Question 1

In a fixed exchange rate system,

Accepted Answer

A) Excess demand for a currency is eliminated by using foreign exchange reserves to increase demand. 
B) A country can eliminate a surplus of its currency by eliminating its protectionist barriers to trade. 
C) The capital account surpluses must offset current account deficits. 
D) A balance-of-payments deficit can be corrected by expansionary fiscal and expansionary monetary policies. 
A) Excess demand for a currency is eliminated by using foreign exchange reserves to increase demand. 
B) A country can eliminate a surplus of its currency by eliminating its protectionist barriers to trade. 
C) The capital account surpluses must offset current account deficits. 
D) A balance-of-payments deficit can be corrected by expansionary fiscal and expansionary monetary policies.

Question 2

A balance-of-payments surplus for the United States can be corrected by

Accepted Answer

A) Increasing U.S.taxes. 
B) Increasing quotas on foreign goods. 
C) Reducing tariffs on foreign goods. 
D) Subsidizing U.S.exports. 
A) Increasing U.S.taxes. 
B) Increasing quotas on foreign goods. 
C) Reducing tariffs on foreign goods. 
D) Subsidizing U.S.exports.

Question 3

Import-competing industries in the United States are likely to resist

Accepted Answer

A) Evaluation of the dollar. 
B) Depreciation of the dollar. 
C) Devaluation of the dollar. 
D) Appreciation of the dollar. 
A) Evaluation of the dollar. 
B) Depreciation of the dollar. 
C) Devaluation of the dollar. 
D) Appreciation of the dollar.

Question 4

If there are no reserves,domestic adjustments to payment imbalances under fixed exchange rates require surplus countries to forsake full employment and deficit countries to forsake price stability.

Accepted Answer

A) True 
 B)False

Question 5

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Accepted Answer

A) Uncertainty for people who invest in world markets. 
B) The return to a worldwide gold standard. 
C) A change in the price of exports. 
D) A change in the price of imports. 
A) Uncertainty for people who invest in world markets. 
B) The return to a worldwide gold standard. 
C) A change in the price of exports. 
D) A change in the price of imports.

Question 6

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus,an increase in imports of French goods by Japanese consumers,ceteris paribus,would result in a

Accepted Answer

A) Market surplus of francs. 
B) Balance-of-trade deficit for France. 
C) Balance-of-payments deficit for Japan. 
D) Balance-of-payments surplus for Japan. 
A) Market surplus of francs. 
B) Balance-of-trade deficit for France. 
C) Balance-of-payments deficit for Japan. 
D) Balance-of-payments surplus for Japan.

Question 7

Which of the following can a nation use to shift the supply or demand for its currency?

Accepted Answer

A) Fiscal policy but not monetary policy. 
B) Monetary policy but not trade policy. 
C) Trade policies such as tariffs but not fiscal policy. 
D) Fiscal,monetary,and trade policies. 
A) Fiscal policy but not monetary policy. 
B) Monetary policy but not trade policy. 
C) Trade policies such as tariffs but not fiscal policy. 
D) Fiscal,monetary,and trade policies.

Question 8

When a Japanese businesswoman traveling in the United States asks,"How many U.S.dollars can I get for these yen?" she wants to know the

Accepted Answer

A) Gold standard rate. 
B) Exchange rate. 
C) Terms of trade. 
D) Currency trade rate. 
A) Gold standard rate. 
B) Exchange rate. 
C) Terms of trade. 
D) Currency trade rate.

Question 9

Theoretically,the net balance of payments is

Accepted Answer

A) Foreign demand for a country's currency minus foreign supply. 
B) The current account plus the capital account. 
C) A country's capital inflow minus its capital outflow. 
D) Exports minus imports. 
A) Foreign demand for a country's currency minus foreign supply. 
B) The current account plus the capital account. 
C) A country's capital inflow minus its capital outflow. 
D) Exports minus imports.

Question 10

One World View article,"The Risks of China's Foreign-Exchange Stockpile," states that

Accepted Answer

A) China's reserves of currency can cause deflation in China. 
B) The trade imbalance is due to an overvalued yuan. 
C) The reserves of foreign exchange in China can cause inflation in China. 
D) The dollar is undervalued. 
A) China's reserves of currency can cause deflation in China. 
B) The trade imbalance is due to an overvalued yuan. 
C) The reserves of foreign exchange in China can cause inflation in China. 
D) The dollar is undervalued.

Question 11

Ceteris paribus,an increase in the U.S.demand for Greek goods in Figure 36.1 will

Accepted Answer

A) Result in a movement from M to R on the supply curve for dollars. 
B) Result in a movement from M to N on the demand curve for dollars. 
C) Increase the dollar price of euros above $2 = 1 euro. 
D) Make U.S.goods more expensive to Greek residents. 
A) Result in a movement from M to R on the supply curve for dollars. 
B) Result in a movement from M to N on the demand curve for dollars. 
C) Increase the dollar price of euros above $2 = 1 euro. 
D) Make U.S.goods more expensive to Greek residents.

Question 12

Suppose that at the prevailing yen-dollar exchange rate there is an excess demand for dollars.To stabilize exchange rates,the United States might

Accepted Answer

A) Lower taxes. 
B) Reduce government spending. 
C) Raise interest rates. 
D) Pursue contractionary monetary policy. 
A) Lower taxes. 
B) Reduce government spending. 
C) Raise interest rates. 
D) Pursue contractionary monetary policy.

Question 13

By holding so much in foreign currency reserves,China is risking

Accepted Answer

A) Recession. 
B) Deflation. 
C) Inflation. 
D) A default on its bonds. 
A) Recession. 
B) Deflation. 
C) Inflation. 
D) A default on its bonds.

Question 14

When exchange rates are flexible,they are

Accepted Answer

A) Determined by proclamation of the monetary authorities of a country. 
B) Determined by the relative levels of gold reserves. 
C) Permitted to vary with changes in supply and demand in the foreign exchange market. 
D) Determined by the provisions of the Bretton Woods agreement. 
A) Determined by proclamation of the monetary authorities of a country. 
B) Determined by the relative levels of gold reserves. 
C) Permitted to vary with changes in supply and demand in the foreign exchange market. 
D) Determined by the provisions of the Bretton Woods agreement.

Question 15

If the Russian ruble depreciates relative to the U.S.dollar,Russian steel becomes more expensive for American firms to purchase.

Accepted Answer

A) True 
 B)False

Question 16

Ceteris paribus,if the French decide they want to drink more Chinese-grown tea,this causes the ________ Chinese currency to ________.

Accepted Answer

A) supply of;increase 
B) supply of;decrease 
C) demand for;increase 
D) demand for;decrease 
A) supply of;increase 
B) supply of;decrease 
C) demand for;increase 
D) demand for;decrease

Question 17

When foreign residents increase their demand for U.S.dollars,ceteris paribus,

Accepted Answer

A) The dollar price of foreign currency will rise. 
B) Foreign residents,at the same time,reduce their supply of foreign currency to the foreign exchange market. 
C) The dollar will appreciate in value. 
D) The dollar will depreciate in value. 
A) The dollar price of foreign currency will rise. 
B) Foreign residents,at the same time,reduce their supply of foreign currency to the foreign exchange market. 
C) The dollar will appreciate in value. 
D) The dollar will depreciate in value.

Question 18

When the price of yen in terms of dollars increases,Honda automobiles from Japan become cheaper to U.S.residents.

Accepted Answer

A) True 
 B)False

Question 19

Ceteris paribus,if African countries experience a drought and purchase food from the United States,the currencies of the African countries should

Accepted Answer

A) Appreciate,and the dollar should appreciate. 
B) Appreciate,and the dollar should depreciate. 
C) Depreciate,and the dollar should appreciate. 
D) Depreciate,and the dollar should depreciate. 
A) Appreciate,and the dollar should appreciate. 
B) Appreciate,and the dollar should depreciate. 
C) Depreciate,and the dollar should appreciate. 
D) Depreciate,and the dollar should depreciate.

Question 20

An excess demand for foreign currency at current exchange rates is known as a

Accepted Answer

A) Balance-of-payments deficit. 
B) Trade deficit. 
C) Balance-of-payments surplus. 
D) Trade surplus. 
A) Balance-of-payments deficit. 
B) Trade deficit. 
C) Balance-of-payments surplus. 
D) Trade surplus.

Exam 36: International Finance

In a fixed exchange rate system,

A balance-of-payments surplus for the United States can be corrected by

Import-competing industries in the United States are likely to resist

If there are no reserves,domestic adjustments to payment imbalances under fixed exchange rates require surplus countries to forsake full employment and deficit countries to forsake price stability.

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus,an increase in imports of French goods by Japanese consumers,ceteris paribus,would result in a

Which of the following can a nation use to shift the supply or demand for its currency?

When a Japanese businesswoman traveling in the United States asks,"How many U.S.dollars can I get for these yen?" she wants to know the

Theoretically,the net balance of payments is

One World View article,"The Risks of China's Foreign-Exchange Stockpile," states that

Ceteris paribus,an increase in the U.S.demand for Greek goods in Figure 36.1 will

Suppose that at the prevailing yen-dollar exchange rate there is an excess demand for dollars.To stabilize exchange rates,the United States might

By holding so much in foreign currency reserves,China is risking

When exchange rates are flexible,they are

If the Russian ruble depreciates relative to the U.S.dollar,Russian steel becomes more expensive for American firms to purchase.

Ceteris paribus,if the French decide they want to drink more Chinese-grown tea,this causes the ________ Chinese currency to ________.

When foreign residents increase their demand for U.S.dollars,ceteris paribus,

When the price of yen in terms of dollars increases,Honda automobiles from Japan become cheaper to U.S.residents.

Ceteris paribus,if African countries experience a drought and purchase food from the United States,the currencies of the African countries should

An excess demand for foreign currency at current exchange rates is known as a

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

Global Poverty

Filters

Ceteris paribus,if the French decide they want to drink more Chinese-grown tea,this causes the Chinese currency to .