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Tips Ib

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Submitted By mongmong
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A managed float is also known as a a. Fixed exchange rate system

b. Pegged exchange rate system

c. Dirty float exchange rate system

d. Floating exchange rate system

1. According to some analysts, under a _____ regime, countries are limited in their ability to use monetary policy to expand or contract their economies by the need to maintain exchange rate parity.

a. Fixed exchange rate

b. Managed float

c. Floating exchange rate

d. Dirty float

2. A foreign debt crisis

a. Occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency

b. Is a situation in which a country cannot service its debt obligations

c. Refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits

d. Is a situation in which consumer spending patterns significantly affect a country's balance of payments, thereby affecting its currency

3. A _____ means the value of the currency is fixed relative to a reference currency.

a. Fixed exchange rate

b. Floating exchange rate

c. Pegged exchange rate

d. Dynamic exchange rate

4. A fixed exchange rate regime

a. Leads to a situation where governments under political pressures expand monetary supply too rapidly, causing unacceptably high price inflation

b. Modeled along the lines of the Bretton Woods system will not work

c. Is characterized by speculation that adds to the uncertainty surrounding future currency movements

d. Allows each country to choose its own inflation rate

5. A banking crisis

a. Refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits

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