43,44
If the government fixes the exchange rate at the value that creates a surplus of the domestic currency, there will be a tendency for the exchange rate to ________. To maintain the fixed exchange rate, the government must _______
Fall; increase the international demand for the domestic currency
If the country removes a tariff on imported shoes, we expect the domestic price of shoes to ______ and the quantity of shoes consumed in the domestic market to ______
Fall; rise
If a country on a fixed exchange rate regime finds it's currently falling
It can use foreign-exchange reserves to purchase some of its own currency
Did advantage to fixed exchange rates is that
It eliminates uncertainty about the value of currency
Foreign-exchange controls are
A government licensing system that limits the amount of foreign currency is an individual can buy
Which of the following is an example of a tariff
A tax of 5% of the value of each Yamaha motorcycle imported from Japan
A tariff imposed on Japanese imports into the United States tends to
Benefit US producers and penalize Japanese producers
If Japan levies tariffs on US goods entering Japan, this will tend in the short run two
Damage US producers and benefit Japanese producers
Fixed exchange rates are determined by the
Policies of the domestic government
Within the importing country, the most likely effects of tariffs and or quotas are to ______ domestic prices and to ______ consumption of the protected domestic good
Raise; raise
Countries that follow floating exchange rate regimes
Tend to insulate themselves from economic fluctuations in other countries
One limitation of maintaining a fixed exchange rate system is that
The country may not be able to use monetary policy to achieve other goals such as full employment