Exam 9: The Exchange Rate and the Balance of Payments

A country that borrows more from the rest of the world than it lends to it in a year is called a , and a country that lends more to the rest of the world than it borrows from it in a year is called a .

Over the past decade, the United States has had a current account deficit and capital account deficit.

The higher the exchange rate today, the

When there is a current account deficit and the official settlements account equals 0, then

When the U.S. dollar depreciates against the yen, the yen becomes _ expensive and the exchange rate .

Suppose Italy lends 1.5 billion euros in 2007 while it borrowed 1 billion euros. Italy definitely is a

-In the above table, the private sector has a

The supply curve of U.S. dollars shifts leftward. This could have been influenced by .

A factor determining the supply of U.S. dollars in the foreign exchange market is

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₁ could occur when

In France, the price of a computer is 1,227.6 euros. In Japan, the price of the same computer is 137,920 yen. If a U.S. dollar can buy 1.023 euros or 119.93 yen, then purchasing power parity )

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. The government sector surplus or deficit is equal to

If the demand for a country's currency increases, the currency

When the U.S. interest rate rises relative to that in other counties, in the foreign exchange market the demand for U.S. dollars _ and the supply of U.S. dollars .

If the yen appreciates in value against the dollar, the dollar must have depreciated against the yen.

As the expected profit from holding dollars _ , the quantity of .

Saudi Telecom is a major producer of telecommunications equipment in Saudi Arabia. The Free Market Iraqi Conglomerate (FMIC) is a collections of over 100 firms that wish to upgrade the communications infrastructure of Iraqi. When FMIC buys $4.5 million U.S. dollars worth of equipment from Saudi Telecom, the

The United States is a creditor nation.

An American consumer buys a French luxury product in New York. In the U.S. balance of payments accounts, this transaction directly appears in

According to purchasing power parity, the foreign exchange market will