Question 1

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

Accepted Answer

A) True 
 B)False

Question 2

Suppose economic agents are increasingly concerned about the stability of Thailand's banking system. What is likely to happen in the Thai currency market?

Accepted Answer

A)  The demand for bahts (Thailand' currency) will decrease. 
B)  The supply of bahts will decrease. 
C)  Both the demand and supply of bahts will decrease. 
D)  Both the demand and supply of bahts will increase. 
A)  The demand for bahts (Thailand' currency) will decrease. 
B)  The supply of bahts will decrease. 
C)  Both the demand and supply of bahts will decrease. 
D)  Both the demand and supply of bahts will increase.

Question 3

Which of the following generates a demand for U.S. dollars in the currency market?

Accepted Answer

A)  Japanese tourists shop in Barney's of New York 
B)  A Japanese businesswoman sells her U.S. government bonds. 
C)  An American citizen buys Japanese Yen for her trip to Japan. 
D)  A restaurant in Kansas imports Kobe beef from Japan. 
A)  Japanese tourists shop in Barney's of New York 
B)  A Japanese businesswoman sells her U.S. government bonds. 
C)  An American citizen buys Japanese Yen for her trip to Japan. 
D)  A restaurant in Kansas imports Kobe beef from Japan.

Question 4

Figure 15-1  
-Refer to Figure 15-1. The equilibrium quantity, Q1 represents

Accepted Answer

A)  the quantity of U.S. dollars supplied by the Federal Reserve in foreign markets. 
B)  the quantity of U.S. dollars supplied and demanded by foreign nationals. 
C)  The quantity of U.S. dollars supplied by U.S. importers and U.S. nationals who purchased foreign assets. 
D)  It represents the total amount foreigners spent in the United States during a given period. 
A)  the quantity of U.S. dollars supplied by the Federal Reserve in foreign markets. 
B)  the quantity of U.S. dollars supplied and demanded by foreign nationals. 
C)  The quantity of U.S. dollars supplied by U.S. importers and U.S. nationals who purchased foreign assets. 
D)  It represents the total amount foreigners spent in the United States during a given period.

Question 5

Consider two countries, Mondrain and Davenport that are on the gold standard exchange rate system. Suppose the exchange rate between monds (Mondrain's currency) and divas (Davenport's currency) is 4 divas per mond and the price of gold in Mondrain is fixed at 60 monds per ounce of gold. What is the price of gold in Davenport?

Accepted Answer

A)  6.66 divas per ounce of gold 
B)  15 divas per ounce of gold 
C)  24 divas per ounce of gold 
D)  240 divas per ounce of gold 
A)  6.66 divas per ounce of gold 
B)  15 divas per ounce of gold 
C)  24 divas per ounce of gold 
D)  240 divas per ounce of gold

Question 6

The purchase of U.S. goods and services by foreigners

Accepted Answer

A)  requires the purchase of dollar-denominated bonds. 
B)  increases the demand for U.S. dollars. 
C)  increases the demand for foreign currencies. 
D)  requires the purchase of U.S. financial assets as collateral. 
A)  requires the purchase of dollar-denominated bonds. 
B)  increases the demand for U.S. dollars. 
C)  increases the demand for foreign currencies. 
D)  requires the purchase of U.S. financial assets as collateral.

Question 7

Suppose a family from Peru eats in a restaurant in Salt Lake City, Utah. How will this Jtransaction be recorded in U.S. international transactions?

Accepted Answer

A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a positive item. 
D)  It is recorded in the capital account as a negative item. 
A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a positive item. 
D)  It is recorded in the capital account as a negative item.

Question 8

The government of France, claiming a threat to its cultural heritage, has restricted the showing of films produced in the United States. French radio stations are fined if more than 40% of the music they play is from "foreign" rock groups. These restrictions

Accepted Answer

A)  are essentially barriers to trade. 
B)  cannot be considered trade barriers; rather they are essential for culture preservation. 
C)  are necessary for economic growth because they promote employment in the French film and music industries. 
D)  are necessary if the French film and music industries are to acquire a comparative advantage in the future. 
A)  are essentially barriers to trade. 
B)  cannot be considered trade barriers; rather they are essential for culture preservation. 
C)  are necessary for economic growth because they promote employment in the French film and music industries. 
D)  are necessary if the French film and music industries are to acquire a comparative advantage in the future.

Question 9

Which of the following has contributed most to the significant increase in world trade since 1990??

Accepted Answer

A)  Removal of trade barriers 
B)  Increase in world population 
C)  Increases in income levels 
D)  Increase in the quantity of natural resources 
A)  Removal of trade barriers 
B)  Increase in world population 
C)  Increases in income levels 
D)  Increase in the quantity of natural resources

Question 10

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado JSprings, Colorado. How will this transaction be recorded in U.S. international transactions?

Accepted Answer

A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a positive item. 
D)  It is recorded in the capital account as a negative item. 
A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a positive item. 
D)  It is recorded in the capital account as a negative item.

Question 11

Japan's current account balance equals

Accepted Answer

A)  spending flowing from Japan to the rest of the world on current account less spending flowing into Japan from the rest of the world on current account. 
B)  spending flowing into Japan from the rest of the world on current account less spending flowing from Japan to the rest of the world on current account. 
C)  spending flowing into Japan from the rest of the world on current account plus spending flowing from Japan to the rest of the world on current account. 
D)  the amount the rest of the world owes Japan for purchases of Japanese products and assets. 
A)  spending flowing from Japan to the rest of the world on current account less spending flowing into Japan from the rest of the world on current account. 
B)  spending flowing into Japan from the rest of the world on current account less spending flowing from Japan to the rest of the world on current account. 
C)  spending flowing into Japan from the rest of the world on current account plus spending flowing from Japan to the rest of the world on current account. 
D)  the amount the rest of the world owes Japan for purchases of Japanese products and assets.

Question 12

The current account

Accepted Answer

A)  keeps track of all spending flows on imports and exports of goods and services. 
B)  keeps track of all spending flows on imports and exports of goods and services and assets. 
C)  is an ongoing balance of what is owed a nation by foreigners. 
D)  is an ongoing balance of a nation's foreign debts. 
A)  keeps track of all spending flows on imports and exports of goods and services. 
B)  keeps track of all spending flows on imports and exports of goods and services and assets. 
C)  is an ongoing balance of what is owed a nation by foreigners. 
D)  is an ongoing balance of a nation's foreign debts.

Question 13

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's
Jbalance on its current account?

Accepted Answer

A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion 
A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion

Question 14

Which of the following statements is true?

Accepted Answer

A)  Current account balance = -(capital account balance). 
B)  A country's balance on current account equals its balance on capital account. 
C)  If the market for a nation's currency is in equilibrium, a capital account surplus necessarily means a current account surplus. 
D)  Capital accounts and current accounts balances are determined by governments. 
A)  Current account balance = -(capital account balance). 
B)  A country's balance on current account equals its balance on capital account. 
C)  If the market for a nation's currency is in equilibrium, a capital account surplus necessarily means a current account surplus. 
D)  Capital accounts and current accounts balances are determined by governments.

Question 15

A higher exchange rate for the U.S. dollar means that a dollar buys

Accepted Answer

A)  more foreign currency and more foreign goods and services. 
B)  less foreign currency and fewer goods and services. 
C)  more foreign currency, and that U.S. exports will rise. 
D)  less foreign currency and more foreign goods and services. 
A)  more foreign currency and more foreign goods and services. 
B)  less foreign currency and fewer goods and services. 
C)  more foreign currency, and that U.S. exports will rise. 
D)  less foreign currency and more foreign goods and services.

Question 16

As the incomes in foreign nations rise, their imports from the United States will

Accepted Answer

A)  fall as they become less dependent on other countries. 
B)  rise. 
C)  not be affected. 
D)  rise and the U.S. dollar exchange rate will fall. 
A)  fall as they become less dependent on other countries. 
B)  rise. 
C)  not be affected. 
D)  rise and the U.S. dollar exchange rate will fall.

Question 17

Which of the following affects the quantity of U.S. dollars demanded in the currency market?

Accepted Answer

A)  U.S. purchases of foreign goods and services 
B)  Payments to foreign owners of U.S. assets 
C)  Transfer payments from foreign individuals, firms, or governments to U.S. residents 
D)  Domestic purchases of U.S. goods and services 
A)  U.S. purchases of foreign goods and services 
B)  Payments to foreign owners of U.S. assets 
C)  Transfer payments from foreign individuals, firms, or governments to U.S. residents 
D)  Domestic purchases of U.S. goods and services

Question 18

An exchange rate system in which governments and central banks do not participate in the Jcurrency market is a(n)

Accepted Answer

A)  managed float system. 
B)  free-floating exchange rate system. 
C)  commodity standard system. 
D)  fixed exchange rate system. 
A)  managed float system. 
B)  free-floating exchange rate system. 
C)  commodity standard system. 
D)  fixed exchange rate system.

Question 19

Members of the countries in the eurozone

Accepted Answer

A)  have less autonomy in conducting their monetary and fiscal policies than they did before the euro was introduced. 
B)  have more autonomy in conducting their monetary and fiscal policies than they did before the euro was introduced. 
C)  have less autonomy in conducting their monetary policy than they did before the euro was introduced, but more autonomy in conducting their fiscal policy. 
D)  have more autonomy in conducting their monetary policy than they did before the euro was introduced, but less autonomy in conducting their fiscal policy. 
A)  have less autonomy in conducting their monetary and fiscal policies than they did before the euro was introduced. 
B)  have more autonomy in conducting their monetary and fiscal policies than they did before the euro was introduced. 
C)  have less autonomy in conducting their monetary policy than they did before the euro was introduced, but more autonomy in conducting their fiscal policy. 
D)  have more autonomy in conducting their monetary policy than they did before the euro was introduced, but less autonomy in conducting their fiscal policy.

Question 20

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's
Jbalance on its capital account?

Accepted Answer

A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion 
A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

Suppose economic agents are increasingly concerned about the stability of Thailand's banking system. What is likely to happen in the Thai currency market?

Which of the following generates a demand for U.S. dollars in the currency market?

Figure 15-1 -Refer to Figure 15-1. The equilibrium quantity, Q₁ represents

The purchase of U.S. goods and services by foreigners

Suppose a family from Peru eats in a restaurant in Salt Lake City, Utah. How will this Jtransaction be recorded in U.S. international transactions?

The government of France, claiming a threat to its cultural heritage, has restricted the showing of films produced in the United States. French radio stations are fined if more than 40% of the music they play is from "foreign" rock groups. These restrictions

Which of the following has contributed most to the significant increase in world trade since 1990??

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado JSprings, Colorado. How will this transaction be recorded in U.S. international transactions?

Japan's current account balance equals

The current account

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's Jbalance on its current account?

Which of the following statements is true?

A higher exchange rate for the U.S. dollar means that a dollar buys

As the incomes in foreign nations rise, their imports from the United States will

Which of the following affects the quantity of U.S. dollars demanded in the currency market?

An exchange rate system in which governments and central banks do not participate in the Jcurrency market is a(n)

Members of the countries in the eurozone

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's Jbalance on its capital account?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 15: Net Exports and International Finance

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

Suppose economic agents are increasingly concerned about the stability of Thailand's banking system. What is likely to happen in the Thai currency market?

Which of the following generates a demand for U.S. dollars in the currency market?

Figure 15-1 -Refer to Figure 15-1. The equilibrium quantity, Q1 represents

The purchase of U.S. goods and services by foreigners

Suppose a family from Peru eats in a restaurant in Salt Lake City, Utah. How will this Jtransaction be recorded in U.S. international transactions?

The government of France, claiming a threat to its cultural heritage, has restricted the showing of films produced in the United States. French radio stations are fined if more than 40% of the music they play is from "foreign" rock groups. These restrictions

Which of the following has contributed most to the significant increase in world trade since 1990??

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado JSprings, Colorado. How will this transaction be recorded in U.S. international transactions?

Japan's current account balance equals

The current account

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's Jbalance on its current account?

Which of the following statements is true?

A higher exchange rate for the U.S. dollar means that a dollar buys

As the incomes in foreign nations rise, their imports from the United States will

Which of the following affects the quantity of U.S. dollars demanded in the currency market?

An exchange rate system in which governments and central banks do not participate in the Jcurrency market is a(n)

Members of the countries in the eurozone

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's Jbalance on its capital account?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Figure 15-1 -Refer to Figure 15-1. The equilibrium quantity, Q₁ represents