Question 1

If Japanese interest rates rise, the

Accepted Answer

A)  demand curve for dollars shifts leftward. 
B)  there is a movement upward along the demand curve for dollars. 
C)  demand curve for dollars shifts rightward. 
D)  None of the above answers are correct. 
A)  demand curve for dollars shifts leftward. 
B)  there is a movement upward along the demand curve for dollars. 
C)  demand curve for dollars shifts rightward. 
D)  None of the above answers are correct.

Question 2

Suppose the target exchange rate set by the Fed is 100 guilders per dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Fed can

Accepted Answer

A)  increase U.S. exports. 
B)  sell dollars. 
C)  buy dollars. 
D)  increase U.S. imports. 
A)  increase U.S. exports. 
B)  sell dollars. 
C)  buy dollars. 
D)  increase U.S. imports.

Question 3

A change in which of the following changes the supply of dollars and shifts the supply curve of doll
I. An increase in the exchange rate.
II. A change in interest rates.
III. A decrease in the expected future exchange rate.

Accepted Answer

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

Question 4

Which of the following occurrences would NOT shift the demand curve for U.S. dollars in the foreign exchange market?

Accepted Answer

A)  an increase in foreign interest rates 
B)  an increase in the U.S. exchange rate 
C)  an increase in the expected future U.S. exchange rate 
D)  an increase in U.S. interest rates 
A)  an increase in foreign interest rates 
B)  an increase in the U.S. exchange rate 
C)  an increase in the expected future U.S. exchange rate 
D)  an increase in U.S. interest rates

Question 5

A decrease in the demand for U.S. exports _ the demand for U.S. dollars and shifts the demand curve for U.S. dollars .

Accepted Answer

A)  increases; leftward 
B)  increases; rightward 
C)  decreases; rightward 
D)  decreases; leftward 
A)  increases; leftward 
B)  increases; rightward 
C)  decreases; rightward 
D)  decreases; leftward

Question 6

Which of the following equations represents the private sector surplus or deficit?

Accepted Answer

A)  C + S + T 
B)  S - I 
C)  X - M 
D)  T - G 
A)  C + S + T 
B)  S - I 
C)  X - M 
D)  T - G

Question 7

Suppose the peso- dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has _ against the dollar and the dollar has against the peso.

Accepted Answer

A)  depreciated; depreciated 
B)  depreciated; appreciated 
C)  appreciated; appreciated 
D)  appreciated; depreciated 
A)  depreciated; depreciated 
B)  depreciated; appreciated 
C)  appreciated; appreciated 
D)  appreciated; depreciated

Question 8

Which of the following is included in a nation's capital account?
I. the purchase of foreign stocks and bonds
II. the sale of foreign stocks and bonds
III. importing a piece of capital equipment

Accepted Answer

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

Question 9

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely that year

Accepted Answer

A)  it has a current account deficit. 
B)  it is a debtor nation. 
C)  it is a net lender. 
D)  it is a creditor nation. 
A)  it has a current account deficit. 
B)  it is a debtor nation. 
C)  it is a net lender. 
D)  it is a creditor nation.

Question 10

The the exchange rate, the are foreign- produced goods and hence the greater the quantity of dollars supplied.

Accepted Answer

A)  higher; more expensive 
B)  lower; more expensive 
C)  higher; cheaper 
D)  lower; cheaper 
A)  higher; more expensive 
B)  lower; more expensive 
C)  higher; cheaper 
D)  lower; cheaper

Question 11

On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment?

Accepted Answer

A)  - 25 fish 
B)  25 fish 
C)  375 fish 
D)  - 375 fish 
A)  - 25 fish 
B)  25 fish 
C)  375 fish 
D)  - 375 fish

Question 12

A factor helping determine demand for the dollar in the foreign exchange market is

Accepted Answer

A)  the supply of U.S. dollars. 
B)  the expected future exchange rate. 
C)  the level of U.S. imports. 
D)  the expected future interest rate. 
A)  the supply of U.S. dollars. 
B)  the expected future exchange rate. 
C)  the level of U.S. imports. 
D)  the expected future interest rate.

Question 13

Suppose that the U.S. interest rate is 5 percent and the Turkish interest rate is 50 percent. The effect of this difference in the foreign exchange market is that

Accepted Answer

A)  investors expect the Turkish currency to fall in value (depreciate) against the dollar. 
B)  investors expect the Turkish currency to rise in value (appreciate) against the dollar. 
C)  an American investor is guaranteed to make an additional 45 percent in dollar terms by investing in Turkey. 
D)  all funds flow to Turkey to get the higher interest rate. 
A)  investors expect the Turkish currency to fall in value (depreciate) against the dollar. 
B)  investors expect the Turkish currency to rise in value (appreciate) against the dollar. 
C)  an American investor is guaranteed to make an additional 45 percent in dollar terms by investing in Turkey. 
D)  all funds flow to Turkey to get the higher interest rate.

Question 14

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

Accepted Answer

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

Question 15

If a country has a capital account deficit, that country's stock of international indebtedness is

Accepted Answer

A)  constant. 
B)  decreasing. 
C)  zero. 
D)  increasing. 
A)  constant. 
B)  decreasing. 
C)  zero. 
D)  increasing.

Question 16

When the value of the U.S. dollar appreciates against the Canadian dollar

Accepted Answer

A)  the Canadian official settlements balance rises. 
B)  the U.S. official settlements balance rises. 
C)  the exchange rate, in terms of Canadian dollars to U.S. dollars, rises. 
D)  the exchange rate, in terms of U.S. dollars to Canadian dollars, rises. 
A)  the Canadian official settlements balance rises. 
B)  the U.S. official settlements balance rises. 
C)  the exchange rate, in terms of Canadian dollars to U.S. dollars, rises. 
D)  the exchange rate, in terms of U.S. dollars to Canadian dollars, rises.

Question 17

An increase in the Japanese interest rate will _ the supply of dollars and lead the dollar to
)

Accepted Answer

A)  decrease; appreciate 
B)  increase; appreciate 
C)  decrease; depreciate 
D)  increase; depreciate 
A)  decrease; appreciate 
B)  increase; appreciate 
C)  decrease; depreciate 
D)  increase; depreciate

Question 18

-Using the table above, if the current market value of the dollar is 110 francs,

Accepted Answer

A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  all three investors expect the dollar to appreciate. 
C)  investor C expects dollar depreciation, but A and B expect appreciation. 
D)  all three investors expect the dollar to depreciate. 
A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  all three investors expect the dollar to appreciate. 
C)  investor C expects dollar depreciation, but A and B expect appreciation. 
D)  all three investors expect the dollar to depreciate.

Question 19

Given the U.S. price level P, the foreign country price level P*, and the real exchange rate RER in foreign currency per U.S. dollar, the nominal exchange rate E would be given by

Accepted Answer

A)  E = P x (RER/P*) 
B)  E = RER x (P*/P) 
C)  E = (P/P*) / RER 
D)  E = RER x (P/P*) 
A)  E = P x (RER/P*) 
B)  E = RER x (P*/P) 
C)  E = (P/P*) / RER 
D)  E = RER x (P/P*)

Question 20

How will an increase in the expected future exchange rate affect the current supply and demand curves for dollars?

Accepted Answer

An increase in the expected future excha

If Japanese interest rates rise, the

Suppose the target exchange rate set by the Fed is 100 guilders per dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Fed can

A change in which of the following changes the supply of dollars and shifts the supply curve of doll I. An increase in the exchange rate. II. A change in interest rates. III. A decrease in the expected future exchange rate.

Which of the following occurrences would NOT shift the demand curve for U.S. dollars in the foreign exchange market?

A decrease in the demand for U.S. exports _ the demand for U.S. dollars and shifts the demand curve for U.S. dollars .

Which of the following equations represents the private sector surplus or deficit?

Suppose the peso- dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has _ against the dollar and the dollar has against the peso.

Which of the following is included in a nation's capital account? I. the purchase of foreign stocks and bonds II. the sale of foreign stocks and bonds III. importing a piece of capital equipment

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely that year

The the exchange rate, the are foreign- produced goods and hence the greater the quantity of dollars supplied.

On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment?

A factor helping determine demand for the dollar in the foreign exchange market is

Suppose that the U.S. interest rate is 5 percent and the Turkish interest rate is 50 percent. The effect of this difference in the foreign exchange market is that

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

If a country has a capital account deficit, that country's stock of international indebtedness is

When the value of the U.S. dollar appreciates against the Canadian dollar

An increase in the Japanese interest rate will _ the supply of dollars and lead the dollar to )

-Using the table above, if the current market value of the dollar is 110 francs,

Given the U.S. price level P, the foreign country price level P*, and the real exchange rate RER in foreign currency per U.S. dollar, the nominal exchange rate E would be given by

How will an increase in the expected future exchange rate affect the current supply and demand curves for dollars?

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

If Japanese interest rates rise, the

Suppose the target exchange rate set by the Fed is 100 guilders per dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Fed can

A change in which of the following changes the supply of dollars and shifts the supply curve of doll I. An increase in the exchange rate. II. A change in interest rates. III. A decrease in the expected future exchange rate.

Which of the following occurrences would NOT shift the demand curve for U.S. dollars in the foreign exchange market?

A decrease in the demand for U.S. exports _ the demand for U.S. dollars and shifts the demand curve for U.S. dollars .

Which of the following equations represents the private sector surplus or deficit?

Suppose the peso- dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has _ against the dollar and the dollar has against the peso.

Which of the following is included in a nation's capital account? I. the purchase of foreign stocks and bonds II. the sale of foreign stocks and bonds III. importing a piece of capital equipment

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely that year

The the exchange rate, the are foreign- produced goods and hence the greater the quantity of dollars supplied.

On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment?

A factor helping determine demand for the dollar in the foreign exchange market is

Suppose that the U.S. interest rate is 5 percent and the Turkish interest rate is 50 percent. The effect of this difference in the foreign exchange market is that

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

If a country has a capital account deficit, that country's stock of international indebtedness is

When the value of the U.S. dollar appreciates against the Canadian dollar

An increase in the Japanese interest rate will _ the supply of dollars and lead the dollar to )

-Using the table above, if the current market value of the dollar is 110 francs,

Given the U.S. price level P, the foreign country price level P*, and the real exchange rate RER in foreign currency per U.S. dollar, the nominal exchange rate E would be given by

How will an increase in the expected future exchange rate affect the current supply and demand curves for dollars?

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