Exam 18: B: The Balance of Payments and Exchange Rates

The following table shows the trade between Canada and Transylvania for the year 2014.All the figures are in billions of dollars. Refer to the above information.In 2014, Canada had a current account:

Refer to the diagram below.Assume the initial demand for and supply of dollars are shown by D₁ and S₁.The exchange rate will be:

The Canadian demand for pounds is:

The following table shows the balance of payments statement for the hypothetical nation of Zabella for 2014.All the figures are in billions of dollars. Refer to the above data.The sign of the official settlement account indicates that:

A nation which imports more goods and services than it exports is necessarily realizing an international balance of payments deficit.

If the dollar depreciates relative to the pound, then the pound:

Which of the following have substantially equivalent effects insofar as a nation's volume of exports and imports is concerned?

In using exchange controls, a nation attempts to eliminate a balance of payments deficit by:

Refer to the above diagram where D and S are Canada's demand for and supply of Swiss francs.At the equilibrium exchange rate, E, Canada's balance of payments is in equilibrium.Given a change in demand from D to D' Canada could maintain the dollar price of francs by:

Assume that, under a system of flexible exchange rates, Mexicans decide to increase their investments in Canada.As a result:

A market in which the money of one nation is exchanged for the money of another nation is a:

If a nation's balance on current account is a negative $20 billion, while its balance on capital account is a positive $16.5 billion, we can conclude with certainty that this nation is experiencing:

If the dollar depreciates, Canadian exports will eventually rise and Canadian imports will eventually fall.

Which of the following would call for a payment to Canada?

Which of the following creates a supply of Euro in foreign exchange markets?

The balance of payments must always balance, because:

The following table shows the balance of payments statement for the hypothetical nation of Zabella for 2014.All the figures are in billions of dollars. Refer to the above data.Zabella's balance on goods and services shows a:

Which of the following would contribute to a Canadian balance of payments surplus?

A country's annual balance of payments statement must always balance because:

Suppose the capital account balance of an economy is -61 billion and the stock of official international reserves is -$11 billion.Given the scenario, the balance in the current account is: