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11) Which of the following countries has a soft peg currency?

A) China

B) Brazil

C) Japan

D) India

12) Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union?

A) The annual government budget must be no greater than 3% of GDP.

B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries.

C) The annual government budget deficit could be no greater than 60% of GDP.

D) The annual inflation rate must remain within 5.5% of the four best-performing EU countries.

13) Which EU country has NOT adopted the euro?

A) Germany

B) France

C) Sweden

D) Greece

14) The major objective of the European Central Bank is to ________.

A) set monetary policy for EU countries that adopt the euro

B) ensure that EU interest rates are equal to U.S. rates

C) control taxes as a means of monitoring EU debt

D) reduce spending by EU countries

15) Which of the following problems with the euro most likely worsened the financial crisis in Greece?

A) excessive flexibility with interest rates

B) cultural disagreements on labor reform

C) lack of uniform fiscal regulation standards

D) unclear policies of the European Central Bank

16) Which of the following has the greatest number of foreign-exchange reserves in the world?

A) China

B) Japan

C) Russia

D) Taiwan

17) The global financial crisis has pushed China closer to ________.

A) operating independently from the central banks of other countries

B) discontinuing its relationship with the Bank for International Settlements

C) liberalizing its currency

D) controlling its currency

18) Why is China most likely considering a greater reliance on the SDR?

A) gains in the foreign exchange market

B) concerns about the value of the U.S. dollars

C) demands to replace the dollar with the euro for reserves

D) requirements by the IMF to make China's currency more flexible

19) Which of the following links together the central banks of the world and acts as a central banker's bank?

A) the IMF

B) the World Bank

C) the BIS

D) the EMU

20) If inflation in the United States is relatively higher than inflation in Japan, and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar, it should most likely ________.

A) allow its currency to rise against the dollar

B) allow its currency to fall against the dollar

C) increase the supply of yen in the market

D) decrease the supply of yen in the market



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