Econ 131 Final Exam: Chapter 16
The Canadian dollar will most likely strengthen against the U.S. dollar if the __________
Canadian inflation rate becomes extremely low
The ______________ is no longer one of the most commonly traded currencies in the foreign exchange markets
French franc
If the the Canadian dollar is strengthening, then it has ____________________
appreciated in terms of other currencies
The ________ is an example of a large-scale common currency
euro
A central bank must be concerned about whether a large and unexpected ____________ will drive most of the country's existing banks into bankruptcy
exchange rate depreciation
If the government uses an expansionary monetary policy to reduce interest rates, then it will cause the _____________
exchange rate for currency to depreciate
If a central bank focuses on preventing either high inflation or deep recession by using low and reasonably steady interest rate policy, then ___________
exchange rates will have less reason to vary
Portfolio investments are often made based on beliefs about how _________________ are likely to move in the near future
exchange rates/ rates of return
A stronger British pound is beneficial for ___________
exchange students with a British scholarship studying in Canada
When Mateo buys euros through the _____________, he will use U.S. dollars to pay for them
foreign exchange market
If a government uses monetary policy to alter the exchange rate, then it cannot at the same time use monetary policy to address the issues of __________
inflation or recession
________________ equalizes the prices of internationally traded goods across countries
purchasing power parity
Greece, Ireland, and Germany all _________
share a common currency (euro)
When a government uses a ________ exchange rate policy, it usually allows the exchange rate to be set by the market
soft peg
A ____________ policy is which government almost never acts to intervene in the exchange rate market looks a great deal like a floating exchange
soft peg exchange rate
A tight monetary policy decreases aggregate demand by _____________
stimulating exports and reducing imports
A soft peg exchange rate may create additional _______ as exchange rate markets try to anticipate when and how the government will intervene
volatility