Question 1

If the U.S. exchange rate rises, the price to foreigners of U.S.- produced goods and services and the quantity of U.S. dollars demanded _ .

Accepted Answer

A)  falls; decreases 
B)  rises; increases 
C)  falls; increases 
D)  rises; decreases 
A)  falls; decreases 
B)  rises; increases 
C)  falls; increases 
D)  rises; decreases

Question 2

-Using the table above, if the current market value of the dollar is 90 francs,

Accepted Answer

A)  all three investors expect the dollar to depreciate. 
B)  all three investors expect the dollar to appreciate. 
C)  investor C expects dollar depreciation, but A and B expect appreciation. 
D)  investor A expects dollar appreciation, but B and C expect depreciation. 
A)  all three investors expect the dollar to depreciate. 
B)  all three investors expect the dollar to appreciate. 
C)  investor C expects dollar depreciation, but A and B expect appreciation. 
D)  investor A expects dollar appreciation, but B and C expect depreciation.

Question 3

If a country is currently lending more to the rest of the world than it is borrowing from the rest of the world, the country is a

Accepted Answer

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

Question 4

If the Fed wants to depreciate the U.S. dollar against the British pound, it will .

Accepted Answer

A)  sell U.S. dollars 
B)  decrease the money supply 
C)  sell foreign exchange 
D)  sell British pounds 
A)  sell U.S. dollars 
B)  decrease the money supply 
C)  sell foreign exchange 
D)  sell British pounds

Question 5

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

Accepted Answer

A)  +$200 billion. 
B)  $0. 
C)  - $80 billion. 
D)  - $200 billion. 
A)  +$200 billion. 
B)  $0. 
C)  - $80 billion. 
D)  - $200 billion.

Question 6

A country records its international finance accounts in its

Accepted Answer

A)  net exports payments account. 
B)  trade payments accounts. 
C)  import/export log accounts. 
D)  balance of payments accounts. 
A)  net exports payments account. 
B)  trade payments accounts. 
C)  import/export log accounts. 
D)  balance of payments accounts.

Question 7

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

Question 8

In late 2008 the National Bank of Australia offered a 5 percent interest rate on a savings account while Bank of America offered 3 percent. This difference means that

Accepted Answer

A)  there will be a shortage of Australian dollars in the foreign exchange markets. 
B)  there will be a surplus of U.S. dollars in the foreign exchange market. 
C)  people expect the U.S. dollar to appreciate to 8 percent against the Australian dollar and interest rate parity to occur. 
D)  people expect the U.S. dollar to appreciate by 2 percent against the Australian dollar and interest rate parity to occur. 
A)  there will be a shortage of Australian dollars in the foreign exchange markets. 
B)  there will be a surplus of U.S. dollars in the foreign exchange market. 
C)  people expect the U.S. dollar to appreciate to 8 percent against the Australian dollar and interest rate parity to occur. 
D)  people expect the U.S. dollar to appreciate by 2 percent against the Australian dollar and interest rate parity to occur.

Question 9

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

Accepted Answer

A)  - $99 billion 
B)  $142 billion 
C)  - $183 billion 
D)  - $146 billion 
A)  - $99 billion 
B)  $142 billion 
C)  - $183 billion 
D)  - $146 billion

Question 10

Name three factors in the foreign exchange market that affect either the quantity of dollars demanded or the demand for dollars. Discuss whether the factor increases or decreases the number of dollars people want to hold.

Accepted Answer

Three factors are the exchange rate, the

Question 11

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

Accepted Answer

A)  an increase in the demand for dollars, a decrease in the supply of dollars, and a rise in the equilibrium exchange rate. 
B)  a decrease in the demand for dollars, an increase in the supply of dollars, and a fall in the equilibrium exchange rate. 
C)  an increase in the demand for dollars, a decrease in the supply of dollars, and a fall in the equilibrium exchange rate. 
D)  a decrease in the demand for dollars, an increase in the supply of dollars, and a rise in the equilibrium exchange rate. 
A)  an increase in the demand for dollars, a decrease in the supply of dollars, and a rise in the equilibrium exchange rate. 
B)  a decrease in the demand for dollars, an increase in the supply of dollars, and a fall in the equilibrium exchange rate. 
C)  an increase in the demand for dollars, a decrease in the supply of dollars, and a fall in the equilibrium exchange rate. 
D)  a decrease in the demand for dollars, an increase in the supply of dollars, and a rise in the equilibrium exchange rate.

Question 12

Which of the following statements about the balance of payments accounts is correct?

Accepted Answer

A)  The official settlements account is typically larger than both the capital and current accounts. 
B)  The current account must be greater than the capital account. 
C)  Typically the capital account is near zero because it equals the difference between the current account and the official settlements account. 
D)  The sum of all three accounts is always zero. 
A)  The official settlements account is typically larger than both the capital and current accounts. 
B)  The current account must be greater than the capital account. 
C)  Typically the capital account is near zero because it equals the difference between the current account and the official settlements account. 
D)  The sum of all three accounts is always zero.

Question 13

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

Accepted Answer

A)  depreciates; rises 
B)  depreciates; falls 
C)  appreciates; falls 
D)  appreciates; rises 
A)  depreciates; rises 
B)  depreciates; falls 
C)  appreciates; falls 
D)  appreciates; rises

Question 14

The U.S. dollar will depreciate in value if

Accepted Answer

A)  the supply of foreign exchange decreases. 
B)  the demand for the dollar decreases. 
C)  the demand for the dollar increases. 
D)  U.S. citizens choose to buy fewer foreign goods. 
A)  the supply of foreign exchange decreases. 
B)  the demand for the dollar decreases. 
C)  the demand for the dollar increases. 
D)  U.S. citizens choose to buy fewer foreign goods.

Question 15

Suppose the exchange rate of the U.S. dollar was 1.50 British pounds = $1.00 on Wednesday, and on Monday the exchange rate was $0.75 = 1.00 British pound. Which of the following best explains what has happened between Wednesday and Monday?

Accepted Answer

A)  The U.S. dollar appreciated against the British pound. 
B)  The British pound appreciated against the U.S. dollar. 
C)  The U.S. dollar depreciated against the British pound. 
D)  Both answers B and C are correct. 
A)  The U.S. dollar appreciated against the British pound. 
B)  The British pound appreciated against the U.S. dollar. 
C)  The U.S. dollar depreciated against the British pound. 
D)  Both answers B and C are correct.

Question 16

Suppose X - M = net exports; T - G = government sector surplus or deficit; and S - I = private sector surplus or deficit. What relationship exists among these variables?

Accepted Answer

A)  (X - M ) + (T - G ) + (S - I ) = 0 
B)  (T - G ) = (X - M ) + (S - I ) 
C)  (T - G ) + (X - M ) = (S - I ) 
D)  (X - M ) = (T - G ) + (S - I ) 
A)  (X - M ) + (T - G ) + (S - I ) = 0 
B)  (T - G ) = (X - M ) + (S - I ) 
C)  (T - G ) + (X - M ) = (S - I ) 
D)  (X - M ) = (T - G ) + (S - I )

Question 17

The nominal exchange rate is

Accepted Answer

A)  a measure of the quantity of the nominal GDP of other countries that we get per unit of U.S. nominal GDP. 
B)  the real exchange rate multiplied by the ratio of the U.S. price level to the foreign price level. 
C)  the value of the U.S. dollar expressed in units of foreign currency per U.S. dollar. 
D)  the relative price of U.S. produced goods to foreign produced goods. 
A)  a measure of the quantity of the nominal GDP of other countries that we get per unit of U.S. nominal GDP. 
B)  the real exchange rate multiplied by the ratio of the U.S. price level to the foreign price level. 
C)  the value of the U.S. dollar expressed in units of foreign currency per U.S. dollar. 
D)  the relative price of U.S. produced goods to foreign produced goods.

Question 18

Which of the following will lead to an appreciation of the U.S. dollar against the British pound?

Accepted Answer

A)  a decrease in British demand for U.S. assets 
B)  an increase in U.S. demand for British imports 
C)  an increase in British interest rates 
D)  an increase in British demand for U.S. imports 
A)  a decrease in British demand for U.S. assets 
B)  an increase in U.S. demand for British imports 
C)  an increase in British interest rates 
D)  an increase in British demand for U.S. imports

Question 19

If people expect the foreign exchange rate for dollars to rise in the future,

Accepted Answer

A)  the demand for dollars decreases. 
B)  there is a movement along the demand curve for dollars. 
C)  the demand for dollars is unaffected. 
D)  the demand for dollars increases. 
A)  the demand for dollars decreases. 
B)  there is a movement along the demand curve for dollars. 
C)  the demand for dollars is unaffected. 
D)  the demand for dollars increases.

Question 20

If foreign investment in the United States exceeds U.S. investment abroad, there is a ; and when U.S. investment abroad exceeds foreign investment in the United States, there is .

Accepted Answer

A)  capital account deficit; a capital account surplus 
B)  current account surplus; an official accounts surplus 
C)  capital account surplus; a capital account deficit 
D)  current account surplus; a current account deficit 
A)  capital account deficit; a capital account surplus 
B)  current account surplus; an official accounts surplus 
C)  capital account surplus; a capital account deficit 
D)  current account surplus; a current account deficit

If the U.S. exchange rate rises, the price to foreigners of U.S.- produced goods and services and the quantity of U.S. dollars demanded _ .

-Using the table above, if the current market value of the dollar is 90 francs,

If a country is currently lending more to the rest of the world than it is borrowing from the rest of the world, the country is a

If the Fed wants to depreciate the U.S. dollar against the British pound, it will .

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

A country records its international finance accounts in its

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

In late 2008 the National Bank of Australia offered a 5 percent interest rate on a savings account while Bank of America offered 3 percent. This difference means that

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

Name three factors in the foreign exchange market that affect either the quantity of dollars demanded or the demand for dollars. Discuss whether the factor increases or decreases the number of dollars people want to hold.

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

Which of the following statements about the balance of payments accounts is correct?

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

The U.S. dollar will depreciate in value if

Suppose the exchange rate of the U.S. dollar was 1.50 British pounds = $1.00 on Wednesday, and on Monday the exchange rate was $0.75 = 1.00 British pound. Which of the following best explains what has happened between Wednesday and Monday?

Suppose X - M = net exports; T - G = government sector surplus or deficit; and S - I = private sector surplus or deficit. What relationship exists among these variables?

The nominal exchange rate is

Which of the following will lead to an appreciation of the U.S. dollar against the British pound?

If people expect the foreign exchange rate for dollars to rise in the future,

If foreign investment in the United States exceeds U.S. investment abroad, there is a ; and when U.S. investment abroad exceeds foreign investment in the United States, there is .

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

If the U.S. exchange rate rises, the price to foreigners of U.S.- produced goods and services and the quantity of U.S. dollars demanded _ .

-Using the table above, if the current market value of the dollar is 90 francs,

If a country is currently lending more to the rest of the world than it is borrowing from the rest of the world, the country is a

If the Fed wants to depreciate the U.S. dollar against the British pound, it will .

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

A country records its international finance accounts in its

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

In late 2008 the National Bank of Australia offered a 5 percent interest rate on a savings account while Bank of America offered 3 percent. This difference means that

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

Name three factors in the foreign exchange market that affect either the quantity of dollars demanded or the demand for dollars. Discuss whether the factor increases or decreases the number of dollars people want to hold.

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

Which of the following statements about the balance of payments accounts is correct?

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

The U.S. dollar will depreciate in value if

Suppose the exchange rate of the U.S. dollar was 1.50 British pounds = $1.00 on Wednesday, and on Monday the exchange rate was $0.75 = 1.00 British pound. Which of the following best explains what has happened between Wednesday and Monday?

Suppose X - M = net exports; T - G = government sector surplus or deficit; and S - I = private sector surplus or deficit. What relationship exists among these variables?

The nominal exchange rate is

Which of the following will lead to an appreciation of the U.S. dollar against the British pound?

If people expect the foreign exchange rate for dollars to rise in the future,

If foreign investment in the United States exceeds U.S. investment abroad, there is a ; and when U.S. investment abroad exceeds foreign investment in the United States, there is .

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 demand curve for U.S. dollars from D₀to D₂could occur when