Question 1

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

Accepted Answer

A)  Japanese yen 
B)  U.S. dollar 
C)  euro 
D)  Mexican peso 
A)  Japanese yen 
B)  U.S. dollar 
C)  euro 
D)  Mexican peso

Question 2

$$\begin{array} { | l | l | } 
\hline \text { Investor } & \begin{array} { l } 
\text { Expected future value of a } \
\text { dollar (francs per doll ar) }
\end{array} \
\hline \text { Investor A } & 120 \
\hline \text { Investor B } & 100 \
\hline \text { Investor C } & 85 \
\hline
\end{array}$$
-Using the table above, if the current market value of the dollar is 125 francs per dollar,

Accepted Answer

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

Question 3

An exchange rate is the price of one countryʹs currency in terms of another countryʹs currency.

Accepted Answer

A) True 
 B)False

Question 4

In part, a countryʹs current account measures

Accepted Answer

A)  receipts from the sale of goods and services to foreigners and payments for goods and services bought from foreigners. 
B)  its current debt as opposed to its long-term debt. 
C)  borrowing and lending activity between the countryʹs residents and foreigners. 
D)  net increases and decreases in a countryʹs holdings of foreign currency. 
A)  receipts from the sale of goods and services to foreigners and payments for goods and services bought from foreigners. 
B)  its current debt as opposed to its long-term debt. 
C)  borrowing and lending activity between the countryʹs residents and foreigners. 
D)  net increases and decreases in a countryʹs holdings of foreign currency.

Question 5

If a nationʹs central bank increased domestic interest rates, the nationʹs exchange rate would change if the countryʹs exchange rate was a

Accepted Answer

A)  a crawling peg. 
B)  a flexible exchange rate. 
C)  a nominally fixed exchange rate. 
D)  a fixed exchange rate. 
A)  a crawling peg. 
B)  a flexible exchange rate. 
C)  a nominally fixed exchange rate. 
D)  a fixed exchange rate.

Question 6

A countryʹs balance of payment accounts include its government budget deficit or surplus.

Accepted Answer

A) True 
 B)False

Question 7

When the U.S. dollar depreciates against the yen, the yen _________and the exchange rate _________

Accepted Answer

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

Question 8

Which of the following accounts records the change in U.S. official reserves?

Accepted Answer

A)  official settlements account 
B)  current account 
C)  capital and financial account 
D)  none of the above 
A)  official settlements account 
B)  current account 
C)  capital and financial account 
D)  none of the above

Question 9

The_________ the exchange rate, the_________ are foreign -produced goods and hence the smaller the quantity of dollars supplied.

Accepted Answer

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

Question 10

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

Accepted Answer

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

Question 11

$$\begin{array} { | l | l | } 
\hline \text { Item } & \text { Billions of dollars } \
\hline \text { Exports } & 234 \
\hline \text { Imports } & 277 \
\hline \begin{array} { l } 
\text { Government } \
\text { expenditure }
\end{array} & 887 \
\hline \text { Net taxes } & 855 \
\hline \text { Investment } & 760 \
\hline \text { Saving } & 749 \
\hline
\end{array}$$
-The above table gives data for the nation of Sueland. What is the government sector balance?

Accepted Answer

A)  -$43 billion 
B)  $32 billion 
C)  -$32 billion 
D)  $1,772 billion 
A)  -$43 billion 
B)  $32 billion 
C)  -$32 billion 
D)  $1,772 billion

Question 12

Suppose that U.S. inflation is 3 percent and Turkish inflation is 70 percent. The effect of this discrepancy on the foreign exchange market is that

Accepted Answer

A)  the dollar will depreciate. 
B)  the Turkish currency will depreciate. 
C)  the Turkish currency will appreciate. 
D)  it is impossible for interest rate parity to hold. 
A)  the dollar will depreciate. 
B)  the Turkish currency will depreciate. 
C)  the Turkish currency will appreciate. 
D)  it is impossible for interest rate parity to hold.

Question 13

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

Accepted Answer

A)  peso depreciated. 
B)  peso appreciated. 
C)  dollar depreciated. 
D)  Both answers A and B are correct. 
A)  peso depreciated. 
B)  peso appreciated. 
C)  dollar depreciated. 
D)  Both answers A and B are correct.

Question 14

Which of the following statements is correct?
I. The exchange rate is a price.
II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Accepted Answer

A)  only I 
B)  neither I nor II 
C)  I and II 
D)  only II 
A)  only I 
B)  neither I nor II 
C)  I and II 
D)  only II

Question 15

$\begin{array}{|l|l|}
\hline \text { Item } & \text { Billions of dollars } \
\hline \begin{array}{l}
\text { Exports of goods and } \
\text { services }
\end{array} & 635 \\hline \begin{array}{l}
\text { Imports of goods and } \
\text { services }
\end{array} & 555 \\hline \text { Net interest income } & -18 \
\hline \text { Net transfers } & 22 \\hline \begin{array}{l}
\text { Urland's investment } \
\text { abroad }
\end{array} & 467 \\hline \begin{array}{l}
\text { For eign investment in } \
\text { Urland }
\end{array} & 321 \
\hline
\end{array}$
-The above table shows some of the balance of payments accounts for Urland. What is Urland?s balance in the official settlements account?

Accepted Answer

A)  $99 billion 
B)  $37 billion 
C)  $405 billion 
D)  $62 billion 
A)  $99 billion 
B)  $37 billion 
C)  $405 billion 
D)  $62 billion

Question 16

$$\begin{array} { | l | l | } 
\hline \text { Investor } & \begin{array} { l } 
\text { Expected future value of a } \
\text { dollar (francs per doll ar) }
\end{array} \
\hline \text { Investor A } & 120 \
\hline \text { Investor B } & 100 \
\hline \text { Investor C } & 85 \
\hline
\end{array}$$
-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 appreciate. 
B)  all three investors expect the dollar to depreciate. 
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 appreciate. 
B)  all three investors expect the dollar to depreciate. 
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 17

$\begin{array}{|l|l|}
\hline \text { Item } & \text { Billions of dollars } \
\hline \begin{array}{l}
\text { Exports of goods and } \
\text { services }
\end{array} & 635 \\hline \begin{array}{l}
\text { Imports of goods and } \
\text { services }
\end{array} & 555 \\hline \text { Net interest income } & -18 \
\hline \text { Net transfers } & 22 \\hline \begin{array}{l}
\text { Urland's investment } \
\text { abroad }
\end{array} & 467 \\hline \begin{array}{l}
\text { For eign investment in } \
\text { Urland }
\end{array} & 321 \
\hline
\end{array}$
-The above table shows some of the balance of payments accounts for Urland. What is Urland?s balance on the capital and financial account?

Accepted Answer

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

Question 18

What balance of payment account records foreign investment between countries?

Accepted Answer

The capital account records fo

Question 19

The U.S. dollar will appreciate in value if

Accepted Answer

A)  Americans choose to buy more foreign goods. 
B)  the demand curve for U.S. dollars shifts rightward. 
C)  the supply curve of U.S. dollars shifts rightward. 
D)  the demand curve for U.S. dollars shifts leftward. 
A)  Americans choose to buy more foreign goods. 
B)  the demand curve for U.S. dollars shifts rightward. 
C)  the supply curve of U.S. dollars shifts rightward. 
D)  the demand curve for U.S. dollars shifts leftward.

Question 20

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases,________  .

Accepted Answer

A)  net exports decrease 
B)  net exports decrease or remain constant 
C)  net exports increase 
D)  net exports increase, decrease, or remain constant 
A)  net exports decrease 
B)  net exports decrease or remain constant 
C)  net exports increase 
D)  net exports increase, decrease, or remain constant

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

Investor Expected future value of a dollar (francs per doll ar) Investor A 120 Investor B 100 Investor C 85 -Using the table above, if the current market value of the dollar is 125 francs per dollar,

An exchange rate is the price of one countryʹs currency in terms of another countryʹs currency.

In part, a countryʹs current account measures

If a nationʹs central bank increased domestic interest rates, the nationʹs exchange rate would change if the countryʹs exchange rate was a

A countryʹs balance of payment accounts include its government budget deficit or surplus.

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

Which of the following accounts records the change in U.S. official reserves?

The_ the exchange rate, the_ are foreign -produced goods and hence the smaller the quantity of dollars supplied.

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

Item Billions of dollars Exports 234 Imports 277 Government expenditure 887 Net taxes 855 Investment 760 Saving 749 -The above table gives data for the nation of Sueland. What is the government sector balance?

Suppose that U.S. inflation is 3 percent and Turkish inflation is 70 percent. The effect of this discrepancy on the foreign exchange market is that

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

Which of the following statements is correct? I. The exchange rate is a price. II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Investor Expected future value of a dollar (francs per doll ar) Investor A 120 Investor B 100 Investor C 85 -Using the table above, if the current market value of the dollar is 90 francs,

What balance of payment account records foreign investment between countries?

The U.S. dollar will appreciate in value if

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases,________ .

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

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

Investor Expected future value of a dollar (francs per doll ar) Investor A 120 Investor B 100 Investor C 85 -Using the table above, if the current market value of the dollar is 125 francs per dollar,

An exchange rate is the price of one countryʹs currency in terms of another countryʹs currency.

In part, a countryʹs current account measures

If a nationʹs central bank increased domestic interest rates, the nationʹs exchange rate would change if the countryʹs exchange rate was a

A countryʹs balance of payment accounts include its government budget deficit or surplus.

When the U.S. dollar depreciates against the yen, the yen _________and the exchange rate _________

Which of the following accounts records the change in U.S. official reserves?

The_________ the exchange rate, the_________ are foreign -produced goods and hence the smaller the quantity of dollars supplied.

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

Item Billions of dollars Exports 234 Imports 277 Government expenditure 887 Net taxes 855 Investment 760 Saving 749 -The above table gives data for the nation of Sueland. What is the government sector balance?

Suppose that U.S. inflation is 3 percent and Turkish inflation is 70 percent. The effect of this discrepancy on the foreign exchange market is that

Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the

Which of the following statements is correct? I. The exchange rate is a price. II. The exchange rate is different from other prices because it is NOT determined by supply and demand.

Investor Expected future value of a dollar (francs per doll ar) Investor A 120 Investor B 100 Investor C 85 -Using the table above, if the current market value of the dollar is 90 francs,

What balance of payment account records foreign investment between countries?

The U.S. dollar will appreciate in value if

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases,________ .

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

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

The_ the exchange rate, the_ are foreign -produced goods and hence the smaller the quantity of dollars supplied.