From full long-run equilibrium, expectations of future exchange rates can only change when there is:
a. a political change.
b. a permanent change in the quantity of money.
c. a change in short-run interest rates.
d. a temporary decrease in the quantity of money.
Answer: b. a permanent change in the quantity of money.
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The current account balance equals
A) net exports + net transfers + net interest. B) net exports + net transfers. C) net exports - net transfers + net interest. D) net exports - net transfers - net interest. E) net exports + net transfers - net interest.
The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to
A) the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs. B) consumer fear of stock market instability. C) producer fear of rising wages. D) the lack of convertibility of gold into silver. E) low consumer spending because of balance of payment crises.