Question 1

Which of the following will lead to a depreciation of the dollar against the British pound?

Accepted Answer

A)  a decrease in U.S. demand for British goods 
B)  a decrease in British demand for U.S. assets 
C)  an increase in U.S. interest rates 
D)  an increase in British demand for U.S. imports 
A)  a decrease in U.S. demand for British goods 
B)  a decrease in British demand for U.S. assets 
C)  an increase in U.S. interest rates 
D)  an increase in British demand for U.S. imports B

Question 2

The balance of payments accounts include the

Accepted Answer

A)  export bank account. 
B)  exim bank account. 
C)  non- performing account. 
D)  current account. 
A)  export bank account. 
B)  exim bank account. 
C)  non- performing account. 
D)  current account. D

Question 3

The balance of payments account that records foreign investment in the United States is the

Accepted Answer

A)  ex- im account 
B)  capital account. 
C)  non- performing account. 
D)  current account. 
A)  ex- im account 
B)  capital account. 
C)  non- performing account. 
D)  current account. B

Question 4

What are the three balance of payments accounts? Briefly describe them. What is the relationship among the three?

Accepted Answer

The three balance of payment accounts ar

Question 5

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

Accepted Answer

A)  demand curve for U.S. dollars shifts rightward. 
B)  supply curve of U.S. dollars shifts rightward. 
C)  dollar will appreciate. 
D)  dollar will depreciate. 
A)  demand curve for U.S. dollars shifts rightward. 
B)  supply curve of U.S. dollars shifts rightward. 
C)  dollar will appreciate. 
D)  dollar will depreciate.

Question 6

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as .

Accepted Answer

A)  point C 
B)  point B 
C)  point D 
D)  point E 
A)  point C 
B)  point B 
C)  point D 
D)  point E

Question 7

The official settlements account for the United States measures the

Accepted Answer

A)  value of U.S. merchandise purchased by foreigners. 
B)  net value of U.S. exports of services. 
C)  net value of foreign goods purchased by U.S. residents. 
D)  net increase or decrease in the government's holdings of foreign currency. 
A)  value of U.S. merchandise purchased by foreigners. 
B)  net value of U.S. exports of services. 
C)  net value of foreign goods purchased by U.S. residents. 
D)  net increase or decrease in the government's holdings of foreign currency.

Question 8

The current account

Accepted Answer

A)  does not account for interest payments paid to and received from the rest of the world. 
B)  measures our imports minus our exports. 
C)  measures our exports minus our imports taking into account interest payments paid to and received from the rest of the world. 
D)  is part of GDP. 
A)  does not account for interest payments paid to and received from the rest of the world. 
B)  measures our imports minus our exports. 
C)  measures our exports minus our imports taking into account interest payments paid to and received from the rest of the world. 
D)  is part of GDP.

Question 9

One of the main reasons the supply curve for dollars slopes includes the _ _.

Accepted Answer

A)  downward; expected profit effect 
B)  upward; exports effect 
C)  upward; expected profits effect 
D)  downward; imports effect 
A)  downward; expected profit effect 
B)  upward; exports effect 
C)  upward; expected profits effect 
D)  downward; imports effect

Question 10

The official settlements account records the change in .

Accepted Answer

A)  international trade 
B)  the reserves held by banks and the Fed 
C)  foreign investment and domestic investment 
D)  U.S. official reserves 
A)  international trade 
B)  the reserves held by banks and the Fed 
C)  foreign investment and domestic investment 
D)  U.S. official reserves

Question 11

By definition, currency appreciation occurs when

Accepted Answer

A)  the value of all currencies rise relative to gold. 
B)  the value of one currency falls relative to another currency. 
C)  the value of all currencies fall relative to gold. 
D)  the value of one currency rises relative to another currency. 
A)  the value of all currencies rise relative to gold. 
B)  the value of one currency falls relative to another currency. 
C)  the value of all currencies fall relative to gold. 
D)  the value of one currency rises relative to another currency.

Question 12

In the foreign exchange market, how does the quantity of U.S. dollars demanded respond to a change in the U.S. exchange rate? Why is there this response?

Accepted Answer

If the U.S. exchange rate falls, the qua

Question 13

If the interest rate on Swiss franc assets increases, the

Accepted Answer

A)  quantity of dollars demanded will increase. 
B)  demand for dollars will decrease. 
C)  demand for dollars will increase. 
D)  quantity of dollars demanded will decrease. 
A)  quantity of dollars demanded will increase. 
B)  demand for dollars will decrease. 
C)  demand for dollars will increase. 
D)  quantity of dollars demanded will decrease.

Question 14

A developing county is usually a
I. net lender.
II. net borrower.
III. debtor nation.
IV. creditor nation.

Accepted Answer

A)  III only 
B)  II only 
C)  II and III 
D)  I and IV 
A)  III only 
B)  II only 
C)  II and III 
D)  I and IV

Question 15

Which of the following examples definitely illustrates an appreciation of the U.S. dollar?

Accepted Answer

A)  The dollar exchanges for 1.2 pounds and then exchanges for 200 yen. 
B)  The dollar exchanges for 120 euros and then exchanges for 100 euros. 
C)  The dollar exchanges for 200 yen and then exchanges for 250 yen. 
D)  none of the above 
A)  The dollar exchanges for 1.2 pounds and then exchanges for 200 yen. 
B)  The dollar exchanges for 120 euros and then exchanges for 100 euros. 
C)  The dollar exchanges for 200 yen and then exchanges for 250 yen. 
D)  none of the above

Question 16

The the expected profit from holding a foreign currency, the greater is the in the foreign exchange market.

Accepted Answer

A)  larger; quantity demanded of dollars 
B)  larger; quantity supplied of dollars 
C)  smaller; quantity demanded of foreign currency 
D)  None of the above is correct because the expected profit has nothing to do with the supply and demand for dollars or foreign currency. 
A)  larger; quantity demanded of dollars 
B)  larger; quantity supplied of dollars 
C)  smaller; quantity demanded of foreign currency 
D)  None of the above is correct because the expected profit has nothing to do with the supply and demand for dollars or foreign currency.

Question 17

If the interest rate on Japanese yen assets falls, the

Accepted Answer

A)  demand for dollars will increase. 
B)  quantity of dollars demanded will decrease. 
C)  quantity of dollars demanded will increase. 
D)  demand for dollars will decrease. 
A)  demand for dollars will increase. 
B)  quantity of dollars demanded will decrease. 
C)  quantity of dollars demanded will increase. 
D)  demand for dollars will decrease.

Question 18

Assume that there is an increased demand in the United States for European wines. If all other factors are held constant, this change will result in

Accepted Answer

A)  an appreciation of the dollar. 
B)  an increase in the exchange rate for euros. 
C)  a decrease in the value of the euro. 
D)  a movement along the demand curve for euros. 
A)  an appreciation of the dollar. 
B)  an increase in the exchange rate for euros. 
C)  a decrease in the value of the euro. 
D)  a movement along the demand curve for euros.

Question 19

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Accepted Answer

A)  92; purchasing power parity occurs 
B)  92; interest rate parity doesn't occur 
C)  110; interest rate parity occurs 
D)  110; purchasing power parity occurs 
A)  92; purchasing power parity occurs 
B)  92; interest rate parity doesn't occur 
C)  110; interest rate parity occurs 
D)  110; purchasing power parity occurs

Question 20

-The above table gives data for the nation of Sueland. What is the government sector surplus or deficit?

Accepted Answer

A)  $32 billion 
B)  - $43 billion 
C)  $1,772 billion 
D)  - $32 billion 
A)  $32 billion 
B)  - $43 billion 
C)  $1,772 billion 
D)  - $32 billion

Which of the following will lead to a depreciation of the dollar against the British pound?

The balance of payments accounts include the

The balance of payments account that records foreign investment in the United States is the

What are the three balance of payments accounts? Briefly describe them. What is the relationship among the three?

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as .

The official settlements account for the United States measures the

The current account

One of the main reasons the supply curve for dollars slopes includes the _ _.

The official settlements account records the change in .

By definition, currency appreciation occurs when

In the foreign exchange market, how does the quantity of U.S. dollars demanded respond to a change in the U.S. exchange rate? Why is there this response?

If the interest rate on Swiss franc assets increases, the

A developing county is usually a I. net lender. II. net borrower. III. debtor nation. IV. creditor nation.

Which of the following examples definitely illustrates an appreciation of the U.S. dollar?

The the expected profit from holding a foreign currency, the greater is the in the foreign exchange market.

If the interest rate on Japanese yen assets falls, the

Assume that there is an increased demand in the United States for European wines. If all other factors are held constant, this change will result in

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-The above table gives data for the nation of Sueland. What is the government sector surplus or deficit?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 9: The Exchange Rate and the Balance of Payments

Which of the following will lead to a depreciation of the dollar against the British pound?

The balance of payments accounts include the

The balance of payments account that records foreign investment in the United States is the

What are the three balance of payments accounts? Briefly describe them. What is the relationship among the three?

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as .

The official settlements account for the United States measures the

The current account

One of the main reasons the supply curve for dollars slopes includes the _ _.

The official settlements account records the change in .

By definition, currency appreciation occurs when

In the foreign exchange market, how does the quantity of U.S. dollars demanded respond to a change in the U.S. exchange rate? Why is there this response?

If the interest rate on Swiss franc assets increases, the

A developing county is usually a I. net lender. II. net borrower. III. debtor nation. IV. creditor nation.

Which of the following examples definitely illustrates an appreciation of the U.S. dollar?

The the expected profit from holding a foreign currency, the greater is the in the foreign exchange market.

If the interest rate on Japanese yen assets falls, the

Assume that there is an increased demand in the United States for European wines. If all other factors are held constant, this change will result in

On HYPERLINK "http://www.yodobashi.com/" www.yodobashi.com, you can buy a Canon EOS camera for 298,000 yen. The same camera costs $2700 on HYPERLINK "http://www.calumetphoto.com/" www.calumetphoto.com. If the exchange rate is yen per dollar, we can determine for this camera.

-The above table gives data for the nation of Sueland. What is the government sector surplus or deficit?

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters