Question 1

Which of the following creates a demand for U.S. dollars?

Accepted Answer

A)  a Japanese tourist catching a show in London 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  Toyota, a Japanese firm, purchasing land in Texas 
D)  a U.S. tourist catching a show in London 
A)  a Japanese tourist catching a show in London 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  Toyota, a Japanese firm, purchasing land in Texas 
D)  a U.S. tourist catching a show in London

Question 2

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar, the dollar has depreciated.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the U.S. interest rate is 6 percent and the world interest rate is 5 percent. The U.S. interest differential is

Accepted Answer

A)  1.2 percent. 
B)  -1 percent. 
C)  - 0.83 percent. 
D)  - 1 percent. 
A)  1.2 percent. 
B)  -1 percent. 
C)  - 0.83 percent. 
D)  - 1 percent.

Question 4

Why do people and firms in the United States supply dollars to the foreign exchange market?

Accepted Answer

People and firms supply dollar

Question 5

Suppose $1 will buy 200 yen in January and buy 300 yen in December. As a result,

Accepted Answer

A)  U.S. exports have decreased. 
B)  the dollar has appreciated. 
C)  the dollar has depreciated. 
D)  the yen has appreciated. 
A)  U.S. exports have decreased. 
B)  the dollar has appreciated. 
C)  the dollar has depreciated. 
D)  the yen has appreciated.

Question 6

The demand for Mexican tomatoes by an American food grocery chain creates a

Accepted Answer

A)  demand for an interest rate differential. 
B)  supply of U.S. dollars. 
C)  demand for the U.S. dollar. 
D)  supply of Mexican pesos. 
A)  demand for an interest rate differential. 
B)  supply of U.S. dollars. 
C)  demand for the U.S. dollar. 
D)  supply of Mexican pesos.

Question 7

-Using the data in the above table, if saving equals $650 billion and exports are greater than imports,

Accepted Answer

A)  government expenditures must increase. 
B)  the government sector must run a deficit. 
C)  net taxes will be less than $650 billion. 
D)  net taxes will be greater than $1300 billion. 
A)  government expenditures must increase. 
B)  the government sector must run a deficit. 
C)  net taxes will be less than $650 billion. 
D)  net taxes will be greater than $1300 billion.

Question 8

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

Accepted Answer

A)  peso depreciated. 
B)  dollar depreciated. 
C)  peso appreciated. 
D)  Both answers A and B are correct. 
A)  peso depreciated. 
B)  dollar depreciated. 
C)  peso appreciated. 
D)  Both answers A and B are correct.

Question 9

In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars?
a) an increase in the exchange rate.
b) an increase in the U.S. interest rate.
c) a fall in the expected future exchange rate.

Accepted Answer

a) The increase in the exchange rate dec

Question 10

In the foreign exchange market, which of the following increases the quantity of dollars demanded?
I. Firms expect a larger profit from holding dollars.
II. Mexicans' income rise so that they buy more U.S. made goods.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 11

Which of the following is included in a nation's current account?
I. the import of services
II. a change of foreign currency holdings
III. net transfers, such as foreign aid payments

Accepted Answer

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

Question 12

-The above table describes accounts for the country of Pacifica. Using this information, net exports for Pacifica equals

Accepted Answer

A)  - $100. 
B)  $650. 
C)  $900. 
D)  $100. 
A)  - $100. 
B)  $650. 
C)  $900. 
D)  $100.

Question 13

-Using the data in the above table, if the private sector runs a surplus of $250 billion, imports will equal $1,000 billion if

Accepted Answer

A)  the government sector runs a deficit of $750 billion. 
B)  investment equals - $1000 billion. 
C)  government expenditure equals - $1000 billion. 
D)  government expenditure equals - $750 billion. 
A)  the government sector runs a deficit of $750 billion. 
B)  investment equals - $1000 billion. 
C)  government expenditure equals - $1000 billion. 
D)  government expenditure equals - $750 billion.

Question 14

Which of the following is NOT included in the U.S. current account?

Accepted Answer

A)  imports of goods and services 
B)  U.S. investment abroad 
C)  net transfers 
D)  net interest income 
A)  imports of goods and services 
B)  U.S. investment abroad 
C)  net transfers 
D)  net interest income

Question 15

A debtor nation means a nation

Accepted Answer

A)  whose current account is less than its capital account. 
B)  through its history has invested less in the rest of the world than other countries have invested in it 
C)  whose current lending to the rest of the world exceeds its borrowing from the rest of the world. 
D)  whose imports exceeds its exports. 
A)  whose current account is less than its capital account. 
B)  through its history has invested less in the rest of the world than other countries have invested in it 
C)  whose current lending to the rest of the world exceeds its borrowing from the rest of the world. 
D)  whose imports exceeds its exports.

Question 16

When the demand for a currency permanently increases, that nation's central bank can maintain its fixed exchange rate indefinitely.

Accepted Answer

A) True 
 B)False

Question 17

During this year a country reports imports of $1,000 billion, exports of $1,100 billion, foreign investment in the country of $900 billion, investment abroad of $1,200 billion, net interest and net transfers of zero. What is the country's current account balance?

Accepted Answer

The curren

Question 18

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world, the country is a

Accepted Answer

A)  net borrower. 
B)  creditor nation. 
C)  net lender. 
D)  debtor nation. 
A)  net borrower. 
B)  creditor nation. 
C)  net lender. 
D)  debtor nation.

Question 19

If net exports is 100 and the private sector balance is 150, then the government sector balance is

Accepted Answer

A)  0. 
B)  250. 
C)  50. 
D)  - 50. 
A)  0. 
B)  250. 
C)  50. 
D)  - 50.

Question 20

-In the above figure, suppose the economy is initially at point A. People come to expect the future
u.S. exchange rate to be higher. As a result there is a change from point A to a point such as
)

Accepted Answer

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

Which of the following creates a demand for U.S. dollars?

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar, the dollar has depreciated.

Suppose the U.S. interest rate is 6 percent and the world interest rate is 5 percent. The U.S. interest differential is

Why do people and firms in the United States supply dollars to the foreign exchange market?

Suppose $1 will buy 200 yen in January and buy 300 yen in December. As a result,

The demand for Mexican tomatoes by an American food grocery chain creates a

-Using the data in the above table, if saving equals $650 billion and exports are greater than imports,

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars? a) an increase in the exchange rate. b) an increase in the U.S. interest rate. c) a fall in the expected future exchange rate.

In the foreign exchange market, which of the following increases the quantity of dollars demanded? I. Firms expect a larger profit from holding dollars. II. Mexicans' income rise so that they buy more U.S. made goods.

Which of the following is included in a nation's current account? I. the import of services II. a change of foreign currency holdings III. net transfers, such as foreign aid payments

-The above table describes accounts for the country of Pacifica. Using this information, net exports for Pacifica equals

-Using the data in the above table, if the private sector runs a surplus of $250 billion, imports will equal $1,000 billion if

Which of the following is NOT included in the U.S. current account?

A debtor nation means a nation

When the demand for a currency permanently increases, that nation's central bank can maintain its fixed exchange rate indefinitely.

During this year a country reports imports of $1,000 billion, exports of $1,100 billion, foreign investment in the country of $900 billion, investment abroad of $1,200 billion, net interest and net transfers of zero. What is the country's current account balance?

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world, the country is a

If net exports is 100 and the private sector balance is 150, then the government sector balance is

-In the above figure, suppose the economy is initially at point A. People come to expect the future u.S. exchange rate to be higher. As a result there is a change from point A to a point such as )

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 creates a demand for U.S. dollars?

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar, the dollar has depreciated.

Suppose the U.S. interest rate is 6 percent and the world interest rate is 5 percent. The U.S. interest differential is

Why do people and firms in the United States supply dollars to the foreign exchange market?

Suppose $1 will buy 200 yen in January and buy 300 yen in December. As a result,

The demand for Mexican tomatoes by an American food grocery chain creates a

-Using the data in the above table, if saving equals $650 billion and exports are greater than imports,

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars? a) an increase in the exchange rate. b) an increase in the U.S. interest rate. c) a fall in the expected future exchange rate.

In the foreign exchange market, which of the following increases the quantity of dollars demanded? I. Firms expect a larger profit from holding dollars. II. Mexicans' income rise so that they buy more U.S. made goods.

Which of the following is included in a nation's current account? I. the import of services II. a change of foreign currency holdings III. net transfers, such as foreign aid payments

-The above table describes accounts for the country of Pacifica. Using this information, net exports for Pacifica equals

-Using the data in the above table, if the private sector runs a surplus of $250 billion, imports will equal $1,000 billion if

Which of the following is NOT included in the U.S. current account?

A debtor nation means a nation

When the demand for a currency permanently increases, that nation's central bank can maintain its fixed exchange rate indefinitely.

During this year a country reports imports of $1,000 billion, exports of $1,100 billion, foreign investment in the country of $900 billion, investment abroad of $1,200 billion, net interest and net transfers of zero. What is the country's current account balance?

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world, the country is a

If net exports is 100 and the private sector balance is 150, then the government sector balance is

-In the above figure, suppose the economy is initially at point A. People come to expect the future u.S. exchange rate to be higher. As a result there is a change from point A to a point such as )

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