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1、Financial Markets and Institutions, 6e (Mishkin/Eakins)Chapter 14 The International Financial System14.1 Multiple Choice1) A central bank sale of to purchase in the foreign exchange marketresults in an equal rise in its international reserves and the monetary base.A) foreign assets; domestic currenc
2、yB) foreign assets; foreign currencyC) domestic currency; foreign assetsD) domestic currency; domestic currencyAnswer: CQuestion Status: Previous Edition2) A central bank sale of to purchase in the foreign exchange marketresults in an equal decline in its international reserves and the monetary base
3、.A) foreign assets; domestic currencyB) foreign assets; foreign currencyC) domestic currency; foreign assetsD) domestic currency; domestic currencyAnswer: AQuestion Status: Previous Edition3) A central bank of domestic currency and corresponding of foreignassets in the foreign exchange market leads
4、to an equal in its internationalreserves and the monetary base.A) sale; purchase; declineB) sale; sale; increaseC) purchase; sale; increaseD) purchase; sale; declineAnswer: DQuestion Status: Previous Edition4) A central bank of domestic currency and corresponding of foreignassets in the foreign exch
5、ange market leads to an equal in its internationalreserves and the monetary base.A) sale; purchase; increaseB) sale; sale; declineC) purchase; sale; increaseD) purchase; purchase; declineAnswer: AQuestion Status: Previous Edition43) Leading up to the foreign exchange crisis of September 1992, the Ba
6、nk of England wanted to pursue a(n)monetary policy and the German Bundesbank wanted to pursue a(n) monetary policy.A) expansionary, expansionaryB) expansionary; contractionaryC) contractionary; expansionaryD) contractionary; contractionaryAnswer: BQuestion Status: Previous Edition44) When the Bundes
7、bank lowered German mark interest rates in September 1992,A) there was a massive sell-off of German marks, requiring intervention to support the value of the mark.B) there was a massive sell-off of British pounds, requiring intervention to support the value of the pound.C) there was a gradual sell-o
8、ff of German marks, which avoided the need for intervention to support the value of the mark.D) there was a gradual sell-off of British pounds, which avoided the need for intervention to support the value of the pound.Answer: BQuestion Status: Previous Edition45) In September 1992, the Bundesbank at
9、tempted to keep the mark from appreciating relative to the British pound, but it failed because participants in the foreign exchange market came to expect theA) appreciation of the mark.B) depreciation of the mark.C) revaluation of the dollar.D) the end of the Exchange Rate Mechanism.Answer: AQuesti
10、on Status: Previous Edition46) Under the Bretton Woods system, when a nonreserve-currency country was running a balance of payments deficit,A) it gained international reserves.B) it lost international reserves.C) it was necessary for the policymakers to implement a contractionary monetary policy.D)
11、both A and C of the above.E) both B and C of the above.Answer: EQuestion Status: Previous Edition47) Under a fixed exchange rate system,A) an anchor country loses control over its monetary policy.B) a country that ties its currency to that of another country gains control of the other countrys monet
12、ary policy.C) a country that ties its currency to that of another country loses control over its monetary policy.D) a country that ties its currency to that of another country acquires greater control over its monetary policy.Answer: CQuestion Status: Previous Edition48) The euro is unlikely to seri
13、ously challenge the dollar as a reserve currency as long asA) the European Unions share of world GDP remains significantly smaller than that of the United States.B) the European Unions share of world exports remains significantly smaller than that of the United States.C) Europe neglects to integrate
14、 its financial markets.D) the European Union is unable to function as a cohesive political entity.Answer: DQuestion Status: Previous Edition49) Under dollarization a countryA) backs its currency 100 percent with foreign reserves.B) earns seignorage because it no longer bears the cost of issuing its
15、own currency.C) abandons its own currency and adopts the money of another country.D) must worry about a speculative attack on its currency.Answer: CQuestion Status: Previous Edition50) A disadvantage of dollarization is that itA) prevents a central bank from creating inflation.B) avoids the possibil
16、ity of a speculative attack on the domestic currency.C) does not allow a country to pursue its own independent monetary policy.D) is a strong commitment to exchange rate stability.Answer: CQuestion Status: Previous Edition51) (I) Controls on capital outflows may increase capital flight by weakening
17、confidence in the government. (II) Controls on capital outflows are an inadequate substitute for financial reform to deal with currency crises.A) (I) is true; (II) false.B) (I) is false; (II) true.C) Both are true.D) Both are false.Answer: CQuestion Status: Previous Edition52) The most effective way
18、 to deal with currency crises is toA) impose controls on capital inflows.B) impose controls on capital outflows.C) impose controls on both capital inflows and outflows.D) improve bank regulation and supervision.Answer: DQuestion Status: Previous Edition53) An argument that supports the view that the
19、 world needs an international lender of last resort such as the IMF is thatA) central banks in emerging-market countries lack credibility as inflation fighters.B) an international lender of last resort creates a safety net that protects bank depositors.C) the IMF is slow to lend, which ultimately re
20、duces the amount that must be borrowed.D) the IMF imposes requirements that borrowing countries must enact microeconomic policies to reform their financial systems.Answer: AQuestion Status: Previous Edition54) In the balance of payments bookkeeping system, payments from foreigners to Americans are e
21、ntered in theA) Receipts1 column with a plus (+) sign to reflect that they are credits.B) Receipts1 column with a minus (-) sign to reflect that they are debits.C) Payments column with a minus (-) sign to reflect that they are debits.D) “Payments” column with a plus (+) sign to reflect that they are
22、 credits.Answer: AQuestion Status: Previous Edition55) In the balance of payments bookkeeping system, all payments to foreigners are entered in theA) Receipts1 column with a plus (+) sign to reflect that they are credits.B) Receipts column with a minus (-) sign to reflect that they are debits.C) Pay
23、ments column with a minus (-) sign to reflect that they are debits.D) Payments column with a plus (+) sign to reflect that they are credits.Answer: CQuestion Status: Previous Edition56) Which of the following appear as credits in the U.S. balance of payments?A) Capital outflowsB) Foreign aidC) Merch
24、andise exportsD) All of the aboveAnswer: CQuestion Status: Previous Edition57) Which of the following appear as debits in the U.S. balance of payments?A) Capital inflowsB) Merchandise and service exportsC) Foreign aidD) All of the aboveAnswer: CQuestion Status: Previous Edition58) In the balance of
25、payments accounting system, the sale of Dell computers abroad are entered in the column with a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) payments; positiveAnswer: BQuestion Status: Previous Edition59) In the balance of payments accounting system, American purchases of BM
26、W automobiles from Germany are entered in the column with a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) payments; positiveAnswer: CQuestion Status: Previous Edition60) In the balance of payments accounting system, American gifts to foreigners are entered in the column with
27、 a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) payments; positiveAnswer: CQuestion Status: Previous Edition61) In the balance of payments accounting system, foreign aid is entered in the column with a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) p
28、ayments; positiveAnswer: CQuestion Status: Previous Edition62) In the balance of payments accounting system, capital inflows are entered in the column with a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) payments; positiveAnswer: BQuestion Status: Previous Edition63) In the
29、balance of payments accounting system, capital outflows are entered in the column with a sign.A) receipts; negativeB) receipts; positiveC) payments; negativeD) payments; positiveAnswer: CQuestion Status: Previous Edition64) An examination of the U.S. balance of payments indicates that the current ac
30、count balance canA) show a surplus only if the trade balance shows a surplus.B) show a deficit only if the trade balance shows a deficit.C) show a deficit even if the trade balance shows a surplus.D) only A and B of the above.Answer: CQuestion Status: Previous Edition65) Financial analysts closely f
31、ollow the current account balance because they believe it can provide information on the future movement ofA) interest rates.B) gold flows.C) exchange rates.D) special drawing rights.Answer: CQuestion Status: Previous Edition66) The capital account describes the flow of capital between the United St
32、ates and other countries. Capital inflows areA) American purchases of foreign assets.B) foreign purchases of American assets.C) both A and B of the above.D) neither (a) nor (b) of the above.Answer: BQuestion Status: Previous Edition67) Which of the following appears in the capital account part of th
33、e balance of payments?A) A gift to an American from his English auntB) A purchase by the Honda corporation of a U.S. Treasury billC) A purchase by the Bank of England of a U.S. Treasury billD) Income earned by the Honda corporation on its automobile plant in OhioAnswer: BQuestion Status: Previous Ed
34、ition68) Given the size of the statistical discrepancy needed to balance the balance of payments account, one can infer thatA) hidden capital flows into the U.S. are inconsequential.B) items in the balance of payments are measured quite accurately.C) many international transactions go unrecorded.D)
35、all of the above.Answer: CQuestion Status: Previous Edition69) Many believe that the statistical discrepancy is primarily the result ofA) large hidden capital flows into the United States.B) large hidden capital flows out of the United States.C) measurement errors due to exchange rate calculations.D
36、) none of the above.Answer: AQuestion Status: Previous Edition70) A balance of payments is associated with a of international reserves.A) deficit; lossB) deficit; gainC) surplus; lossD) balance; gainAnswer: AQuestion Status: Previous Edition71) A balance of payments is associated with a of internati
37、onal reserves.A) surplus; lossB) surplus; gainC) deficit; gainD) balance; lossAnswer: BQuestion Status: Previous Edition72) The official reserve transactions balanceA) equals the current account balance plus the items in the capital account.B) tells us the net amount of international reserves that m
38、ust move between central banks in order to finance international transactions.C) has an important impact on the money supply.D) all of the above.Answer: DQuestion Status: Previous Edition73) Because other countries hold dollars as international reserves, a U.S. official reserve transactions deficit
39、can be financed byA) an increase in U.S. international reserves.B) an increase in foreign holdings of dollars.C) a decrease in foreign holdings of dollars.D) only A and B of the above.Answer: BQuestion Status: Previous Edition74) When a reserve currency country runs a balance of payments deficit and
40、 a nonreserve currency country buys the reserve currency to finance the reserve countrys deficits, themonetary base in the nonreserve countrycountryA) increases; decreases.B) increases; does not change.C) decreases; does not change.D) decreases; increases.Answer: BQuestion Status: Previous Editionan
41、d the monetary base in the reserve75)is when the domestic currency is backed 100% by a foreign currency and in which the note-issuing authority establishes a fixed exchange rate to this foreign currency and stands ready to exchange domestic currency for the foreign currency at this rate whenever the
42、 public requests it.A) DollarizationB) Currency boardC) DevaluationD) RevaluationAnswer: BQuestion Status: New76) What shows international transactions that involve currently produced goods and services?A) Current accountB) Balance of paymentsC) Trade balanceD) Capital AccountAnswer: AQuestion Statu
43、s: New77) What is the bookkeeping system for recording all receipts and payments that have a direct bearing on the movement for funds between a nation and foreign countries?A) Current AccountB) Capital AccountC) Balance of paymentsD) Trade balanceAnswer: CQuestion Status: New78) The o仔icial reserve
44、transactions balance is referred to asA) the capital account.B) the current account.C) the trade balance.D) net change in government international reserves.Answer: DQuestion Status: New79) A dirty float isA) when the value of a currency is pegged relative to the value of one other currency.B) when t
45、he value of a currency is allowed to fluctuate against all other currencies.C) when countries intervene in foreign exchange markets in an attempt to influence their exchange rates by buying and selling foreign assets.D) when the value of a currency is pegged relative to an anchor currency.Answer: CQ
46、uestion Status: New80) Seigniorage isA) when a country abandons its currency altogether and adopts that of another country.B) when a country loses the revenue that it received by issuing money.C) when the par exchange rate is reset at a lower level.D) when the domestic currency is backed 100% by a f
47、oreign currency.Answer: BQuestion Status: New14.2 True/False1) An unsterilized intervention in which domestic currency is sold to purchase foreign assets leads to a gain in international reserves.Answer: TRUEQuestion Status: Previous Edition2) The deference between merchandise exports and imports is called the current account balance.Answer: FALSEQuestion Status: Previous Edition3) The current account balance plus the capital account balance equals the net change in government international reserves.Answer: TRUEQuestion Status: Previous E