the economics of money, banking, and financial markets

623 #

© 2014 Pearson Canada Inc.#

55. 
    

    Under the Exchange Rate Mechanism of the European Monetary System, when the German
    mark depreciated below its lower limit against the British pound, the German central bank was
    required to buy ____ and sell ____, thereby ____ international reserves.
    A) pounds; marks; losing
    B) pounds; marks; gaining
    C) marks; pounds; gaining
    D) marks; pounds; losing
    Answer: D
    Diff: 2 Type: MC Page Ref: 505
    Skill: Recall
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


56. 
    

    In September 1992, the Bundesbank attempted to keep the mark from appreciating relative to
    the British pound, but it failed because participants in the foreign exchange market came to
    expect the ____.
    A) appreciation of the mark
    B) depreciation of the mark
    C) revaluation of the dollar
    D) end of the Exchange Rate Mechanism
    Answer: A
    Diff: 2 Type: MC Page Ref: 505 - 506
    Skill: Applied
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


57. 
    

    The East Asia currency crisis in 1997 started in ____.
    A) Japan
    B) Thailand
    C) South Korea
    D) the Philippines
    Answer: B
    Diff: 2 Type: MC Page Ref: 507
    Skill: Applied
    Objective List: 20.3 Summarize the arguments for and against capital controls

    
    


58. 
    

    Between May and July 1997, concerns about the large current account deficit in Thailand
    and the weakness in the Thai financial system caused speculators to suspect that Thailand might
    be forced to ____.
    A) devalue its currency
    B) sell baht to prop up its value
    C) buy dollars to prop up the baht
    D) impose capital controls
    Answer: A
    Diff: 2 Type: MC Page Ref: 507 - 508
    Skill: Applied
    Objective List: 20.3 Summarize the arguments for and against capital controls