Exam (elaborations)

Econ370 Final Questions and Answers (100% Pass)

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Econ370

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Econ370

Ch25. Fiscal policy is most effective in influencing aggregate demand under a floating exchange-rate system with a low degree of capital mobility. Ch.25 A domestic monetary shock is least disruptive under a fixed exchange-rate system without sterilization. Ch.25 A domestic spending shock is...

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econ370 final questions and answers 100 pass

Institution Econ370
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Econ370 Final Questions and
Answers (100% Pass)
Ch25. Fiscal policy is most effective in influencing aggregate demand

✓ under a floating exchange-rate system with a low degree of capital

mobility.

Ch.25 A domestic monetary shock is least disruptive

✓ under a fixed exchange-rate system without sterilization.

Ch.25 A domestic spending shock is likely to be least disruptive under a

✓ floating exchange-rate system when there is high capital mobility.

Ch.25 For an international capital-flow shock in which foreign investors lose

confidence in a country

✓ the country's real domestic product is affected if the country has a

floating exchange rate but not affected if the country has a fixed

exchange rate.

Ch.25 An international trade shock arising from a sudden increase in import

demand is likely to be least disruptive to a country with

Master01 | October, 2024/2025 | Latest update

, 1|Page | © copyright 2024/2025 | Grade A+

✓ a fixed exchange-rate system without sterilization.

Ch.25 Which of the following statements is true?

✓ With floating exchange rates, the transmission of business cycles

through foreign trade and repercussion is less than with fixed exchange

rates

Ch.25 Which of the following is true?

✓ Countries that want to have a fixed exchange-rate regime should be

willing to refrain from policy changes that lead to large international

capital flows.

Ch.25 If two countries choose to fix the exchange rates among their

currencies, then

✓ the country with a lower rate of inflation will eventually have large

current account surpluses.

Ch.25 Which of the following is incorrect?

✓ Overall, floating exchange rates discipline countries to have low

inflation rates.

Master01 | October, 2024/2025 | Latest update

, 1|Page | © copyright 2024/2025 | Grade A+

Ch.25 Which of the following is a major drawback of the European Monetary

Union?

✓ Its inability to use monetary policies to address a recession that affects

some member countries but not others

Ch.25 Fiscal policy is most effective when capital is not mobile and the

country has fixed exchange rates.

✓ F

Ch.25 Internal monetary shocks cause less trouble with floating exchange

rates.

✓ F

Ch.25 Intervention to defend a fixed exchange rate can magnify the

transmission of a foreign recession into an economy.

✓ T

Ch.25 International capital-flow shocks tend to be less disruptive with floating

exchange rates than with fixed exchange-rates.

✓ T

Master01 | October, 2024/2025 | Latest update

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Exam (elaborations)

Econ370 Final Questions and Answers (100% Pass)

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