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