9) Based on the premise that, other things equal, countries would prefer a fixed exchange rate,...

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Finance

9) Based on the premise that, other things equal, countrieswould prefer a fixed exchange rate, which of the followingstatements is NOT true?
A) Fixed rates provide stability in international prices for theconduct of trade.
B) Fixed exchange rate regimes necessitate that central banksmaintain large quantities of international reserves for use in theoccasional defense of the fixed rate.
C) Fixed rates are inherently inflationary in that they requirethe country to follow loose monetary and fiscal policies.
D) Stable prices aid in the growth of international trade andlessen exchange rate risks for businesses.
10) According to the terminology associated with changes incurrency values, which of the following choices is the case when acurrency's value relative to other currencies is changed by agovernment?
A) depreciation and revaluation
B) devaluation and appreciation
C) devaluation and revaluation
D) depreciation and appreciation
11) The "Impossible Trinity" is defined as the inability toachieve simultaneously the goals of exchange rate stability, fullfinancial integration, and monetary independence. If a countrychooses to have a pure float exchange rate regime, which two of thethree goals is a country most able to achieve?
A) monetary independence and exchange rate stability
B) exchange rate stability and full financial integration
C) full financial integration and monetary independence
D) A country cannot attain any of the exchange rate goals with apure float exchange rate regime.
12) What is the single most important mandate of the EuropeanCentral Bank?
A) Promote international trade for countries within the EuropeanUnion.
B) Price, in euros, all products for sale in the EuropeanUnion.
C) Promote price stability within the European Union.
D) Establish an EMU trade surplus with the United States.

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4.5 Ratings (985 Votes)

Answer 9 C Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies is correct Explanation The statement C is not true because Fixed rates are inherently inflationary in that they require the country to follow restrictive monetary and fiscal policiesThis restriction can be a See Answer

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9) Based on the premise that, other things equal, countrieswould prefer a fixed exchange rate, which of the followingstatements is NOT true?A) Fixed rates provide stability in international prices for theconduct of trade.B) Fixed exchange rate regimes necessitate that central banksmaintain large quantities of international reserves for use in theoccasional defense of the fixed rate.C) Fixed rates are inherently inflationary in that they requirethe country to follow loose monetary and fiscal policies.D) Stable prices aid in the growth of international trade andlessen exchange rate risks for businesses.10) According to the terminology associated with changes incurrency values, which of the following choices is the case when acurrency's value relative to other currencies is changed by agovernment?A) depreciation and revaluationB) devaluation and appreciationC) devaluation and revaluationD) depreciation and appreciation11) The "Impossible Trinity" is defined as the inability toachieve simultaneously the goals of exchange rate stability, fullfinancial integration, and monetary independence. If a countrychooses to have a pure float exchange rate regime, which two of thethree goals is a country most able to achieve?A) monetary independence and exchange rate stabilityB) exchange rate stability and full financial integrationC) full financial integration and monetary independenceD) A country cannot attain any of the exchange rate goals with apure float exchange rate regime.12) What is the single most important mandate of the EuropeanCentral Bank?A) Promote international trade for countries within the EuropeanUnion.B) Price, in euros, all products for sale in the EuropeanUnion.C) Promote price stability within the European Union.D) Establish an EMU trade surplus with the United States.