(1)All the members of IMF follow the same exchange rate policy.
TrueFalse
(2)
In a floating exchange rate system, a current account deficit is likely to be corrected by:
depreciation of the home currency.
appreciation of the home currency.
a prolonged period of hyperinflation.
expansion of domestic money supply.
a decrease in domestic tax rates.
(3)
The advocates of the floating rate system argue that:
floating rates boost exports.
floating rates help adjust trade imbalances.
there is no connection between the floating rate system and trade balance.
floating rates boost imports.
floating rates help keep inflation close to zero.
(4)
Which of the following is true about a strict currency board system?
The currency board system enhances the ability of the government to print money.
The government lacks the ability to set interest rates.
A currency board system is governed by the market forces of demand and supply.
A currency board cannot issue additional domestic notes and coins despite the presence of foreign exchange reserves to back it.
A currency board system has no features of a fixed exchange rate regime.
