Home / Questions / If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its eq
.If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its equilibrium level, then the
a.dollar is undervalued.
b.peso is undervalued.
c.dollar has depreciated.
d.peso has appreciated.
e.a and c
42.If, under a fixed exchange rate system, the dollar price of a Mexican peso is below its equilibrium level, then the
a.dollar is overvalued.
b.peso is overvalued.
c.dollar has depreciated.
d.peso has appreciated.
43.If, under a fixed exchange rate system, the dollar price of a Mexican peso is above its equilibrium level, then the
a.dollar is undervalued.
b.peso is undervalued.
c.dollar has appreciated.
d.peso has depreciated.
44.If, under a fixed exchange rate system, the dollar price of a Mexican peso is above its equilibrium level, then the
a.dollar is overvalued.
b.peso is overvalued.
c.dollar has appreciated.
d.peso has depreciated.
45.Under a fixed exchange rate system, if the dollar price of a Mexican peso is below its equilibrium level, the peso is said to be
a.depreciable.
b.undervalued.
c.overvalued.
d.appreciable.
e.none of the above
46.Proponents of the fixed exchange rate system argue that
a.flexible exchange rates may promote international trade, but under a fixed exchange rate system at least we know what the rates will be from day to day.
b.under a flexible exchange rate system, there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.
c.under a flexible exchange rate system, there is no way of knowing what the exchange rate is at any particular point in time.
d.under a fixed exchange rate system, there would be only one currency.
e.none of the above
47.Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,
a.there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate.
b.nations that experience persistent trade deficits might be tempted to impose trade barriers.
c.nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate.
d.b and c
e.a, b, and c
48.If an international currency speculator expects that country A will soon be forced to devalue its currency, the speculator will
a.buy as much of that currency as possible.
b.sell all of his holdings of that currency.
c.not be concerned because the devaluation will affect only the domestic prices of goods within country A's borders, not international prices.
d.not be concerned because only a revaluation will affect his or her profits.
49.Which of the following points would not be used as an argument in support of the current international monetary system?
a.It allows nations to pursue independent monetary policies.
b.It results in stable exchange rates.
c.It helps solve trade problems without trade restrictions.
d.It is flexible and can easily adjust to shocks.
e.All of the above could be used as arguments supporting the current system.
50.The foreign exchange market is the market where
a.goods and services of different countries are exchanged.
b.currencies of different countries are exchanged.
c.transportation services for foreign goods are contracted.
d.either a or c
e.none of the above
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