurred in the US economy.
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