Question 1

-The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

Accepted Answer

A)  $62 billion 
B)  $84 billion 
C)  $47 billion 
D)  $80 billion 
A)  $62 billion 
B)  $84 billion 
C)  $47 billion 
D)  $80 billion

Question 2

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

Accepted Answer

The official settlements account is the

Question 3

The value of net exports increases when the value of .

Accepted Answer

A)  imports of goods and services decrease 
B)  exports of goods and services decrease 
C)  imports of goods and services increase 
D)  exports of goods and services minus imports of goods and services decreases 
A)  imports of goods and services decrease 
B)  exports of goods and services decrease 
C)  imports of goods and services increase 
D)  exports of goods and services minus imports of goods and services decreases

Question 4

Suppose this year Angola borrows $100 million from foreign countries while it lends $15 million. Angola definitely is a

Accepted Answer

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

Question 5

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

Accepted Answer

A)  - $500 billion. 
B)  $500 billion. 
C)  $1,000 billion. 
D)  $0. 
A)  - $500 billion. 
B)  $500 billion. 
C)  $1,000 billion. 
D)  $0.

Question 6

-In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed

Accepted Answer

A)  cannot maintain the target exchange rate. 
B)  can buy dollars. 
C)  must violate interest rate parity but not purchasing power parity. 
D)  can sell dollars. 
A)  cannot maintain the target exchange rate. 
B)  can buy dollars. 
C)  must violate interest rate parity but not purchasing power parity. 
D)  can sell dollars.

Question 7

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

Accepted Answer

The answer of China has used a fixed yuan exchange...

Question 8

If X - M = $0 and the government sector has a deficit of $250 billion, the private sector

Accepted Answer

A)  has a surplus that equals $500 billion. 
B)  has a deficit that equals $250 billion. 
C)  has a deficit that equals $0. 
D)  has a surplus that equals $250 billion. 
A)  has a surplus that equals $500 billion. 
B)  has a deficit that equals $250 billion. 
C)  has a deficit that equals $0. 
D)  has a surplus that equals $250 billion.

Question 9

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is

Accepted Answer

A)  9.5 million yuan. 
B)  85.5 million yuan. 
C)  10 million yuan. 
D)  950 million yuan. 
A)  9.5 million yuan. 
B)  85.5 million yuan. 
C)  10 million yuan. 
D)  950 million yuan.

Question 10

The sum of the current account, capital account, and official settlements account is

Accepted Answer

A)  a negative number if the country has a trade deficit. 
B)  always equal to zero. 
C)  a positive number if the country has a trade surplus. 
D)  positive or negative depending on whether the domestic exchange rate is appreciating or depreciating. 
A)  a negative number if the country has a trade deficit. 
B)  always equal to zero. 
C)  a positive number if the country has a trade surplus. 
D)  positive or negative depending on whether the domestic exchange rate is appreciating or depreciating.

Question 11

A country's balance of payment accounts include its government budget deficit or surplus.

Accepted Answer

A) True 
 B)False

Question 12

Currently, the United States is both a net borrower and a debtor nation.

Accepted Answer

A) True 
 B)False

Question 13

If the current account balance is $235 billion and U.S. official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

Accepted Answer

The official settlements account equals

Question 14

Last year the exchange rate between U.S. dollars and Mexican pesos was 10 pesos per dollar. Today is it 11 pesos per dollar. Here, the dollar _ against the peso, and the peso _ against the dollar

Accepted Answer

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

Question 15

Suppose $1 will buy 1.20 euros in January and 1.10 euros in December. As a result,

Accepted Answer

A)  U.S. exports have increased. 
B)  the euro has appreciated. 
C)  the euro has depreciated. 
D)  the dollar has appreciated. 
A)  U.S. exports have increased. 
B)  the euro has appreciated. 
C)  the euro has depreciated. 
D)  the dollar has appreciated.

Question 16

-The data in the table above are the U.S. balance of payments. What is the current account balance?

Accepted Answer

A)  - $150 billion 
B)  $150 billion 
C)  $0 
D)  - $100 billion 
A)  - $150 billion 
B)  $150 billion 
C)  $0 
D)  - $100 billion

Question 17

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

Accepted Answer

A change in the exch

Question 18

The market in which the currency of one country is exchanged for the currency of another is the

Accepted Answer

A)  foreign funds market. 
B)  currency exchange market. 
C)  currency dollar exchange market since all currencies are exchangeable with the dollar. 
D)  foreign exchange market. 
A)  foreign funds market. 
B)  currency exchange market. 
C)  currency dollar exchange market since all currencies are exchangeable with the dollar. 
D)  foreign exchange market.

Question 19

Why is the foreign exchange rate volatile; that is, why can there often be large changes in the foreign exchange rate?

Accepted Answer

For the United States, the foreign excha

Question 20

If the Federal Reserve raises the U.S. interest rate, foreigners'

Accepted Answer

A)  demand for U.S. dollars will decrease and the exchange rate will fall. 
B)  demand for U.S. dollars will increase and the exchange rate will fall. 
C)  demand for U.S. dollars will decrease and the exchange rate will rise. 
D)  demand for U.S. dollars will increase and the exchange rate will rise. 
A)  demand for U.S. dollars will decrease and the exchange rate will fall. 
B)  demand for U.S. dollars will increase and the exchange rate will fall. 
C)  demand for U.S. dollars will decrease and the exchange rate will rise. 
D)  demand for U.S. dollars will increase and the exchange rate will rise.

-The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

The value of net exports increases when the value of .

Suppose this year Angola borrows $100 million from foreign countries while it lends $15 million. Angola definitely is a

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

-In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D₁. To maintain the target exchange rate, the Fed

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

If X - M = $0 and the government sector has a deficit of $250 billion, the private sector

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is

The sum of the current account, capital account, and official settlements account is

A country's balance of payment accounts include its government budget deficit or surplus.

Currently, the United States is both a net borrower and a debtor nation.

If the current account balance is $235 billion and U.S. official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

Last year the exchange rate between U.S. dollars and Mexican pesos was 10 pesos per dollar. Today is it 11 pesos per dollar. Here, the dollar _ against the peso, and the peso _ against the dollar

Suppose $1 will buy 1.20 euros in January and 1.10 euros in December. As a result,

-The data in the table above are the U.S. balance of payments. What is the current account balance?

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

The market in which the currency of one country is exchanged for the currency of another is the

Why is the foreign exchange rate volatile; that is, why can there often be large changes in the foreign exchange rate?

If the Federal Reserve raises the U.S. interest rate, foreigners'

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 above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

The value of net exports increases when the value of .

Suppose this year Angola borrows $100 million from foreign countries while it lends $15 million. Angola definitely is a

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

-In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

If X - M = $0 and the government sector has a deficit of $250 billion, the private sector

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is

The sum of the current account, capital account, and official settlements account is

A country's balance of payment accounts include its government budget deficit or surplus.

Currently, the United States is both a net borrower and a debtor nation.

If the current account balance is $235 billion and U.S. official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

Last year the exchange rate between U.S. dollars and Mexican pesos was 10 pesos per dollar. Today is it 11 pesos per dollar. Here, the dollar _ against the peso, and the peso _ against the dollar

Suppose $1 will buy 1.20 euros in January and 1.10 euros in December. As a result,

-The data in the table above are the U.S. balance of payments. What is the current account balance?

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

The market in which the currency of one country is exchanged for the currency of another is the

Why is the foreign exchange rate volatile; that is, why can there often be large changes in the foreign exchange rate?

If the Federal Reserve raises the U.S. interest rate, foreigners'

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 temporarily increases so that the demand curve shifts to D₁. To maintain the target exchange rate, the Fed