Question 1

The larger the value of U.S. imports, the greater the quantity of causing the quantity supplied of dollars to .

Accepted Answer

A)  foreign currency demanded; increase 
B)  U.S. dollars demanded; increase 
C)  foreign currency demanded; decrease 
D)  U.S. dollars demanded; decrease 
A)  foreign currency demanded; increase 
B)  U.S. dollars demanded; increase 
C)  foreign currency demanded; decrease 
D)  U.S. dollars demanded; decrease

Question 2

The law of demand for dollars means that the

Accepted Answer

A)  lower the exchange rate, the greater the quantity of dollars demanded. 
B)  higher the exchange rate, the smaller the quantity of dollars demanded. 
C)  lower the exchange rate, the smaller the quantity of U.S. exports demanded. 
D)  Both answers A and B are correct. 
A)  lower the exchange rate, the greater the quantity of dollars demanded. 
B)  higher the exchange rate, the smaller the quantity of dollars demanded. 
C)  lower the exchange rate, the smaller the quantity of U.S. exports demanded. 
D)  Both answers A and B are correct.

Question 3

If U.S. imports increase, the sum of the balance of payments accounts (the sum of the current account plus capital account plus official settlements account)

Accepted Answer

A)  does not change. 
B)  becomes negative. 
C)  becomes positive. 
D)  becomes negative or positive depending on the government budget deficit or surplus. 
A)  does not change. 
B)  becomes negative. 
C)  becomes positive. 
D)  becomes negative or positive depending on the government budget deficit or surplus.

Question 4

Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result,

Accepted Answer

A)  the demand curve for European euros shifts rightward and the supply curve for Indian rupees shifts leftward. 
B)  only the demand curve for Indian rupees shifts rightward. 
C)  the demand curve for European euros and the supply curve for Indian rupees both shift rightward. 
D)  only the demand curve for European euros shifts rightward. 
A)  the demand curve for European euros shifts rightward and the supply curve for Indian rupees shifts leftward. 
B)  only the demand curve for Indian rupees shifts rightward. 
C)  the demand curve for European euros and the supply curve for Indian rupees both shift rightward. 
D)  only the demand curve for European euros shifts rightward.

Question 5

The account used to record changes in the official reserve is the

Accepted Answer

A)  capital account. 
B)  official reserves account. 
C)  official settlements account. 
D)  current account. 
A)  capital account. 
B)  official reserves account. 
C)  official settlements account. 
D)  current account.

Question 6

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

Accepted Answer

A)  $25 billion 
B)  $350 billion 
C)  $300 billion 
D)  - $25 billion 
A)  $25 billion 
B)  $350 billion 
C)  $300 billion 
D)  - $25 billion

Question 7

Which of the following statements is correct?
I. The exchange rate is a price.
II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Accepted Answer

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

Question 8

Which of the following statements is INCORRECT?

Accepted Answer

A)  The sum of government sector and private sector balances equals net exports. 
B)  Net exports equals exports minus imports. 
C)  Private sector balance equal private investment minus private saving. 
D)  The government sector balance equals net taxes minus government expenditures on goods and services. 
A)  The sum of government sector and private sector balances equals net exports. 
B)  Net exports equals exports minus imports. 
C)  Private sector balance equal private investment minus private saving. 
D)  The government sector balance equals net taxes minus government expenditures on goods and services.

Question 9

When the value of one currency falls relative to another currency, the exchange rate for the first currency has

Accepted Answer

A)  appreciated. 
B)  depreciated. 
C)  demanded. 
D)  revalued. 
A)  appreciated. 
B)  depreciated. 
C)  demanded. 
D)  revalued.

Question 10

In the United States, since 1981 which two of the following have almost always moved in the same direction?

Accepted Answer

A)  net exports and the private sector balance 
B)  the government sector balance and the private sector balance 
C)  net exports and the government sector balance 
D)  none of the above 
A)  net exports and the private sector balance 
B)  the government sector balance and the private sector balance 
C)  net exports and the government sector balance 
D)  none of the above

Question 11

The capital account measures .

Accepted Answer

A)  capital used inside the United States but manufactured outside the United States 
B)  capital used outside the United States but manufactured inside the United States 
C)  foreign investment in the United States minus U.S. investment abroad 
D)  capital produced outside of the United States minus capital produced inside the United States 
A)  capital used inside the United States but manufactured outside the United States 
B)  capital used outside the United States but manufactured inside the United States 
C)  foreign investment in the United States minus U.S. investment abroad 
D)  capital produced outside of the United States minus capital produced inside the United States

Question 12

In June 2008, $1 bought 0.5 pounds and in October, $1 bought 0.65 pounds. As a result of this change, between June and October.

Accepted Answer

A)  the demand for dollars increased. 
B)  the dollar depreciated and the quantity of dollars demanded decreased. 
C)  the demand for dollars decreased. 
D)  the dollar appreciated and the quantity of dollars demanded decreased. 
A)  the demand for dollars increased. 
B)  the dollar depreciated and the quantity of dollars demanded decreased. 
C)  the demand for dollars decreased. 
D)  the dollar appreciated and the quantity of dollars demanded decreased.

Question 13

-Using the table above, if the current market value of the dollar is 125 francs,

Accepted Answer

A)  investor A holds francs, but B and C hold dollars. 
B)  all three investors hold francs. 
C)  investor A holds dollars, but B and C hold francs. 
D)  all three investors hold dollars. 
A)  investor A holds francs, but B and C hold dollars. 
B)  all three investors hold francs. 
C)  investor A holds dollars, but B and C hold francs. 
D)  all three investors hold dollars.

Question 14

The price of a computer in the United States is $1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar.
a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price computer in Germany?
b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the the United States?
c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported fro United States change in Germany?
d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the Un States from Germany change in the United States?

Accepted Answer

a) The price of an American computer in

Question 15

Which of the following is recorded in the U.S. balance of payments account?
I. foreign investment in the United States
II. U.S. investment abroad
III. the U.S. government deficit or surplus

Accepted Answer

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

Question 16

If exchange rates and prices are such that a CD purchased in the U.S. is less expensive than a CD purchased in Mexico, purchasing power parity predicts that the demand for dollars will and the supply of dollars will .

Accepted Answer

A)  decrease, increase 
B)  increase, decrease 
C)  decrease, decrease 
D)  increase, increase 
A)  decrease, increase 
B)  increase, decrease 
C)  decrease, decrease 
D)  increase, increase

Question 17

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2007 and 2008, the Japanese yen against the U.S dollar and the euro _ against the
u.S. dollar.

Accepted Answer

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

Question 18

The exchange rate is the price at which the of one country exchanges for the _ of another country.

Accepted Answer

A)  currency; currency 
B)  goods; goods 
C)  currency; goods 
D)  currency; financial instruments 
A)  currency; currency 
B)  goods; goods 
C)  currency; goods 
D)  currency; financial instruments

Question 19

Other things remaining the same, if the expected future exchange rate rises, the demand curve for
u.S. dollars shifts and the supply curve of U.S. dollars shifts .

Accepted Answer

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

Question 20

Which international account is used to record payments for imports, receipts from exports, net interest paid abroad and net transfers?

Accepted Answer

A)  the official settlements account 
B)  the current account 
C)  the capital account 
D)  the trade account 
A)  the official settlements account 
B)  the current account 
C)  the capital account 
D)  the trade account

The larger the value of U.S. imports, the greater the quantity of causing the quantity supplied of dollars to .

The law of demand for dollars means that the

If U.S. imports increase, the sum of the balance of payments accounts (the sum of the current account plus capital account plus official settlements account)

Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result,

The account used to record changes in the official reserve is the

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

Which of the following statements is correct? I. The exchange rate is a price. II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Which of the following statements is INCORRECT?

When the value of one currency falls relative to another currency, the exchange rate for the first currency has

In the United States, since 1981 which two of the following have almost always moved in the same direction?

The capital account measures .

In June 2008, $1 bought 0.5 pounds and in October, $1 bought 0.65 pounds. As a result of this change, between June and October.

-Using the table above, if the current market value of the dollar is 125 francs,

Which of the following is recorded in the U.S. balance of payments account? I. foreign investment in the United States II. U.S. investment abroad III. the U.S. government deficit or surplus

If exchange rates and prices are such that a CD purchased in the U.S. is less expensive than a CD purchased in Mexico, purchasing power parity predicts that the demand for dollars will and the supply of dollars will .

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2007 and 2008, the Japanese yen against the U.S dollar and the euro _ against the u.S. dollar.

The exchange rate is the price at which the of one country exchanges for the _ of another country.

Other things remaining the same, if the expected future exchange rate rises, the demand curve for u.S. dollars shifts and the supply curve of U.S. dollars shifts .

Which international account is used to record payments for imports, receipts from exports, net interest paid abroad and net transfers?

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

The larger the value of U.S. imports, the greater the quantity of causing the quantity supplied of dollars to .

The law of demand for dollars means that the

If U.S. imports increase, the sum of the balance of payments accounts (the sum of the current account plus capital account plus official settlements account)

Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result,

The account used to record changes in the official reserve is the

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

Which of the following statements is correct? I. The exchange rate is a price. II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Which of the following statements is INCORRECT?

When the value of one currency falls relative to another currency, the exchange rate for the first currency has

In the United States, since 1981 which two of the following have almost always moved in the same direction?

The capital account measures .

In June 2008, $1 bought 0.5 pounds and in October, $1 bought 0.65 pounds. As a result of this change, between June and October.

-Using the table above, if the current market value of the dollar is 125 francs,

Which of the following is recorded in the U.S. balance of payments account? I. foreign investment in the United States II. U.S. investment abroad III. the U.S. government deficit or surplus

If exchange rates and prices are such that a CD purchased in the U.S. is less expensive than a CD purchased in Mexico, purchasing power parity predicts that the demand for dollars will and the supply of dollars will .

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2007 and 2008, the Japanese yen against the U.S dollar and the euro _ against the u.S. dollar.

The exchange rate is the price at which the of one country exchanges for the _ of another country.

Other things remaining the same, if the expected future exchange rate rises, the demand curve for u.S. dollars shifts and the supply curve of U.S. dollars shifts .

Which international account is used to record payments for imports, receipts from exports, net interest paid abroad and net transfers?

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