ER 39-Which of the following is not part of the trilemma

ER 39-Which of the following is not part of the trilemma

Subject: Business    / Finance

Question 1 (1 point)

Which of the following is not part of the trilemma of international monetary regimes?

Question 1 options:

free trade

free capital flows

effective monetary policy

fixed exchange rate

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Question 2 (1 point)

People holding money in anticipation that bond yields will rise is an example of

Question 2 options:

money demand for transactions.

precautionary demand.

speculative demand.

none of the above.

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Question 3 (1 point)

People holding money in case they need to fix their car is an example of

Question 3 options:

money demand for transactions.

precautionary demand.

speculative demand.

none of the above.

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Question 4 (1 point)

Which of the following regimes allows for effective domestic monetary policy?

Question 4 options:

gold standard

free float

fixed exchange rate

none of the above

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Question 5 (1 point)

Dollarization is a type of what exchange rate regime?

Question 5 options:

dirty standard

free float

fixed exchange rate

none of the above

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Question 6 (1 point)

Which of the following is equivalent to velocity?

Question 6 options:

MV/PY

YP/M

MP/Y

none of the above

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Question 7 (1 point)

The major advantage of fixed exchange rates is that _____.

Question 7 options:

is allows for free capital mobility

it ensures exchange rate stability for importers and exporters

central banks can exercise monetary policy discretion

it increases the foreign exchange reserves with the central bank

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Question 8 (1 point)

One determinant of money demand that Friedman considers but Keynes does not is

Question 8 options:

output.

the return on stocks.

the unemployment rate.

none of the above.

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Question 9 (1 point)

The primary disadvantage of the gold standard is that

Question 9 options:

international capital flows are restricted.

the supply of gold has little connection to economic conditions.

exchange rates are volatile.

none of the above.

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Question 10 (1 point)

According to Friedman, an increase in expected inflation causes the demand for money to _____, ceteris paribus.

Question 10 options:

increase

decrease

stay the same

cannot be determined

Under a dirty float, a country must sell international reserves when its exchange rate (in terms of a foreign currency) reaches its

Question 11 options:

maximum.

minimum.

both of the above.

neither of the above.

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Question 12 (1 point)

In Keynes’s model, a(n) _____ in interest rates can decrease the _____ demand for money.

Question 12 options:

increase, transactions

decrease, transactions

increase, speculative

decrease, speculative

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Question 13 (1 point)

Some developing countries adopted a managed float instead of a free float because

Question 13 options:

a managed float does not require that they hold foreign reserves.

exchange rates are less volatile under a managed float.

there are restrictions on capital mobility under a free float.

none of the above.

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Question 14 (1 point)

If a central bank does not have full control of the supply of money, supply is ____ on a graph of the supply and demand for money.

Question 14 options:

upward sloping

downward sloping

vertical

horizontal

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Question 15 (1 point)

A country that commits to a maximum and minimum allowable exchange rate at a given time uses a

Question 15 options:

dirty float.

managed fixed exchange rate.

specie standard.

all of the above.

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Question 16 (1 point)

Which of the following is a difference between Keynes liquidity preference theory and the modern quantity theory of money?

Question 16 options:

The modern quantity theory of money specifies 1 asset instead of 3 assets like the liquidity preference theory.

The liquidity preference theory assumes the return on money to be 1, unlike the modern quantity theory of money.

The liquidity preference theory assumes velocity to be constant, unlike the modern quantity theory of money.

The modern quantity theory predicts that interest rate changes have little effect on money demand unlike the liquidity preference theory.

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Question 17 (1 point)

A sterilized purchase of international reserves by a central bank is meant to make its currency

Question 17 options:

appreciate.

depreciate.

offset the purcahse or sale of international reserves with a domestic sale or purchase

it is unsure if it will appreciate or depreciate a currency

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Question 18 (1 point)

Which of the following could explain an increase in velocity?

Question 18 options:

credit cards

wire transfers

cash management accounts

all of the above

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Question 19 (1 point)

what was one of the assumptions to the quantity theory of money that proved to be problematic?

Question 19 options:

the money supply stays constant

foreign exchange rates don’t matter as they are fixed due to the gold standard

money velocity is constant

it uses real GDP rather than nominal GDP in its identity

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Question 20 (1 point)

An unsterilized sale of international reserves by a central bank is meant to make its currency

Question 20 options:

appreciate.

depreciate.

neither appreciate nor depreciate.

cannot be determined.