Question 1

The account that records foreign investment in the United States minus U.S. investment abroad is the

Accepted Answer

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

Question 2

-In the above table, saving must be

Accepted Answer

A)  $300 billion. 
B)  - $300 billion. 
C)  $400 billion. 
D)  - $400 billion. 
A)  $300 billion. 
B)  - $300 billion. 
C)  $400 billion. 
D)  - $400 billion.

Question 3

A creditor nation is a country that and a debtor nation is a country that .

Accepted Answer

A)  through its history has invested more in the rest of the world than other countries have invested in it; through its history has borrowed more than it has lent 
B)  currently lends more than it borrows; currently borrows more than it lends 
C)  currently borrows more than it lends; currently lends more than it borrows 
D)  through its history has borrowed more than it has lent; through its history has invested more in the rest of the world than other countries have invested in it 
A)  through its history has invested more in the rest of the world than other countries have invested in it; through its history has borrowed more than it has lent 
B)  currently lends more than it borrows; currently borrows more than it lends 
C)  currently borrows more than it lends; currently lends more than it borrows 
D)  through its history has borrowed more than it has lent; through its history has invested more in the rest of the world than other countries have invested in it

Question 4

If the value of a dollar rises in terms of yen, the dollar has and the yen has .

Accepted Answer

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

Question 5

The United States has net exports of - $350 billion and the private sector balance is - $400 billion. What is the government sector balance?

Accepted Answer

The sum of the private sector balance pl

Question 6

If the current account balance is $30 billion, and the capital account balance is $35 billion, then the official settlements account balance is billion, and the official reserves _.

Accepted Answer

A)  $5 billion; increase 
B)  $5 billion; decrease 
C)  - $5 billion; decrease 
D)  - $5 billion; increase 
A)  $5 billion; increase 
B)  $5 billion; decrease 
C)  - $5 billion; decrease 
D)  - $5 billion; increase

Question 7

In the above figure, suppose the demand for dollars permanently decreases to D2. To maintain the target, the Fed

Accepted Answer

A)  cannot permanently maintain the exchange rate target of 150 yen per dollar. 
B)  can sell dollars. 
C)  can buy dollars. 
D)  must decrease the nation's net exports. 
A)  cannot permanently maintain the exchange rate target of 150 yen per dollar. 
B)  can sell dollars. 
C)  can buy dollars. 
D)  must decrease the nation's net exports.

Question 8

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

Accepted Answer

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

Question 9

According to purchasing power parity, a rise in inflation in the United States. relative to the rest of the world will lead to

Accepted Answer

A)  a balance of payments surplus. 
B)  an exchange rate depreciation. 
C)  an exchange rate appreciation. 
D)  a balance of payments deficit. 
A)  a balance of payments surplus. 
B)  an exchange rate depreciation. 
C)  an exchange rate appreciation. 
D)  a balance of payments deficit.

Question 10

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

Accepted Answer

A)  quantity demanded for euros increases as the euro/rupee exchange rate increases. 
B)  demand curve for euros shifts leftward. 
C)  quantity demand for euros decreases, on matter what the euro/rupee exchange rate is. 
D)  demand curve for euros shifts rightward. 
A)  quantity demanded for euros increases as the euro/rupee exchange rate increases. 
B)  demand curve for euros shifts leftward. 
C)  quantity demand for euros decreases, on matter what the euro/rupee exchange rate is. 
D)  demand curve for euros shifts rightward.

Question 11

-In the figure above, suppose the economy is initially at point B. Then the interest rate in Japan rises relative to the interest rate in the United States. This change the supply of dollars and the market moves to a point such as .

Accepted Answer

A)  decreases; A 
B)  decreases; E 
C)  increases; C 
D)  increases; D 
A)  decreases; A 
B)  decreases; E 
C)  increases; C 
D)  increases; D

Question 12

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has
)

Accepted Answer

A)  positive net exports of $125 billion 
B)  a government budget surplus 
C)  negative net exports of $125 billion 
D)  Both answers B and C are correct. 
A)  positive net exports of $125 billion 
B)  a government budget surplus 
C)  negative net exports of $125 billion 
D)  Both answers B and C are correct.

Question 13

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases, _.

Accepted Answer

A)  net exports decrease or remain constant 
B)  net exports decrease 
C)  net exports increase 
D)  net exports increase, decrease, or remain constant 
A)  net exports decrease or remain constant 
B)  net exports decrease 
C)  net exports increase 
D)  net exports increase, decrease, or remain constant

Question 14

The lower the exchange rate, the cheaper are foreign- produced goods and services.

Accepted Answer

A) True 
 B)False

Question 15

In June 2008, $1 bought 104 yen and in October, $1 bought 93 yen. This change means

Accepted Answer

A)  U.S. exports became cheaper to Japanese buyers. 
B)  the dollar appreciated relative to the yen. 
C)  there was a rightward shift in the demand curve for dollars. 
D)  the dollars' buying power relative to the yen increased. 
A)  U.S. exports became cheaper to Japanese buyers. 
B)  the dollar appreciated relative to the yen. 
C)  there was a rightward shift in the demand curve for dollars. 
D)  the dollars' buying power relative to the yen increased.

Question 16

What factors can change expectations about the exchange rate?

Accepted Answer

A)  purchasing power parity 
B)  interest rate parity 
C)  real GDP parity 
D)  Both answers A and B are correct. 
A)  purchasing power parity 
B)  interest rate parity 
C)  real GDP parity 
D)  Both answers A and B are correct.

Question 17

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)  there was a rightward shift in the demand curve for dollars. 
B)  there was a movement down along the demand curve for dollars. 
C)  there was a movement up along the demand curve for dollars. 
D)  the dollar depreciated. 
A)  there was a rightward shift in the demand curve for dollars. 
B)  there was a movement down along the demand curve for dollars. 
C)  there was a movement up along the demand curve for dollars. 
D)  the dollar depreciated.

Question 18

Suppose that the price of a Big Mac is a good approximation of the price level in the country. A Big Mac costs £2 in London and $3 in New York.
a) If purchasing power parity holds, what is the exchange rate between the U.S. dollar and the British pound?
b) If the current exchange rate is $1.6 per pound, what is the dollar price of a Big Mac in London? What do you will happen to the exchange rate? Explain.
c) The exchange rate between the U.S. dollar and the Russian ruble is 30 rubles per dollar. If purchasing power parity holds, what is the price of a Big Mac in Moscow?

Accepted Answer

a) If purchasing power parity holds, the

Question 19

Of the following, when would the U.S. exchange rate rise the most?

Accepted Answer

A)  When the supply of and demand for U.S. dollars increase. 
B)  When the supply of U.S. dollars increases and the demand for them decreases. 
C)  When the supply of and demand for U.S. dollars decrease. 
D)  When the supply of U.S. dollars decreases and the demand for them increases. 
A)  When the supply of and demand for U.S. dollars increase. 
B)  When the supply of U.S. dollars increases and the demand for them decreases. 
C)  When the supply of and demand for U.S. dollars decrease. 
D)  When the supply of U.S. dollars decreases and the demand for them increases.

Question 20

The exchange rate between the United States and Japan is directly determined by

Accepted Answer

A)  the World Trade Organization, WTO. 
B)  the Federal Reserve. 
C)  a joint GATT agreement between the United States, Japan, and the European Union. 
D)  equilibrium in the foreign exchange market. 
A)  the World Trade Organization, WTO. 
B)  the Federal Reserve. 
C)  a joint GATT agreement between the United States, Japan, and the European Union. 
D)  equilibrium in the foreign exchange market.

The account that records foreign investment in the United States minus U.S. investment abroad is the

-In the above table, saving must be

A creditor nation is a country that and a debtor nation is a country that .

If the value of a dollar rises in terms of yen, the dollar has and the yen has .

The United States has net exports of - $350 billion and the private sector balance is - $400 billion. What is the government sector balance?

If the current account balance is $30 billion, and the capital account balance is $35 billion, then the official settlements account balance is billion, and the official reserves _.

In the above figure, suppose the demand for dollars permanently decreases to D₂. To maintain the target, the Fed

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

According to purchasing power parity, a rise in inflation in the United States. relative to the rest of the world will lead to

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

-In the figure above, suppose the economy is initially at point B. Then the interest rate in Japan rises relative to the interest rate in the United States. This change the supply of dollars and the market moves to a point such as .

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has )

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases, _.

The lower the exchange rate, the cheaper are foreign- produced goods and services.

In June 2008, $1 bought 104 yen and in October, $1 bought 93 yen. This change means

What factors can change expectations about the exchange rate?

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.

Of the following, when would the U.S. exchange rate rise the most?

The exchange rate between the United States and Japan is directly determined by

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 account that records foreign investment in the United States minus U.S. investment abroad is the

-In the above table, saving must be

A creditor nation is a country that and a debtor nation is a country that .

If the value of a dollar rises in terms of yen, the dollar has and the yen has .

The United States has net exports of - $350 billion and the private sector balance is - $400 billion. What is the government sector balance?

If the current account balance is $30 billion, and the capital account balance is $35 billion, then the official settlements account balance is billion, and the official reserves _.

In the above figure, suppose the demand for dollars permanently decreases to D2. To maintain the target, the Fed

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

According to purchasing power parity, a rise in inflation in the United States. relative to the rest of the world will lead to

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

-In the figure above, suppose the economy is initially at point B. Then the interest rate in Japan rises relative to the interest rate in the United States. This change the supply of dollars and the market moves to a point such as .

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has )

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases, _.

The lower the exchange rate, the cheaper are foreign- produced goods and services.

In June 2008, $1 bought 104 yen and in October, $1 bought 93 yen. This change means

What factors can change expectations about the exchange rate?

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.

Of the following, when would the U.S. exchange rate rise the most?

The exchange rate between the United States and Japan is directly determined by

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

In the above figure, suppose the demand for dollars permanently decreases to D₂. To maintain the target, the Fed