Exam 9: The Exchange Rate and the Balance of Payments

"Currency appreciation" means the price of the currency is decreasing.

"Although the United States is running a large current account deficit, it is still ranked as a major international net lender." Is the previous statement correct or incorrect? Briefly explain your answer.

Suppose that U.S. interest rates rise relative to foreign interest rates. Within the foreign exchange market, there is a shift in the demand curve for dollars and a shift in the supply curve of dollars.

In June 2008, the dollar bought 1.6 Brazilian reals and in October, the dollar bought 2.4 reals. This resulted in a

If the dollar's value changes from 120 yen per dollar to 110 yen per dollar, the dollar has

The official settlements account records the change in official U.S. reserves.

Which of the following countries are net lenders? I. Japan II. United States

In July 2008, a British pound could buy $2. By October 2008, a pound could buy $1.55. Over the four months, the

-Using the data in the above table, if the government sector runs a deficit of $250 billion and net exports equal - $500 billion, then saving must equal

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

If the official settlements account is zero, whenever the United States has a current account deficit, it must also have a capital account deficit.

-The table above gives some of the entries in the national income and product accounts. The government sector has a , and the private sector has a .

When the U.S. exchange rate falls, U.S. goods become _ _ to foreign residents and U.S. exports _.

can intervene directly in the foreign exchange market by buying or selling dollars.

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2007 and 2008, the U.S. dollar against the euro and against the Japanese yen.

The real exchange rate is

If the official settlements account equals zero, the fact that the United States has a current account deficit means that the

Other things remaining the same, if the U.S. interest rate differential increases, the demand curve For U.S. dollars shifts and the supply curve of U.S. dollars shifts .

If net exports is a negative number, the government sector must if the private sector is in a .