Exam 15: Net Exports and International Finance

Free-floating exchange rates are determined by the

Which of the following is not an example of an international transfer payment?

While members of the European Union that are part of the eurozone continue to have their own central bank, these national central banks agree to cede the conduct of monetary policy to the European Central Bank.

A surplus in the current account implies

Suppose Grovner's exports equal $950 billion, its imports equal $1,000 billion, and Jpurchases of foreign assets by its citizens equals $900 billion. What is Grovner's balance on its current account?

If income increases in other countries, then U.S.

Which of the following statements is true?

In a simple currency board arrangement, a country can issue

Figure 15-1 -Refer to Figure 15-1. The supply curve of dollars in the foreign exchange market represents I. U.S. purchases of imported goods and services. II. payments to foreign owners of U.S. assets. III. demand for U.S. Treasury bonds by U.S. residents. IV. foreigners' purchases of U.S. assets.

Under the simplifying assumptions made in the text, a current account surplus exists when

Consider two countries, Mondrain and Davenport that are on the gold standard exchange Jrate system. The exchange rate implied by the gold standard is 5 divas (Davenport's Jcurrency) per mond (Mondrain's currency). Suppose at this exchange rate, the quantity supplied of monds exceeds the quantity demanded. Which of the following is true?

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

Under the Bretton Woods agreement,

In a currency board arrangement, participating countries make an explicit legislative commitment to I. use the currency of the largest (based on real GDP) participating country. II. exchange domestic currency for a specified foreign currency at a fixed rate and agreed to submit to the board's disciplines to fulfill its obligations. III. adopt common monetary and fiscal policies prescribed by the board.

A lower price level in the United States.

Consider only the flow of funds spent on acquiring assets. Which of the following is true if the U.S. has a net capital outflow of funds? I. Foreign purchases of U.S. assets are greater than U.S. residents' purchases of foreign assets. II. Foreign purchases of U.S. assets are less than U.S. residents' purchases of foreign assets. III. There is a capital account surplus. IV. There is a capital account deficit.

Suppose that the exchange rate between the British pound and gold was £20 per ounce of Jgold and the exchange rate between the U.S. dollar and gold was $80 per ounce of gold. What is the U.S. dollar exchange rate with respect to the British pound?

The terms "balance of payments" and "balance of trade" are synonymous.

What are the three broad categories of exchange rate systems?

Suppose an American family from New York City eats in a restaurant in Mexico City. How Jwill this transaction be recorded in U.S. international transactions?