Tag: open economy macroeconomics

Questions Related to open economy macroeconomics

The Bretton Woods exchange rate system was a three-tier system of currency convertibility. 

  1. True

  2. False


Correct Option: B

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is __________.

  1. likely to rise

  2. likely to fall

  3. likely to rise and fall both

  4. remain unaffected


Correct Option: A
Explanation:

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is likely to rise as it indicates that the greater flow of foreign exchange in the domestic economy promotes higher level of development. Hence, national income rises as the price of foreign currency rises.

GDR stands for _______.

  1. Global Depository Receipts

  2. Global Demand Receipts

  3. Government Department Receipts

  4. Gold Deposit Receipts


Correct Option: A

The exchange rate system established under the Smithsonian agreement lasted for only 16 months.

  1. True

  2. False


Correct Option: B

Foreign exchange received on account of export of Jute will be recorded in capital account.

  1. True

  2. False


Correct Option: B
Explanation:

Foreign exchange received on account of export of Jute will be recorded in the CREDIT (positive) side of the CURRENT account as it comes under export of visible items.

The gold standard was the epitome of the _______________.

  1. floating exchange rate system

  2. fixed exchange rate system

  3. managed floating system

  4. none of the above


Correct Option: B

_____________ exchange rate regime prevailed between 1870 to 1914.

  1. Smithsonian

  2. Gold standard

  3. Brettonwoods

  4. Dollar-based


Correct Option: B

The problem with the Bretton Woods exchange rate system was identified by Robert Triffin and was termed as _____________.

  1. Triffin dilemma

  2. Triffin paradox

  3. Triffin rigidity

  4. none of the above


Correct Option: A

_____________ established an exchange rate system in 1971.

  1. Bretton woods conference

  2. Smithsonian agreement

  3. Triffin paradox

  4. None of the above


Correct Option: B