Which of the following transactions would be included in Germany's current account?
A) A German citizen purchases a new Volkswagen made in Germany.
B) An American citizen purchases a new Volkswagen made in Germany.
C) A German citizen purchases 100 shares of Texas Instruments stock.
D) An American citizen purchases 100 shares of BMW stock.
B
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Money that some authority, generally a government, has ordered to be accepted as a medium of exchange is called _______ money.
A) fiat B) intrinsic C) commodity D) debt
One of the chief advantages of exchange rate pegging is that ________
A) a country is able to pursue an independent monetary policy over the course of the business cycle B) it can be an effective means of reducing inflation C) the currency can be used to promote export growth D) it allows the monetary authorities to actively respond to the problems of inflation and unemployment