According to this Application, during the late 1980s, Argentina pegged its currency to the U.S. dollar. After 1995, the U.S. dollar appreciated sharply on world markets. Since the Argentinean peso was pegged to the U.S
dollar, the appreciation of the dollar essentially caused
A) the peso to appreciate relative to the dollar, but depreciate on world markets.
B) a sharp devaluation of the dollar relative to the peso.
C) a severe revaluation of the peso relative to the dollar.
D) the peso to also appreciate sharply on world markets.
D
You might also like to view...
If everyone has identical preferences over public goods, Lindahl prices for providing the efficient level of the public good will be the same for everyone.
Answer the following statement true (T) or false (F)
Which of the following statements is TRUE about a vehicle currency?
A) It is widely used to denominate contracts made by parties who reside in the country that issues the vehicle currency. B) The dollar is sometimes called a vehicle currency because of its pivotal role in many foreign exchange deals. C) There is much skepticism that the euro will ever evolve into a vehicle currency on par with the dollar. D) The pound sterling, once second only to the dollar as a key international currency, is beginning to rise in importance. E) Vehicle currencies include nondeliverable currencies like the renminbi.
Which of the following will be the best example of a monopoly firm?
a. The US Bank b. The Bank of America c. National City Bank d. The Federal Reserve e. Washington Mutual Funds Bank
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the monetary base in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and monetary base falls. b. The real risk-free interest rate rises and monetary base falls. c. The real risk-free interest rate falls and monetary base rises. d. The real risk-free interest rate and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.