In the ERM, each country fixed participant Collectively the group ________ against the rest of the world?

A. A nominal exchange rate, floated
B. A real exchange rate, pegged
C. A purchasing power parity, pegged
D. A real exchange rate, floated

All of the following are benefits of the single market except ?

A. it allows countries to exploit their comparative advantage, more fully
B. firm could more readily exploit
C. economies of scal
D. it intensified competition

If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?

A. Appreciate
B. Depreciate
C. Revalue
D. Be in short supply

A rise in the real exchange rate will ________ the competitiveness of the domestic economy?

A. Increase
B. Reduce
C. Do nothing to
D. None of the above

perfect international capital mobility suggests that international funds will be responsive to ________ differentials?

A. Current account
B. Interest rate
C. Tax
D. Price

With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ?

A. Increased
B. Unaffected
C. Reduced
D. None of these

A fixed exchange rate, plus perfect capital mobility ________ the scope for monetary policy ?

A. Enhances
B. Undermines
C. Encourages
D. Facilitates

Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?

A. Depreciation
B. Appreciation
C. Fall
D. Devaluation

If currency dealers expect the value of the pound to fall, the exchange value will tend to ?

A. Depreciate
B. Not be affected
C. Fluctuate more than it would do therwise
D. Appreciate

If the US economy is forecast to come out of recession because military expenditure has increase then the exchange value of the UK pound will tend to ?

A. Depreciate
B. Not be affected
C. Fluctuate more than it would do therwise
D. Appreciate