Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The lower the exchange rate today, ceteris paribus, the

Accepted Answer

A)  smaller the quantity of U.S. dollars demanded in the foreign exchange market today. 
B)  greater is the expected profit from buying foreign currency today and holding it. 
C)  smaller is the expected profit from buying U.S. dollars today and holding them. 
D)  greater is the expected profit from buying U.S. dollars today and holding them. 
A)  smaller the quantity of U.S. dollars demanded in the foreign exchange market today. 
B)  greater is the expected profit from buying foreign currency today and holding it. 
C)  smaller is the expected profit from buying U.S. dollars today and holding them. 
D)  greater is the expected profit from buying U.S. dollars today and holding them.

Question 3

Which of the following statements is INCORRECT?

Accepted Answer

A)  The government sector balance equals net taxes minus government expenditures on goods and services. 
B)  Private sector balance equal private investment minus private saving. 
C)  The sum of government sector and private sector balances equals net exports. 
D)  Net exports equals exports minus imports. 
A)  The government sector balance equals net taxes minus government expenditures on goods and services. 
B)  Private sector balance equal private investment minus private saving. 
C)  The sum of government sector and private sector balances equals net exports. 
D)  Net exports equals exports minus imports.

Question 4

A decrease in the value of a currency in terms of other currencies is known as

Accepted Answer

A)  a depreciation. 
B)  a par value. 
C)  a gold point. 
D)  an appreciation. 
A)  a depreciation. 
B)  a par value. 
C)  a gold point. 
D)  an appreciation.

Question 5

Suppose that the U.S. government gives foreign aid to Turkey. This transaction would directly

Accepted Answer

A)  decrease the U.S. current account. 
B)  decrease the U.S. capital and financial account. 
C)  increase the U.S. current account. 
D)  increase the U.S. capital and financial account. 
A)  decrease the U.S. current account. 
B)  decrease the U.S. capital and financial account. 
C)  increase the U.S. current account. 
D)  increase the U.S. capital and financial account.

Question 6

-The figure above shows the demand and supply of dollars in the foreign exchange market. The equilibrium in the market occurs at a price of ________ Brazilian reals per dollar and a quantity of________ 
Billion dollars.

Accepted Answer

A)  1.6; 100. 
B)  100; 2.0 
C)  2.4; 120 
D)  2.0 ; 100 
A)  1.6; 100. 
B)  100; 2.0 
C)  2.4; 120 
D)  2.0 ; 100

Question 7

Other things remaining the same, the higher the current exchange rate, the larger is the expected profit from buying dollars.

Accepted Answer

A) True 
 B)False

Question 8

Interest rates in the United States rise relative to interest rates in other countries. As a result, in the foreign exchange market

Accepted Answer

A)  the supply curve of dollars shifts leftward. 
B)  the demand curve for dollars shifts leftward. 
C)  there is an upward movement along the supply curve of dollars. 
D)  the supply curve of dollars shifts rightward. 
A)  the supply curve of dollars shifts leftward. 
B)  the demand curve for dollars shifts leftward. 
C)  there is an upward movement along the supply curve of dollars. 
D)  the supply curve of dollars shifts rightward.

Question 9

The _________the exchange rate, the_________ are foreign -produced goods and hence the greater the quantity of dollars supplied.

Accepted Answer

A)  higher; cheaper 
B)  higher; more expensive 
C)  lower; cheaper 
D)  lower; more expensive 
A)  higher; cheaper 
B)  higher; more expensive 
C)  lower; cheaper 
D)  lower; more expensive

Question 10

If nothing else changes, the_________ the current exchange rate, the_________ is the expected profit from holding dollars, all other things remaining the same.

Accepted Answer

A)  lower; larger 
B)  lower; smaller 
C)  higher; larger 
D)  The premise of the question is wrong because the exchange rate has nothing to do with expected profit from holding dollars. 
A)  lower; larger 
B)  lower; smaller 
C)  higher; larger 
D)  The premise of the question is wrong because the exchange rate has nothing to do with expected profit from holding dollars.

Question 11

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

Accepted Answer

The official settlements account is the

Question 12

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a___________ and also a___________ .

Accepted Answer

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

Question 13

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

Accepted Answer

A)  expected future interest rate in foreign countries. 
B)  expected future exchange rate. 
C)  expected future interest rate in the United States. 
D)  U.S. supply of exports. 
A)  expected future interest rate in foreign countries. 
B)  expected future exchange rate. 
C)  expected future interest rate in the United States. 
D)  U.S. supply of exports.

Question 14

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

Accepted Answer

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

Question 15

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

Accepted Answer

A change in the exch

Question 16

Suppose the exchange rate between the dollar and the euro is 2 euros per dollar. The price of a clock in Europe is 20 euros while the price of the same clock in the United States is $5. From these prices and exchange rate, it can be concluded that

Accepted Answer

A)  money buys more in Europe. 
B)  interest rate parity holds. 
C)  purchasing power parity holds. 
D)  money buys more in the United States. 
A)  money buys more in Europe. 
B)  interest rate parity holds. 
C)  purchasing power parity holds. 
D)  money buys more in the United States.

Question 17

In the United States, since 1981 which two of the following have almost always moved in the same direction?

Accepted Answer

A)  net exports and the government sector balance 
B)  the government sector balance and the private sector balance 
C)  net exports and the private sector balance 
D)  none of the above 
A)  net exports and the government sector balance 
B)  the government sector balance and the private sector balance 
C)  net exports and the private sector balance 
D)  none of the above

Question 18

On www.yodobashi.com,  you can buy a Canon EOS camera for 298,000 yen. The same camera costs $2700 on If the exchange rate is_________ yen per dollar, we can determine________ for this camera.

Accepted Answer

A)  92; interest rate parity doesnʹt occur 
B)  110; interest rate parity occurs 
C)  110; purchasing power parity occurs 
D)  92; purchasing power parity occurs 
A)  92; interest rate parity doesnʹt occur 
B)  110; interest rate parity occurs 
C)  110; purchasing power parity occurs 
D)  92; purchasing power parity occurs

Question 19

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

Accepted Answer

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

Question 20

When a nation has no funds to finance economic development, how can it acquire the needed funds? Is the country a net lender or a net borrower?

Accepted Answer

Funds for development can be b

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

The lower the exchange rate today, ceteris paribus, the

Which of the following statements is INCORRECT?

A decrease in the value of a currency in terms of other currencies is known as

Suppose that the U.S. government gives foreign aid to Turkey. This transaction would directly

-The figure above shows the demand and supply of dollars in the foreign exchange market. The equilibrium in the market occurs at a price of Brazilian reals per dollar and a quantity of Billion dollars.

Other things remaining the same, the higher the current exchange rate, the larger is the expected profit from buying dollars.

Interest rates in the United States rise relative to interest rates in other countries. As a result, in the foreign exchange market

The _the exchange rate, the_ are foreign -produced goods and hence the greater the quantity of dollars supplied.

If nothing else changes, the_ the current exchange rate, the_ is the expected profit from holding dollars, all other things remaining the same.

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a_ and also a_ .

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

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

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

Suppose the exchange rate between the dollar and the euro is 2 euros per dollar. The price of a clock in Europe is 20 euros while the price of the same clock in the United States is $5. From these prices and exchange rate, it can be concluded that

In the United States, since 1981 which two of the following have almost always moved in the same direction?

On www.yodobashi.com, you can buy a Canon EOS camera for 298,000 yen. The same camera costs $2700 on If the exchange rate is_ yen per dollar, we can determine for this camera.

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

When a nation has no funds to finance economic development, how can it acquire the needed funds? Is the country a net lender or a net borrower?

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 9: The Exchange Rate and the Balance of Payments

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

The lower the exchange rate today, ceteris paribus, the

Which of the following statements is INCORRECT?

A decrease in the value of a currency in terms of other currencies is known as

Suppose that the U.S. government gives foreign aid to Turkey. This transaction would directly

-The figure above shows the demand and supply of dollars in the foreign exchange market. The equilibrium in the market occurs at a price of ________ Brazilian reals per dollar and a quantity of________ Billion dollars.

Other things remaining the same, the higher the current exchange rate, the larger is the expected profit from buying dollars.

Interest rates in the United States rise relative to interest rates in other countries. As a result, in the foreign exchange market

The _________the exchange rate, the_________ are foreign -produced goods and hence the greater the quantity of dollars supplied.

If nothing else changes, the_________ the current exchange rate, the_________ is the expected profit from holding dollars, all other things remaining the same.

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a___________ and also a___________ .

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

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

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

Suppose the exchange rate between the dollar and the euro is 2 euros per dollar. The price of a clock in Europe is 20 euros while the price of the same clock in the United States is $5. From these prices and exchange rate, it can be concluded that

In the United States, since 1981 which two of the following have almost always moved in the same direction?

On www.yodobashi.com, you can buy a Canon EOS camera for 298,000 yen. The same camera costs $2700 on If the exchange rate is_________ yen per dollar, we can determine________ for this camera.

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

When a nation has no funds to finance economic development, how can it acquire the needed funds? Is the country a net lender or a net borrower?

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

-The figure above shows the demand and supply of dollars in the foreign exchange market. The equilibrium in the market occurs at a price of Brazilian reals per dollar and a quantity of Billion dollars.

The _the exchange rate, the_ are foreign -produced goods and hence the greater the quantity of dollars supplied.

If nothing else changes, the_ the current exchange rate, the_ is the expected profit from holding dollars, all other things remaining the same.

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a_ and also a_ .

On www.yodobashi.com, you can buy a Canon EOS camera for 298,000 yen. The same camera costs $2700 on If the exchange rate is_ yen per dollar, we can determine for this camera.