Tag: open economy macroeconomics

Quizzes (4) Questions (48)

Questions Related to open economy macroeconomics

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Which of the following is/are the reasons for the collapse of Bretton Woods system?
$1$. The refusal by the US Treasury to convert short-term liability into gold.
$2$. The US move to make dollar inconvertible.
$3$. The devaluation of US dollar in 1973.
Select the correct answer using the code given.

  1. $1$ only
  2. $1$ and $2$
  3. $2$ and $3$
  4. $1, 2$ and $3$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The primary cause of the collapse was the US Treasury's inability to maintain the gold-dollar convertibility due to excessive dollar supply and gold outflows. While the US did eventually make the dollar inconvertible (Nixon Shock), the refusal to convert short-term liabilities was the core systemic issue.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

The National Stock Exchange recently launched Interest Rate Futures (IRF). IRF in fact is a ______________.

  1. new mode of trading specifically for SME sector

  2. financial mode of trading

  3. electronic mode of transferring money from one account to another

  4. safest and fastest mode of trading at all the stock exchanges of India simultaneously
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The National Stock Exchange recently launched Interest Rate Futures (IRF).

IRF in fact is a financial mode of trading as investors can buy and sell interest rate futures contracts from different locations in the country through registered NSE brokers in the same manner as they buy and sell equities and derivatives today. The financial settlement of all the trades is guaranteed by National Securities and Clearing Corporations Ltd (NSCCL).

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Many times we read about 'PPP' in economic literature. What is PPP?

  1. Tells us the exchange rates between currencies are in equilibrium when their purchasing power is the same in both the countries

  2. It tells us the exchange rates between currencies are in equilibrium when they are adjusted for differences in purchasing power.
  3. PPP means the current exchange rate of a currency against US$

  4. A measure of income inequality in developing countries
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The acronym PPP stands for, "Purchasing Power Parity". It is a method of currency valuation that tells us that the exchange rate between two countries must be equal to the ratio of the currencies' respective purchasing power. ie. two identical goods should eventually cost the same in different countries once adjusted for purchasing power parity.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Full form of SDRs:

  1. Suitable Drawing Rights

  2. Special Drawing Rights

  3. Special Derivation Rights

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Special drawing rights. Special drawing rights (abbreviated SDR, ISO 4217 currency code XDR (numeric: 960)) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Which conference had given birth to International Monetary Fund?

  1. Uruguay Round Conference

  2. Round Table Conference

  3. Bretton Woods Conference

  4. Simla Conference
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Bretton Woods conference was held in washington, DC in 1944. It was the period after the great depression and most economies in Europe were failing thus the IMF was set up as a bank where member states could draw from to maintain economic activity and employment through periodic crises.