IMF01
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University
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8 questions
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1.
MULTIPLE CHOICE QUESTION
3 mins • 1 pt
The exchange rate is said to overshoot when
Its immediate response to a disturbance is greater than its long-run response.
Its immediate response to a disturbance is less than its long-run response.
Its immediate response to a disturbance is the same as its long-run response.
Its immediate response to a disturbance is not related to its long-run response.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
After a permanent increase in the money supply
The exchange rate overshoots in the short run.
The exchange rate overshoots in the long run.
The exchange rate smoothly depreciates in the short run.
The exchange rate smoothly appreciates in the short run.
The exchange rate remains the same.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Assuming an increase in domestic money supply, what is the short-run effect on the domestic interest rate, exchange rate, and price level?
Domestic interest rate rises;
Domestic currency depreciates;
Price level rises.
Domestic interest rate falls;
Domestic currency depreciates;
Price level is fixed.
Domestic interest rate falls;
Domestic currency appreciates;
Price level is fixed.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Dornbusch model aims to explain the high volatility of floating
exchange rates due to ’sticky’ prices in the short run.
True
False
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Dornbusch model can be used to analyze the exchange rate
fluctuation in China.
True
False
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Extension:
If a country has capital controls, would its exchange rate be unaffected by a tightening in monetary policy?
Yes.
No, the domestic currency would appreciate.
No, the domestic currency would depreciate.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Financial markets adjust to shocks far
more rapidly than goods markets.
True
False
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