Under a pegged exchange rate system which does not explain why a country would have a balance of payments deficit ?

A. Very high rates of inflation occur domestically
B. Foreigners discriminate against domestic products
C. Technological advance is superior abroad
D. The domestic currency is undervalued relative to other currencies

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize ?

A. Pegged exchange rates
B. Freely floating exchange rates
C. Managed floating exchange rates
D. Crawling exchange rates

The relationship between the exchange rate and the prices of tradable goods is known as the ?

A. Purchasing power parity theory
B. Asset markets theory
C. Monetary theory
D. Balance of payments theory

Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ?

A. Appreciates against foreign currencies
B. Depreciates against foreign currencies
C. Be officially revalued by the government
D. Be officially devalued by the government

Which exchange rate system does not require monetary reserves for official exchange rate intervention ?

A. Floating exchange rates
B. Pegged exchanged rates
C. Managed floating exchange rates
D. Dual exchange rates

Small nations with more than one major trading partner tend to peg the value of their currencies to ?

A. Gold
B. Silver
C. A single currency
D. A basket of currencies

Which exchange rate system involves a leaning against the wind|| strategy in which short-term fluctuations in exchange rates are reduced without adhering to any particular exchange rate over the long run ?

A. Pegged of fixed exchange rates
B. Adjustable pegged exchange rates
C. Managed floating exchange rates
D. Free floating exchange rates

Which exchange rate mechanism in intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions ?

A. Dual exchange rates
B. Managed floating exchange rates
C. Adjustable pegged exchange rates
D. Crawling pegged exchange rates

The gas-guzzler tax that is placed on new vehicles that are very fuel inefficient is an example of ?

A. A tradeable pollution permits.
B. An attempt to internalize a positive externality
C. An application of the coase theorem
D. An attempt to internalize a negative externality.

Tradable pollution permits ?

A. Reduce the incentive for technological innovations to further reduce pollution.
B. Set the price of pollution.
C. Determine the demand for pollution rights.
D. Set the quantity of pollution