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1. Advocates of floating rates pointed out that:, , a. removal of the obligation to peg currency values would restore monetary control to central banks., , b. imposing of the obligation to peg currency values would restore monetary control to central banks., , c. removing of the obligation to peg currency values would restore fiscal control., , d. imposing of the obligation to peg currency values would restore fiscal control.,2. Advocates of flexible exchange rates claim that under flexible exchange rates, a currency:, , a. appreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products., , b. depreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products., , c. depreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products., , d. depreciation caused by increasing the money supply would reduce unemployment by,3. Advocates of flexible exchange rates claim that under flexible exchange rates:, , a. the United States would no longer have the same opportunity as other countries to influence its exchange rate against foreign currencies., , b. the United States would have the same opportunity as other countries to influence its exchange rate against foreign currencies., , c. the United Kingdom would not have the same opportunity as other countries to influence its exchange rate against foreign currencies., , d. Germany would not have the same opportunity as other countries to influence its exchange rate against foreign currencies.,4. Advocates of flexible exchange rates claim that under flexible exchange rates, a currency:, , a. depreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing the world demand for them., , b. appreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing world demand for them., , c. appreciation caused by decreasing the money supply would reduce unemployment by lowering the relative price of domestic products and increasing world demand for them., , d. appreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products and increasing world demand for them.,,5. Some claim that the long and agonizing periods of speculation preceding exchange rate realignments would:, , a. not occur under fixed exchange rate regime., , b. not occur under floating., , c. become more severe under currency board., , d. become less severe under floating.,,6. Advocates of flexible exchange rates claim that under flexible exchange rates:, , a. enhanced control over fiscal policy would allow countries to dismantle their distorting barriers to international payments., , b. reduced control over monetary policy would allow countries to dismantle their distorting barriers to international payments., , c. enhanced control over monetary policy would allow countries to increase their distorting barriers to international payments., , d. enhanced control over monetary policy would allow countries to dismantle their distorting barriers to international payments.,,7. By the end of the 1960s, many countries felt that they were importing inflation from:, , a. the United States., , b. Germany., , c. France., , d. Japan.,,8. Advocates of flexible exchange rates claim that under flexible exchange rates, if the central bank faced unemployment:, , a. and thus wished to decrease its money supply, there would no longer be any legal barrier to the currency depreciation this would cause., , b. and thus wished to expand its money supply, there would no longer be any legal barrier to the currency depreciation this would cause., , c. and wished to expand its money supply, there would no longer be any legal barrier to the currency appreciation this would cause., , d. and wished to decrease its money supply, there now would be legal barrier to the currency depreciation this would cause.,,9. Advocates of flexible exchange rates claim that under flexible exchange rates, the central bank of:, , a. an overheated economy could cool down activity by increasing the money supply without worrying that undesired reserve inflow would undermine its stabilization effort., , b. a cooled economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort., , c. an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort., , d. an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve outflow would undermine its stabilization effort.,,10. Which of the following is NOT a result of a permanent fall in foreign demand on one country’s exports under floating exchange rate?, , a. The DD curve shifts to the left due to reduction of aggregate demand., , b. The AA curve shifts upwards due to the increased expected long-run exchange rate., , c. A reduction in output by a smaller degree compared to temporary fall in demand, , d. DD shifts to the right.,,,

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