Home / Questions / Which of the following best describes a rate where selective government intervention works
Which of the following best describes a rate where selective government intervention works hand-in-hand, allowing markets the freedom to work themselves out?
a.Free float rate
b.Fixed rate
c.Dirty float rate
d.Target exchange rate
12._____ have specified upper or lower bounds within which the exchange rate is allowed to fluctuate.
a.Fixed exchange rates
b.Target exchange rates
c.Free float exchange rates
d.Dirty float exchange rates
13.The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____.
a.managed float rate policy
b.floating rate policy
c.target exchange rate policy
d.fixed exchange rate policy
14.Which of the following characterizes the peg policy in foreign exchange rates?
a.It links a developed country’s currency to the gold standard.
b.It stabilizes the import and export prices for developing countries.
c.It is a type of floating exchange rate policy.
d.It is primarily used by developed countries to control inflation.
15.The bandwagon effect is an example of the way _____ directly affects foreign exchange rates.
a.exchange rate policy
b.investor psychology
c.purchasing power parity
d.balance of payments
16.In foreign exchange, a(n) _____ is said to have occurred when investors move in the same direction at the same time, like a herd.
a.placebo effect
b.bandwagon effect
c.edge effect
d.positive correlation
17.Capital flight is a phenomenon in which a large number of individuals and companies exchange _____.
a.domestic goods for gold
b.gold for domestic goods
c.foreign currency for a domestic currency
d.domestic currency for a foreign currency
18.Between 1870 and 1914, the value of most major currencies was maintained by fixing their prices in terms of _____.
a.dollar
b.yuan
c.gold
d.diamonds
19.Which of the following is one of the major reasons the gold standard was abandoned?
a.The increased flow of gold from the U.S. into foreign central banks.
b.The competitive devaluation of currencies during the Great Depression.
c.The strengthening of the U.S. dollar due to the rise in productivity levels in the United States.
d.The United States unilaterally announced that the dollar would not be convertible to gold.
20.Which of the following was true of the Bretton Woods system?
a.All currencies in the system had floating exchange rates.
b.All currencies were pegged at a fixed rate to the dollar.
c.All currencies were maintained by fixing their prices in terms of gold.
d.All currencies in the system were required to be gold convertible.
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