the economics of money, banking, and financial markets

613 #

© 2014 Pearson Canada Inc.#

16. 
    

    Under a fixed exchange rate regime, if a country has an ____ exchange rate, then its
    central bank's attempt to keep its currency from depreciating will result in a ____ of
    international reserves.
    A) undervalued; gain
    B) undervalued; loss
    C) overvalued; gain
    D) overvalued; loss
    Answer: D
    Diff: 2 Type: MC Page Ref: 527 - 528
    Skill: Recall
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


17. 
    

    Under a fixed exchange rate regime, if a country has an undervalued exchange rate, then its
    central bank's attempt to keep its currency from ____ will result in a ____ of
    international reserves.
    A) depreciating; gain
    B) depreciating; loss
    C) appreciating; gain
    D) appreciating; loss
    Answer: C
    Diff: 2 Type: MC Page Ref: 527 - 528
    Skill: Recall
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


18. 
    

    Under a fixed exchange rate regime, if a country has an ____ exchange rate, then its
    central bank's attempt to keep its currency from appreciating will result in a ____ of
    international reserves.
    A) undervalued; gain
    B) undervalued; loss
    C) overvalued; gain
    D) overvalued; loss
    Answer: A
    Diff: 2 Type: MC Page Ref: 527 - 528
    Skill: Recall
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


19. 
    

    Under a fixed exchange rate regime, if a country's central bank runs out of international
    reserves, it cannot keep its currency from ____.
    A) depreciating
    B) appreciating
    C) deflating
    D) inflating
    Answer: A
    Diff: 2 Type: MC Page Ref: 527 - 528
    Skill: Recall
    Objective List: 20.3 Summarize the arguments for and against capital controls