Question 1

If 100 Japanese yen buy more U.S. dollars today than yesterday, the dollar has and the yen has .

Accepted Answer

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

Question 2

If the U.S. interest rate rises, the

Accepted Answer

A)  there is a movement downward along the demand curve for dollars. 
B)  demand curve for dollars shifts rightward. 
C)  demand curve for dollars shifts leftward. 
D)  None of the above answers are correct. 
A)  there is a movement downward along the demand curve for dollars. 
B)  demand curve for dollars shifts rightward. 
C)  demand curve for dollars shifts leftward. 
D)  None of the above answers are correct.

Question 3

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

Accepted Answer

A)  is greater than before. 
B)  is the same as before. 
C)  is less than before. 
D)  More information is needed to answer the question. 
A)  is greater than before. 
B)  is the same as before. 
C)  is less than before. 
D)  More information is needed to answer the question.

Question 4

Consider the market for euros. Suppose the exchange rate is its equilibrium. This means that the quantity of euros is greater than the quantity of euros and the exchange rate will .

Accepted Answer

A)  below; supplied; demanded; rise 
B)  below; demanded; supplied; fall 
C)  above; supplied; demanded; fall 
D)  above; demanded; supplied; fall 
A)  below; supplied; demanded; rise 
B)  below; demanded; supplied; fall 
C)  above; supplied; demanded; fall 
D)  above; demanded; supplied; fall

Question 5

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

Accepted Answer

A)  $155 billion. 
B)  - $45 billion. 
C)  $170 billion. 
D)  $140 billion. 
A)  $155 billion. 
B)  - $45 billion. 
C)  $170 billion. 
D)  $140 billion.

Question 6

Which of the following transactions directly leads to a surplus on the U.S. capital account?

Accepted Answer

A)  An American sells wheat to an African nation. 
B)  A resident of France visits the United States. 
C)  A Japanese resident purchases a U.S. government bond. 
D)  An American purchases a share of stock on the Tokyo exchange. 
A)  An American sells wheat to an African nation. 
B)  A resident of France visits the United States. 
C)  A Japanese resident purchases a U.S. government bond. 
D)  An American purchases a share of stock on the Tokyo exchange.

Question 7

Which of the following are included in the U.S. current account balance?
I. exports to Japan
II. interest payments made to Canada
III. transfer payments made to Israel

Accepted Answer

A)  I and II 
B)  I only 
C)  I, II and III 
D)  I and III 
A)  I and II 
B)  I only 
C)  I, II and III 
D)  I and III

Question 8

When you arrive at the airport in Paris and go to the bank window to exchange dollars into euros, you are

Accepted Answer

A)  contributing to U.S. exports. 
B)  avoiding the use of foreign exchange markets. 
C)  selling euros to the French. 
D)  None of the above answers is correct. 
A)  contributing to U.S. exports. 
B)  avoiding the use of foreign exchange markets. 
C)  selling euros to the French. 
D)  None of the above answers is correct.

Question 9

The private sector surplus or deficit equals

Accepted Answer

A)  saving minus investment. 
B)  investment minus saving. 
C)  net taxes minus government purchases. 
D)  government purchases minus net taxes. 
A)  saving minus investment. 
B)  investment minus saving. 
C)  net taxes minus government purchases. 
D)  government purchases minus net taxes.

Question 10

-Using the data in the above table, if exports = $1,150 billion and the private sector runs a surplus of
$300 billion, the government sector will run

Accepted Answer

A)  a deficit of $450 billion. 
B)  a surplus of $450 billion. 
C)  a deficit of $150 billion. 
D)  a surplus of $150 billion. 
A)  a deficit of $450 billion. 
B)  a surplus of $450 billion. 
C)  a deficit of $150 billion. 
D)  a surplus of $150 billion.

Question 11

The U.S. interest rate minus the foreign interest rate is called the _.

Accepted Answer

A)  U.S. stock yield differential 
B)  U.S. bond rate differential 
C)  foreign interest rate differential 
D)  U.S. interest rate differential 
A)  U.S. stock yield differential 
B)  U.S. bond rate differential 
C)  foreign interest rate differential 
D)  U.S. interest rate differential

Question 12

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now
And the capital account surplus is now .

Accepted Answer

A)  smaller; smaller 
B)  larger; larger 
C)  smaller; larger 
D)  larger; smaller 
A)  smaller; smaller 
B)  larger; larger 
C)  smaller; larger 
D)  larger; smaller

Question 13

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

Accepted Answer

A)  the supply of U.S. dollars will increase. 
B)  the supply of Mexican pesos will increase. 
C)  the supply of Mexican pesos will decrease. 
D)  None of the above answers is correct. 
A)  the supply of U.S. dollars will increase. 
B)  the supply of Mexican pesos will increase. 
C)  the supply of Mexican pesos will decrease. 
D)  None of the above answers is correct.

Question 14

When the exchange rate falls, in the foreign exchange market the

Accepted Answer

A)  demand for the currency increases. 
B)  demand for the currency decreases. 
C)  quantity demanded of the currency increases. 
D)  quantity demanded of the currency decreases. 
A)  demand for the currency increases. 
B)  demand for the currency decreases. 
C)  quantity demanded of the currency increases. 
D)  quantity demanded of the currency decreases.

Question 15

Looking at the U.S. balance of payments for the last two decades, how have the current account and the capital account changed?

Accepted Answer

Since the early 1980s and onward, the U.

Question 16

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

Accepted Answer

A)  there will be a movement down along the demand curve for dollars. 
B)  there was an increase in the value in the dollar, relative to the yen. 
C)  the dollar appreciated relative to the yen. 
D)  U.S. exports became more expensive for Japanese buyers. 
A)  there will be a movement down along the demand curve for dollars. 
B)  there was an increase in the value in the dollar, relative to the yen. 
C)  the dollar appreciated relative to the yen. 
D)  U.S. exports became more expensive for Japanese buyers.

Question 17

Which of the following transactions is NOT recorded in the capital account?

Accepted Answer

A)  statistical discrepancy 
B)  foreign investment in the United States 
C)  net interest income 
D)  U.S. investment abroad 
A)  statistical discrepancy 
B)  foreign investment in the United States 
C)  net interest income 
D)  U.S. investment abroad

Question 18

By definition, currency depreciation occurs when the value of

Accepted Answer

A)  one currency falls relative to another currency. 
B)  one currency rises relative to another currency. 
C)  gold falls relative to the value of currencies. 
D)  all currencies fall relative to gold. 
A)  one currency falls relative to another currency. 
B)  one currency rises relative to another currency. 
C)  gold falls relative to the value of currencies. 
D)  all currencies fall relative to gold.

Question 19

The Federal Reserve can influence the exchange rate by

Accepted Answer

A)  buying or selling dollars. 
B)  changing interest rates. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct 
A)  buying or selling dollars. 
B)  changing interest rates. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct

Question 20

If U.S. interest rates fall, the

Accepted Answer

A)  demand curve for dollars shifts leftward. 
B)  demand curve for dollars shifts rightward. 
C)  there is a movement upward along the demand curve for dollars. 
D)  None of the above answers are correct. 
A)  demand curve for dollars shifts leftward. 
B)  demand curve for dollars shifts rightward. 
C)  there is a movement upward along the demand curve for dollars. 
D)  None of the above answers are correct.

If 100 Japanese yen buy more U.S. dollars today than yesterday, the dollar has and the yen has .

If the U.S. interest rate rises, the

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

Consider the market for euros. Suppose the exchange rate is its equilibrium. This means that the quantity of euros is greater than the quantity of euros and the exchange rate will .

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

Which of the following transactions directly leads to a surplus on the U.S. capital account?

Which of the following are included in the U.S. current account balance? I. exports to Japan II. interest payments made to Canada III. transfer payments made to Israel

When you arrive at the airport in Paris and go to the bank window to exchange dollars into euros, you are

The private sector surplus or deficit equals

-Using the data in the above table, if exports = $1,150 billion and the private sector runs a surplus of $300 billion, the government sector will run

The U.S. interest rate minus the foreign interest rate is called the _.

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now And the capital account surplus is now .

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

When the exchange rate falls, in the foreign exchange market the

Looking at the U.S. balance of payments for the last two decades, how have the current account and the capital account changed?

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

Which of the following transactions is NOT recorded in the capital account?

By definition, currency depreciation occurs when the value of

The Federal Reserve can influence the exchange rate by

If U.S. interest rates fall, the

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

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Exam 9: The Exchange Rate and the Balance of Payments

If 100 Japanese yen buy more U.S. dollars today than yesterday, the dollar has and the yen has .

If the U.S. interest rate rises, the

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

Consider the market for euros. Suppose the exchange rate is its equilibrium. This means that the quantity of euros is greater than the quantity of euros and the exchange rate will .

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

Which of the following transactions directly leads to a surplus on the U.S. capital account?

Which of the following are included in the U.S. current account balance? I. exports to Japan II. interest payments made to Canada III. transfer payments made to Israel

When you arrive at the airport in Paris and go to the bank window to exchange dollars into euros, you are

The private sector surplus or deficit equals

-Using the data in the above table, if exports = $1,150 billion and the private sector runs a surplus of $300 billion, the government sector will run

The U.S. interest rate minus the foreign interest rate is called the _.

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now And the capital account surplus is now .

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

When the exchange rate falls, in the foreign exchange market the

Looking at the U.S. balance of payments for the last two decades, how have the current account and the capital account changed?

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

Which of the following transactions is NOT recorded in the capital account?

By definition, currency depreciation occurs when the value of

The Federal Reserve can influence the exchange rate by

If U.S. interest rates fall, the

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