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12 Which of the following statements about the formation of the J-curve is correct?
In the short run, supply will exceed demand; however, in the long run, they will be equal.
An overshooting effect occurs as people adjust to the new information.
Investors tend to be overly cautious in currency instruments.
Supply and demand for goods are less elastic in the short run than in the long run.
13 Based on perfect capital mobility and fixed exchange rates, which of the following statements is correct?
Monetary policy is super powerful.
Fiscal policy is less effective than monetary policy.
Fiscal policy is useless.
Monetary policy is useless.
14 According to IS-LM-BP model, what would the area on the left of the BP curve indicate?
Internal disequilibrium. A balance of payments deficit.
A balance of payments surplus. External equilibrium.
15 Which of the following statements regarding the advantage of a fixed exchange rate system is correct?
Speculation strategies can be eliminated.
Systemic risk can be eliminated.
Exchange rate volatility can be eliminated.
Fixed exchange rate nations seldom have credit risk problems.
16 Suppose the spot rates quoted for the US Dollar, the Japanese Yen and the New Taiwanese Dollar are
NT/$=30.5-30.6, Yen/$= 105-106, respectively. What is the corresponding cross rate for Yen/NT?
17 When developing countries have a deficit in their national balance of payments due to improper economic
policy, which international agency can they seek for assistance to obtain long-term equilibrium in its
balance of payments?
World Bank. IMF. EBRD. ADB.
18 The Euro has become an important foreign currency deposit in the United States, mainly because US
banks issue Euro deposit accounts with narrower margins relative to domestic currency deposits for Euro
trading. What nature of Euro deposits is it in the United States for US banks to do so?
Important exchange currency. Good investment target.
Free of regulation. Social status symbol.
19 The World Bank (WB), established in 1944, is an international financial institution in the United Nations
system. In addition to providing loans to developing countries to promote economic development, which
of the followings is also one of its main tasks?
Modern constructions. Market opening.
Poverty reduction. Pollution reduction.
20 Which of the following statements regarding monetary policy under a fixed exchange rate system is
correct?
An anchor country loses control over its monetary policy.
A country that ties its currency to that of another country acquires greater control over its monetary
policy.
A country that ties its currency to that of another country gains control over that country’s monetary
policy.
A country that ties its currency to that of another country loses control over its own monetary policy.