Question 1

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

Accepted Answer

A)  shift the demand curve for dollars rightward. 
B)  increase the demand for pounds. 
C)  increase the U.S. interest rate differential. 
D)  Both answers A and C are correct. 
A)  shift the demand curve for dollars rightward. 
B)  increase the demand for pounds. 
C)  increase the U.S. interest rate differential. 
D)  Both answers A and C are correct.

Question 3

The lower the exchange rate today, the

Accepted Answer

A)  smaller is the expected profit from selling U.S. dollars today. 
B)  smaller is the expected profit from selling foreign currency today. 
C)  greater the quantity of U.S. dollars supplied in the foreign exchange market today. 
D)  greater is the expected profit from selling U.S. dollars today. 
A)  smaller is the expected profit from selling U.S. dollars today. 
B)  smaller is the expected profit from selling foreign currency today. 
C)  greater the quantity of U.S. dollars supplied in the foreign exchange market today. 
D)  greater is the expected profit from selling U.S. dollars today.

Question 4

The quantity of dollars supplied will increase if

Accepted Answer

A)  tourism to the United States increases. 
B)  U.S. interest rates are high. 
C)  foreign demand for U.S. exports increases. 
D)  U.S. imports increase. 
A)  tourism to the United States increases. 
B)  U.S. interest rates are high. 
C)  foreign demand for U.S. exports increases. 
D)  U.S. imports increase.

Question 5

Currently, the United States is a net and a nation.

Accepted Answer

A)  lender; creditor 
B)  lender; debtor 
C)  borrower; creditor 
D)  borrower; debtor 
A)  lender; creditor 
B)  lender; debtor 
C)  borrower; creditor 
D)  borrower; debtor

Question 6

Income that a nation earns from previous investments in foreign nations is included in its

Accepted Answer

A)  unilateral transfers account. 
B)  current account. 
C)  capital account. 
D)  statistical errors account. 
A)  unilateral transfers account. 
B)  current account. 
C)  capital account. 
D)  statistical errors account.

Question 7

-In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when

Accepted Answer

A)  the current exchange rate falls. 
B)  the expected future exchange rate rises. 
C)  the expected future exchange rate falls. 
D)  the U.S. interest rate differential decreases. 
A)  the current exchange rate falls. 
B)  the expected future exchange rate rises. 
C)  the expected future exchange rate falls. 
D)  the U.S. interest rate differential decreases.

Question 8

The target exchange rate set by the Fed is 100 pesos per dollar. If the demand for dollars temporarily increases

Accepted Answer

A)  the Fed can meet the target by buying dollars. 
B)  the Fed can meet the target by selling dollars. 
C)  the Fed cannot maintain the target rate. 
D)  the Fed must sell pesos. 
A)  the Fed can meet the target by buying dollars. 
B)  the Fed can meet the target by selling dollars. 
C)  the Fed cannot maintain the target rate. 
D)  the Fed must sell pesos.

Question 9

-In the table above, what is the government's sector balance?

Accepted Answer

A)  $0 
B)  a surplus of $600 billion 
C)  a deficit of $700 billion 
D)  a deficit of $100 billion 
A)  $0 
B)  a surplus of $600 billion 
C)  a deficit of $700 billion 
D)  a deficit of $100 billion

Question 10

In the foreign exchange market, the lower the dollar's exchange rate, the

Accepted Answer

A)  larger the quantity supplied of dollars. 
B)  smaller the supply of dollars. 
C)  smaller the quantity supplied of dollars. 
D)  larger the supply of dollars. 
A)  larger the quantity supplied of dollars. 
B)  smaller the supply of dollars. 
C)  smaller the quantity supplied of dollars. 
D)  larger the supply of dollars.

Question 11

-The above gives some of the balance of payments accounts of the United States in 2020.
a) What is the current account balance?
b) What is the capital account balance?
c) What is the official settlements account balance?

Accepted Answer

a) The current account balance

Question 12

In the foreign exchange market, how does a change in expected future U.S. exchange rate affect the supply of dollars?

Accepted Answer

Changes in the expected future exchange

Question 13

If U.S. interest rates are rise relative to foreign interest rates, in the foreign exchange market the demand for U.S. dollars will decrease.

Accepted Answer

A) True 
 B)False

Question 14

If a country is importing more than they are exporting, the current account will have a _ balance and the capital account will have a balance.

Accepted Answer

A)  negative; negative 
B)  negative; positive 
C)  positive; positive 
D)  positive; negative 
A)  negative; negative 
B)  negative; positive 
C)  positive; positive 
D)  positive; negative

Question 15

The exchange rate is the

Accepted Answer

A)  price for which one currency exchanges for another. 
B)  rate at which a currency falls in value. 
C)  rate at which a currency rises in value. 
D)  None of the above is correct. 
A)  price for which one currency exchanges for another. 
B)  rate at which a currency falls in value. 
C)  rate at which a currency rises in value. 
D)  None of the above is correct.

Question 16

A creditor nation means a nation

Accepted Answer

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

Question 17

If the exchange rate falls, then the expected profit from holding the currency

Accepted Answer

A)  does not change. 
B)  decreases. 
C)  increases. 
D)  can either increase or decrease. 
A)  does not change. 
B)  decreases. 
C)  increases. 
D)  can either increase or decrease.

Question 18

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when

Accepted Answer

A)  the U.S. interest rate rises. 
B)  people expect that the dollar will appreciate. 
C)  foreign interest rates rise. 
D)  the expected future exchange rate increases. 
A)  the U.S. interest rate rises. 
B)  people expect that the dollar will appreciate. 
C)  foreign interest rates rise. 
D)  the expected future exchange rate increases.

Question 19

-In the above table, net exports equals a

Accepted Answer

A)  surplus of $200 billion. 
B)  surplus of $100 billion. 
C)  deficit of $200 billion. 
D)  deficit of $100 billion. 
A)  surplus of $200 billion. 
B)  surplus of $100 billion. 
C)  deficit of $200 billion. 
D)  deficit of $100 billion.

Question 20

What is the relationship between net borrower, net lender, debtor nation, and creditor nation?

Accepted Answer

If a nation is currently borrowing from

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

The lower the exchange rate today, the

The quantity of dollars supplied will increase if

Currently, the United States is a net and a nation.

Income that a nation earns from previous investments in foreign nations is included in its

-In the figure above, the shift in the supply curve for U.S. dollars from S₀to S₁could occur when

The target exchange rate set by the Fed is 100 pesos per dollar. If the demand for dollars temporarily increases

-In the table above, what is the government's sector balance?

In the foreign exchange market, the lower the dollar's exchange rate, the

-The above gives some of the balance of payments accounts of the United States in 2020. a) What is the current account balance? b) What is the capital account balance? c) What is the official settlements account balance?

In the foreign exchange market, how does a change in expected future U.S. exchange rate affect the supply of dollars?

If U.S. interest rates are rise relative to foreign interest rates, in the foreign exchange market the demand for U.S. dollars will decrease.

If a country is importing more than they are exporting, the current account will have a _ balance and the capital account will have a balance.

The exchange rate is the

A creditor nation means a nation

If the exchange rate falls, then the expected profit from holding the currency

-In the figure above, the shift in the demand curve for U.S. dollars from D₀to D₂could occur when

-In the above table, net exports equals a

What is the relationship between net borrower, net lender, debtor nation, and creditor nation?

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

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

The lower the exchange rate today, the

The quantity of dollars supplied will increase if

Currently, the United States is a net and a nation.

Income that a nation earns from previous investments in foreign nations is included in its

-In the figure above, the shift in the supply curve for U.S. dollars from S0 to S1 could occur when

The target exchange rate set by the Fed is 100 pesos per dollar. If the demand for dollars temporarily increases

-In the table above, what is the government's sector balance?

In the foreign exchange market, the lower the dollar's exchange rate, the

-The above gives some of the balance of payments accounts of the United States in 2020. a) What is the current account balance? b) What is the capital account balance? c) What is the official settlements account balance?

In the foreign exchange market, how does a change in expected future U.S. exchange rate affect the supply of dollars?

If U.S. interest rates are rise relative to foreign interest rates, in the foreign exchange market the demand for U.S. dollars will decrease.

If a country is importing more than they are exporting, the current account will have a _ balance and the capital account will have a balance.

The exchange rate is the

A creditor nation means a nation

If the exchange rate falls, then the expected profit from holding the currency

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when

-In the above table, net exports equals a

What is the relationship between net borrower, net lender, debtor nation, and creditor nation?

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 figure above, the shift in the supply curve for U.S. dollars from S₀to S₁could occur when

-In the figure above, the shift in the demand curve for U.S. dollars from D₀to D₂could occur when