{
  "slug": "chapter-25-national-and-global-choices-floating-rates-and-t",
  "chapter": 25,
  "title": "National and Global Choices: Floating Rates and the Alternatives",
  "overview": "National and Global Choices: Floating Rates and the Alternatives This chapter provides a capstone to the discussion of international finance and international macroeconomics by examining the choice between fixed and floating exchange rates. Much of the discussion examines this choice from the point of view of a single country, but the discussion also examines some issues related to the functioning of the entire system.",
  "manualPreview": [
    "National and Global Choices: Floating Rates and the Alternatives",
    "This chapter provides a capstone to the discussion of international finance and international macroeconomics by examining the choice between fixed and floating exchange rates. Much of the discussion examines this choice from the point of view of a single country, but the discussion also examines some issues related to the functioning of the entire system.",
    "The text examines five key issues that can influence a country's choice. Figure 25.1 presents a summary of implications of the key issues for the advantages of each policy choice.",
    "First, different types of shocks have different effects, depending on which exchange rate policy is chosen. Internal shocks, especially domestic monetary shocks, are less disruptive to the domestic economy with a fixed exchange rate. External shocks, especially international trade shocks, are less disruptive with a floating exchange rate. If a country believes that it is mainly hit with internal shocks, it would favor a fixed rate; if it believes that it is mainly hit by external shocks, it would favor a floating rate."
  ],
  "slideOutline": [
    "Key Issues in the Choice of",
    "Effects of Macroeconomic Shocks",
    "The Effectiveness of Government Policies",
    "Differences in Macroeconomic Goals, Priorities, and Policies",
    "Controlling Inflation",
    "Real Effects of Exchange Rate Variability",
    "National Choices",
    "Extreme Fixes",
    "The International Fix—Monetary Union",
    "Maastricht Criteria",
    "European Monetary Union: Gains",
    "European Monetary Union: Risks and Possible Losses"
  ],
  "stats": {
    "manualChars": 31881,
    "slideCount": 23,
    "exerciseCount": 60,
    "knowledgePoints": 7,
    "caseStudies": 4
  },
  "knowledgePoints": [
    {
      "id": "ch25-kp-01",
      "title": "Key Issues in the Choice of Exchange-Rate Policy",
      "summary": "The text examines five key issues that can influence a country's choice. Figure 25.1 presents a summary of implications of the key issues for the advantages of each policy choice.",
      "supportingBullets": [
        "Exchange-Rate Policy",
        "The effects of macroeconomic shocks",
        "The effectiveness of government policies"
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-02",
      "title": "National Choices",
      "summary": "National and Global Choices: Floating Rates and the Alternatives",
      "supportingBullets": [
        "National and Global Choices: Floating Rates and the Alternatives"
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-03",
      "title": "Extreme Fixes",
      "summary": "If the only relevant national goal is to defend the fixed rate, then the currency board is probably better. Because the currency board holds no domestic-currency assets, the currency board cannot sterilize its foreign exchange intervention. The domestic money supply must change with the intervention, and the adjustments to eliminate the payments imbalance takes place.",
      "supportingBullets": [
        "currency board",
        "attempts to establish a fixed exchange rate that is long-lived by mandating that the board, acting as the country’s monetary authority, should focus almost exclusively on maintaining the fixed rate."
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-04",
      "title": "The International Fix – Monetary Union",
      "summary": "The members of the European Union (EU) are pursuing an international fix—a monetary union in which exchange rates are permanently fixed among the currencies of the countries in the union and a single monetary authority conducts a unionwide monetary policy. As mentioned previously in Chapter 20, in 1979 the EU countries established the European Monetary System, and most became members of its Exchange Rate Mechanism (ERM), an adjustable pegged rate system among its members' currencies.",
      "supportingBullets": [
        "monetary union,",
        "exchange rates are permanently fixed and a single monetary authority conducts a single, unionwide monetary policy.",
        "In 1999, a subset of countries in the European Union implemented a monetary union with a single currency, the euro, and the European Central Bank as the monetary authority."
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-06",
      "title": "Effects of Macroeconomic Shocks",
      "summary": "Key gains from European Monetary Union are the elimination of exchange rate risk and the elimination of the transaction costs of exchanging currencies. Key risks include the loss of national use of exchange rate changes and monetary policy to address shortcomings in national economic performance. The ECB’s monetary policy can address union-wide macroeconomic performance shortcomings, as it did starting in 2015 when the ECB began an aggressive quantitative easing to address very low euro area inflation rates, slow real GDP growth, and high unemployment rates.",
      "supportingBullets": [
        "Exchange-Rate Policy",
        "The effects of macroeconomic shocks",
        "The effectiveness of government policies"
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-07",
      "title": "The Effectiveness of Government Policies",
      "summary": "Each country must make its own decision about its exchange rate policy. Several of these key issues seem to be important for most countries. Strong arguments in favor of a country's choosing a floating exchange rate are the use of changes in the floating exchange rate to achieve external balance, so that monetary policy can be used to pursue domestic objectives, the ability to set its own goals and policies, and the reduced need to hold official international reserves to defend against speculative attacks on the fixed rate.",
      "supportingBullets": [
        "Exchange-Rate Policy",
        "The effects of macroeconomic shocks",
        "The effectiveness of government policies"
      ],
      "sourceType": "manual"
    },
    {
      "id": "ch25-kp-08",
      "title": "Differences in Macroeconomic Goals, Priorities, and Policies",
      "summary": "Third, countries that have their currencies linked through fixed exchange rates must achieve consistency in their macroeconomic policies, so that the fixed rate can be defended and maintained. If countries have different goals, priorities, and policies, then they will favor floating exchange rates.",
      "supportingBullets": [
        "Exchange-Rate Policy",
        "The effects of macroeconomic shocks",
        "The effectiveness of government policies"
      ],
      "sourceType": "manual"
    }
  ],
  "caseStudies": [
    {
      "id": "ch25-case-01",
      "title": "The members of the European Union (EU) are pursuing an international ...",
      "summary": "The members of the European Union (EU) are pursuing an international fix—a monetary union in which exchange rates are permanently fixed among the currencies of the countries in the union and a single monetary authority conducts a unionwide monetary policy. As mentioned previously in Chapter 20, in 1979 the EU countries established the European Monetary System, and most became members of its Exchange Rate Mechanism (ERM), an adjustable pegged rate system among its members' currencies.",
      "sourceExcerpt": "The members of the European Union (EU) are pursuing an international fix—a monetary union in which exchange rates are permanently fixed among the currencies of the countries in the union and a single monetary authority conducts a unionwide monetary policy. As mentioned previously in Chapter 20, in 1979 the EU countries established the European Monetary System, and most became members of its Exchange Rate Mechanism (ERM), an adjustable pegged rate system among its members' currencies. By mid-1992 all EU members except Greece were members of the ERM. Then a series of speculative attacks weakened the ERM—Britain and Italy left it in 1992, realignments were necessary for the central rates of the currencies of some other countries, and the bands for nearly all currencies were widened to plus or minus 15 percent in 1993. After 1993 the exchange rates within the ERM were generally steady, and a"
    },
    {
      "id": "ch25-case-02",
      "title": "Fiscal policy has become a flash point for the euro area. ...",
      "summary": "Fiscal policy has become a flash point for the euro area. In the absence of national monetary policy and national exchange rate policy, national fiscal policy should be valuable as the key tool for national macroeconomic stabilization. But national governments may sometimes run excessive fiscal deficits and build up excessive government debt.",
      "sourceExcerpt": "Fiscal policy has become a flash point for the euro area. In the absence of national monetary policy and national exchange rate policy, national fiscal policy should be valuable as the key tool for national macroeconomic stabilization. But national governments may sometimes run excessive fiscal deficits and build up excessive government debt. The Stability and Growth Pact attempted to impose limits on the size of national government budget deficits, but the pact was weakened in 2005. Then the global financial and economic crisis led to ballooning deficits in some euro-area countries. Greece had to be rescued from a government debt crisis in 2010, followed by Ireland and Portugal. In mid-2011 the government debts of Spain and Italy came under market pressures. National fiscal policies and national government debt were central to the crisis that threatened the viability of the euro. The eu"
    },
    {
      "id": "ch25-case-03",
      "title": "Key gains from European Monetary Union are the elimination of exchange ...",
      "summary": "Key gains from European Monetary Union are the elimination of exchange rate risk and the elimination of the transaction costs of exchanging currencies. Key risks include the loss of national use of exchange rate changes and monetary policy to address shortcomings in national economic performance. The ECB’s monetary policy can address union-wide macroeconomic performance shortcomings, as it did starting in 2015 when the ECB began an aggressive quantitative easing to address very low euro area inflation rates, slow real GDP growth, and high unemployment rates.",
      "sourceExcerpt": "Key gains from European Monetary Union are the elimination of exchange rate risk and the elimination of the transaction costs of exchanging currencies. Key risks include the loss of national use of exchange rate changes and monetary policy to address shortcomings in national economic performance. The ECB’s monetary policy can address union-wide macroeconomic performance shortcomings, as it did starting in 2015 when the ECB began an aggressive quantitative easing to address very low euro area inflation rates, slow real GDP growth, and high unemployment rates. But, a major challenge for the member countries is finding effective mechanisms for national adjustments when adverse economic shocks affect different countries in different ways (for instance, Germany and Ireland during the early 2000s). Labor mobility between member countries is low. “Internal devaluation” to improve international"
    },
    {
      "id": "ch25-case-04",
      "title": "Given the importance of having and maintaining similar inflation rates f ...",
      "summary": "Given the importance of having and maintaining similar inflation rates for the success of fixed exchange rates, the most important criterion is probably that related to the country's inflation rate. The criteria related to government budget deficits and debt seem to be more debatable. A country that shifts to completely fixed exchange rates has given up the ability to use national monetary policy and exchange rate changes in seeking to address imbalances.",
      "sourceExcerpt": "Given the importance of having and maintaining similar inflation rates for the success of fixed exchange rates, the most important criterion is probably that related to the country's inflation rate. The criteria related to government budget deficits and debt seem to be more debatable. A country that shifts to completely fixed exchange rates has given up the ability to use national monetary policy and exchange rate changes in seeking to address imbalances. This country may need to use fiscal policy more actively, including sometimes running large budget deficits. If the criteria also restrain the independence of fiscal policy, the country's government is left with little in the way of policy tools to address national imbalance. However, the series of government debt crises that hit Greece, Ireland, and Portugal beginning in 2010 show that excessive fiscal deficits and government debts can"
    }
  ],
  "exercises": [
    {
      "number": 1,
      "question": "Which of the following is most likely to happen if the demand for money decreases in the domestic economy under floating exchange rates and free capital mobility?",
      "options": {
        "A": "The domestic interest rate will increase.",
        "B": "Domestic borrowing will decline.",
        "C": "The financial account of the country's balance of payments will deteriorate.",
        "D": "The average price level in the domestic economy will decrease."
      },
      "answer": "C",
      "answerText": "The financial account of the country's balance of payments will deteriorate.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 2,
      "question": "Monetary policy is most effective in influencing aggregate demand",
      "options": {
        "A": "under a freely floating exchange-rate system.",
        "B": "under a fixed exchange-rate system with sterilization.",
        "C": "under a fixed exchange-rate system without sterilization.",
        "D": "when there is low capital mobility."
      },
      "answer": "A",
      "answerText": "under a freely floating exchange-rate system.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "1 Easy",
      "bloom": "Remember"
    },
    {
      "number": 3,
      "question": "Fiscal policy is most effective in influencing aggregate demand",
      "options": {
        "A": "under a floating exchange-rate system with a low degree of capital mobility.",
        "B": "under a fixed exchange-rate system with sterilization.",
        "C": "under a fixed exchange-rate system without sterilization.",
        "D": "under a floating exchange-rate system with a high degree of capital mobility."
      },
      "answer": "A",
      "answerText": "under a floating exchange-rate system with a low degree of capital mobility.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "1 Easy",
      "bloom": "Remember"
    },
    {
      "number": 4,
      "question": "Those who advocate a return to a real gold standard believe that doing so would",
      "options": {
        "A": "force countries to pursue sustainable fiscal policies.",
        "B": "allow countries to earn a higher rate of  interest on their holdings of international reserve assets.",
        "C": "reduce unemployment rates by allowing countries to have independent monetary policies.",
        "D": "reduce inflation rates by imposing strong discipline on national monetary authorities."
      },
      "answer": "D",
      "answerText": "reduce inflation rates by imposing strong discipline on national monetary authorities.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "1 Easy",
      "bloom": "Remember"
    },
    {
      "number": 5,
      "question": "Under a gold standard, a major discovery of a new gold deposit would",
      "options": {
        "A": "decrease the volume of world trade.",
        "B": "increase the inflation rate.",
        "C": "decrease output growth.",
        "D": "increase private demand for gold."
      },
      "answer": "B",
      "answerText": "increase the inflation rate.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "1 Easy",
      "bloom": "Remember"
    },
    {
      "number": 6,
      "question": "A domestic monetary shock is least disruptive",
      "options": {
        "A": "under a floating exchange-rate system.",
        "B": "under a fixed exchange-rate system with sterilization.",
        "C": "under a fixed exchange-rate system without sterilization.",
        "D": "under both fixed and floating exchange rates."
      },
      "answer": "C",
      "answerText": "under a fixed exchange-rate system without sterilization.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 7,
      "question": "The process of \"demonetization of gold\" involves",
      "options": {
        "A": "the purchase of gold and supply of money into the market by the central banks to defend the fixed gold prices.",
        "B": "a sudden fall in private demand for gold in a country due to discovery of a minable gold deposit.",
        "C": "gold sales into the private market in recent decades by central banks and the International Monetary Fund (IMF).",
        "D": "a sudden increase in the private demand for gold in a country, forcing its central bank to sell off gold."
      },
      "answer": "C",
      "answerText": "gold sales into the private market in recent decades by central banks and the International Monetary Fund (IMF).",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "1 Easy",
      "bloom": "Remember"
    },
    {
      "number": 8,
      "question": "A domestic spending shock is likely to be least disruptive under a",
      "options": {
        "A": "floating exchange-rate system when there is high capital mobility.",
        "B": "fixed exchange-rate system when there is high capital mobility.",
        "C": "fixed exchange-rate system without sterilization.",
        "D": "floating exchange-rate system when there is low capital mobility."
      },
      "answer": "A",
      "answerText": "floating exchange-rate system when there is high capital mobility.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 9,
      "question": "For an international capital-flow shock in which foreign investors lose confidence in a country",
      "options": {
        "A": "the country's real domestic product is affected if the country has a fixed exchange rate but is not affected if the country has a floating exchange rate.",
        "B": "the country's real gross domestic product (GDP) decreases regardless of whether the country has a fixed or floating exchange rate, but the country's real GDP declines less if the country has a floating exchange rate.",
        "C": "the country's real domestic product is affected if the country has a floating exchange rate but not affected if the country has a fixed exchange rate.",
        "D": "the country's real GDP tends to decline if the country has a fixed exchange rate, but the country's real GDP tends to increase if the country has a floating exchange rate."
      },
      "answer": "D",
      "answerText": "the country's real GDP tends to decline if the country has a fixed exchange rate, but the country's real GDP tends to increase if the country has a floating exchange rate.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 10,
      "question": "Export demand shocks are likely to be least disruptive to a country with",
      "options": {
        "A": "a floating exchange-rate system.",
        "B": "a fixed exchange-rate system with sterilization.",
        "C": "a fixed exchange-rate system without sterilization.",
        "D": "a deficit in the current account."
      },
      "answer": "A",
      "answerText": "a floating exchange-rate system.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 11,
      "question": "An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with",
      "options": {
        "A": "a floating exchange-rate system.",
        "B": "a fixed exchange-rate system with sterilization.",
        "C": "a fixed exchange-rate system without sterilization.",
        "D": "a surplus in the overall payment balance."
      },
      "answer": "A",
      "answerText": "a floating exchange-rate system.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    },
    {
      "number": 12,
      "question": "Which of the following statements is true?",
      "options": {
        "A": "A domestic monetary shock is less disruptive with floating exchange rates.",
        "B": "If foreign capital is highly responsive to changes in interest rates, then domestic spending shocks are less disruptive with fixed exchange rates.",
        "C": "With floating exchange rates, the transmission of business cycles through foreign trade and repercussion is less than with fixed exchange rates.",
        "D": "International capital-flow shocks have domestic effects under fixed exchange rates but not under floating exchange rates."
      },
      "answer": "C",
      "answerText": "With floating exchange rates, the transmission of business cycles through foreign trade and repercussion is less than with fixed exchange rates.",
      "topic": "Key Issues in the Choice of Exchange-Rate Policy",
      "difficulty": "2 Medium",
      "bloom": "Understand"
    }
  ],
  "handoutMarkdown": "# 第25章 National and Global Choices: Floating Rates and the Alternatives\n\n## 章节概览\nNational and Global Choices: Floating Rates and the Alternatives This chapter provides a capstone to the discussion of international finance and international macroeconomics by examining the choice between fixed and floating exchange rates. Much of the discussion examines this choice from the point of view of a single country, but the discussion also examines some issues related to the functioning of the entire system.\n\n## 知识点\n### 1. Key Issues in the Choice of Exchange-Rate Policy\n- 教学说明：The text examines five key issues that can influence a country's choice. Figure 25.1 presents a summary of implications of the key issues for the advantages of each policy choice.\n- 支撑要点：Exchange-Rate Policy\n- 支撑要点：The effects of macroeconomic shocks\n- 支撑要点：The effectiveness of government policies\n- 来源类型：manual\n\n### 2. National Choices\n- 教学说明：National and Global Choices: Floating Rates and the Alternatives\n- 支撑要点：National and Global Choices: Floating Rates and the Alternatives\n- 来源类型：manual\n\n### 3. Extreme Fixes\n- 教学说明：If the only relevant national goal is to defend the fixed rate, then the currency board is probably better. Because the currency board holds no domestic-currency assets, the currency board cannot sterilize its foreign exchange intervention. The domestic money supply must change with the intervention, and the adjustments to eliminate the payments imbalance takes place.\n- 支撑要点：currency board\n- 支撑要点：attempts to establish a fixed exchange rate that is long-lived by mandating that the board, acting as the country’s monetary authority, should focus almost exclusively on maintaining the fixed rate.\n- 来源类型：manual\n\n### 4. The International Fix – Monetary Union\n- 教学说明：The members of the European Union (EU) are pursuing an international fix—a monetary union in which exchange rates are permanently fixed among the currencies of the countries in the union and a single monetary authority conducts a unionwide monetary policy. As mentioned previously in Chapter 20, in 1979 the EU countries established the European Monetary System, and most became members of its Exchange Rate Mechanism (ERM), an adjustable pegged rate system among its members' currencies.\n- 支撑要点：monetary union,\n- 支撑要点：exchange rates are permanently fixed and a single monetary authority conducts a single, unionwide monetary policy.\n- 支撑要点：In 1999, a subset of countries in the European Union implemented a monetary union with a single currency, the euro, and the European Central Bank as the monetary authority.\n- 来源类型：manual\n\n### 5. Effects of Macroeconomic Shocks\n- 教学说明：Key gains from European Monetary Union are the elimination of exchange rate risk and the elimination of the transaction costs of exchanging currencies. Key risks include the loss of national use of exchange rate changes and monetary policy to address shortcomings in national economic performance. The ECB’s monetary policy can address union-wide macroeconomic performance shortcomings, as it did starting in 2015 when the ECB began an aggressive quantitative easing to address very low euro area inflation rates, slow real GDP growth, and high unemployment rates.\n- 支撑要点：Exchange-Rate Policy\n- 支撑要点：The effects of macroeconomic shocks\n- 支撑要点：The effectiveness of government policies\n- 来源类型：manual\n\n### 6. The Effectiveness of Government Policies\n- 教学说明：Each country must make its own decision about its exchange rate policy. Several of these key issues seem to be important for most countries. Strong arguments in favor of a country's choosing a floating exchange rate are the use of changes in the floating exchange rate to achieve external balance, so that monetary policy can be used to pursue domestic objectives, the ability to set its own goals and policies, and the reduced need to hold official international reserves to defend against speculative attacks on the fixed rate.\n- 支撑要点：Exchange-Rate Policy\n- 支撑要点：The effects of macroeconomic shocks\n- 支撑要点：The effectiveness of government policies\n- 来源类型：manual\n\n### 7. Differences in Macroeconomic Goals, Priorities, and Policies\n- 教学说明：Third, countries that have their currencies linked through fixed exchange rates must achieve consistency in their macroeconomic policies, so that the fixed rate can be defended and maintained. If countries have different goals, priorities, and policies, then they will favor floating exchange rates.\n- 支撑要点：Exchange-Rate Policy\n- 支撑要点：The effects of macroeconomic shocks\n- 支撑要点：The effectiveness of government policies\n- 来源类型：manual\n\n## 案例\n### 案例 1: The members of the European Union (EU) are pursuing an international ...\nThe members of the European Union (EU) are pursuing an international fix—a monetary union in which exchange rates are permanently fixed among the currencies of the countries in the union and a single monetary authority conducts a unionwide monetary policy. As mentioned previously in Chapter 20, in 1979 the EU countries established the European Monetary System, and most became members of its Exchange Rate Mechanism (ERM), an adjustable pegged rate system among its members' currencies.\n\n### 案例 2: Fiscal policy has become a flash point for the euro area. ...\nFiscal policy has become a flash point for the euro area. In the absence of national monetary policy and national exchange rate policy, national fiscal policy should be valuable as the key tool for national macroeconomic stabilization. But national governments may sometimes run excessive fiscal deficits and build up excessive government debt.\n\n### 案例 3: Key gains from European Monetary Union are the elimination of exchange ...\nKey gains from European Monetary Union are the elimination of exchange rate risk and the elimination of the transaction costs of exchanging currencies. Key risks include the loss of national use of exchange rate changes and monetary policy to address shortcomings in national economic performance. The ECB’s monetary policy can address union-wide macroeconomic performance shortcomings, as it did starting in 2015 when the ECB began an aggressive quantitative easing to address very low euro area inflation rates, slow real GDP growth, and high unemployment rates.\n\n### 案例 4: Given the importance of having and maintaining similar inflation rates f ...\nGiven the importance of having and maintaining similar inflation rates for the success of fixed exchange rates, the most important criterion is probably that related to the country's inflation rate. The criteria related to government budget deficits and debt seem to be more debatable. A country that shifts to completely fixed exchange rates has given up the ability to use national monetary policy and exchange rate changes in seeking to address imbalances.\n\n## 习题\n### 题目 1\nWhich of the following is most likely to happen if the demand for money decreases in the domestic economy under floating exchange rates and free capital mobility?\n- A) The domestic interest rate will increase.\n- B) Domestic borrowing will decline.\n- C) The financial account of the country's balance of payments will deteriorate.\n- D) The average price level in the domestic economy will decrease.\n\n### 题目 2\nMonetary policy is most effective in influencing aggregate demand\n- A) under a freely floating exchange-rate system.\n- B) under a fixed exchange-rate system with sterilization.\n- C) under a fixed exchange-rate system without sterilization.\n- D) when there is low capital mobility.\n\n### 题目 3\nFiscal policy is most effective in influencing aggregate demand\n- A) under a floating exchange-rate system with a low degree of capital mobility.\n- B) under a fixed exchange-rate system with sterilization.\n- C) under a fixed exchange-rate system without sterilization.\n- D) under a floating exchange-rate system with a high degree of capital mobility.\n\n### 题目 4\nThose who advocate a return to a real gold standard believe that doing so would\n- A) force countries to pursue sustainable fiscal policies.\n- B) allow countries to earn a higher rate of  interest on their holdings of international reserve assets.\n- C) reduce unemployment rates by allowing countries to have independent monetary policies.\n- D) reduce inflation rates by imposing strong discipline on national monetary authorities.\n\n### 题目 5\nUnder a gold standard, a major discovery of a new gold deposit would\n- A) decrease the volume of world trade.\n- B) increase the inflation rate.\n- C) decrease output growth.\n- D) increase private demand for gold.\n\n### 题目 6\nA domestic monetary shock is least disruptive\n- A) under a floating exchange-rate system.\n- B) under a fixed exchange-rate system with sterilization.\n- C) under a fixed exchange-rate system without sterilization.\n- D) under both fixed and floating exchange rates.\n\n### 题目 7\nThe process of \"demonetization of gold\" involves\n- A) the purchase of gold and supply of money into the market by the central banks to defend the fixed gold prices.\n- B) a sudden fall in private demand for gold in a country due to discovery of a minable gold deposit.\n- C) gold sales into the private market in recent decades by central banks and the International Monetary Fund (IMF).\n- D) a sudden increase in the private demand for gold in a country, forcing its central bank to sell off gold.\n\n### 题目 8\nA domestic spending shock is likely to be least disruptive under a\n- A) floating exchange-rate system when there is high capital mobility.\n- B) fixed exchange-rate system when there is high capital mobility.\n- C) fixed exchange-rate system without sterilization.\n- D) floating exchange-rate system when there is low capital mobility.\n\n## 参考答案\n- 题目 1: 答案：C | 选项内容：The financial account of the country's balance of payments will deteriorate. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：2 Medium\n- 题目 2: 答案：A | 选项内容：under a freely floating exchange-rate system. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：1 Easy\n- 题目 3: 答案：A | 选项内容：under a floating exchange-rate system with a low degree of capital mobility. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：1 Easy\n- 题目 4: 答案：D | 选项内容：reduce inflation rates by imposing strong discipline on national monetary authorities. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：1 Easy\n- 题目 5: 答案：B | 选项内容：increase the inflation rate. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：1 Easy\n- 题目 6: 答案：C | 选项内容：under a fixed exchange-rate system without sterilization. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：2 Medium\n- 题目 7: 答案：C | 选项内容：gold sales into the private market in recent decades by central banks and the International Monetary Fund (IMF). | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：1 Easy\n- 题目 8: 答案：A | 选项内容：floating exchange-rate system when there is high capital mobility. | Topic：Key Issues in the Choice of Exchange-Rate Policy | Difficulty：2 Medium\n\n## AI / NextLab 使用建议\n- Mundell Trilemma Lab：将《Key Issues in the Choice of Exchange-Rate Policy》对应的理论或政策机制放到贸易分析实验室中做交互式验证。 https://digitconnection.ai/nextlab/\n",
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