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© 2014 Pearson Canada Inc.#
Policymakers in a country with a balance of payments surplus may not want to see their
country's currency appreciate because this would ____.
A) hurt consumers in their country by making foreign goods more expensive
B) hurt domestic businesses by making foreign goods cheaper in their country
C) increase inflation in their country
D) decrease the wealth of the country
Answer: B
Diff: 2 Type: MC Page Ref: 504
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Under the current managed float exchange rate regime, countries with balance of payments
deficits frequently do not want to see their currencies depreciate because it makes ____
goods more expensive for ____ consumers and can stimulate inflation.
A) foreign; foreign
B) foreign; domestic
C) domestic; foreign
D) domestic; domestic
Answer: B
Diff: 2 Type: MC Page Ref: 504
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Countries with surpluses in their balance of payments frequently do not want to see their
currencies ____ because it makes their goods ____ expensive abroad.
A) appreciate; less
B) appreciate; more
C) depreciate; less
D) depreciate; more
Answer: B
Diff: 2 Type: MC Page Ref: 504
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls
Countries with balance of payments deficits do not want to see their currencies ____
because it makes foreign goods ____ expensive for domestic consumers.
A) appreciate; less
B) appreciate; more
C) depreciate; less
D) depreciate; more
Answer: D
Diff: 2 Type: MC Page Ref: 504
Skill: Recall
Objective List: 20.3 Summarize the arguments for and against capital controls