Question 1

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

Accepted Answer

A) appreciate, imports will become less expensive, and domestic exports will become more expensive to foreigners. 
B) depreciate, imports will become less expensive, and domestic exports will become more expensive to foreigners. 
C) appreciate, imports will become more expensive, and domestic exports will become less expensive to foreigners. 
D) depreciate, imports will become more expensive, and domestic exports will become less expensive to foreigners. 
A) appreciate, imports will become less expensive, and domestic exports will become more expensive to foreigners. 
B) depreciate, imports will become less expensive, and domestic exports will become more expensive to foreigners. 
C) appreciate, imports will become more expensive, and domestic exports will become less expensive to foreigners. 
D) depreciate, imports will become more expensive, and domestic exports will become less expensive to foreigners.

Question 2

If the exchange rate between the U.S. dollar and the euro was 1.20 ($1.20 = one euro), what would be the price in dollars of a bottle of French wine selling for 40 euro?

Accepted Answer

A) $33.33 
B) $40 
C) $48 
D) $120 
A) $33.33 
B) $40 
C) $48 
D) $120

Question 3

An appreciation in the U.S. dollar benefits which of the following groups of people?

Accepted Answer

A) All people living in the United States. 
B) U.S.producers who export farm equipment to other countries. 
C) U.S.consumers who buy imported automobiles. 
D) Foreigners who wish to travel to the United States. 
E) U.S.consumers who buy only goods made entirely in the United States. 
A) All people living in the United States. 
B) U.S.producers who export farm equipment to other countries. 
C) U.S.consumers who buy imported automobiles. 
D) Foreigners who wish to travel to the United States. 
E) U.S.consumers who buy only goods made entirely in the United States.

Question 4

If Thailand fixes the foreign exchange value of its currency and follows a highly expansionary monetary policy,

Accepted Answer

A) Thailand will be unable to maintain both the fixed-exchange rate and the full convertibility of its currency 
B) Thailand will experience rapid economic growth. 
C) it will be easier for Thailand to engage in international trade. 
D) Thailand will have relatively low rates of inflation. 
A) Thailand will be unable to maintain both the fixed-exchange rate and the full convertibility of its currency 
B) Thailand will experience rapid economic growth. 
C) it will be easier for Thailand to engage in international trade. 
D) Thailand will have relatively low rates of inflation.

Question 5

Use the figure below to answer the following question(s).
Figure 18-1  
-Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.20, which of the following is true?

Accepted Answer

A) There is an excess supply of pounds, and the dollar price of pounds will rise. 
B) There is an excess demand for pounds, and the dollar price of pounds will rise. 
C) There is an excess supply of pounds, and the dollar price of pounds will fall. 
D) There is an excess demand for pounds, and the dollar price of pounds will fall. 
A) There is an excess supply of pounds, and the dollar price of pounds will rise. 
B) There is an excess demand for pounds, and the dollar price of pounds will rise. 
C) There is an excess supply of pounds, and the dollar price of pounds will fall. 
D) There is an excess demand for pounds, and the dollar price of pounds will fall.

Question 6

An appreciation of the U.S. dollar

Accepted Answer

A) is the same thing as a decrease in the consumer price level. 
B) increases the purchasing power of the U.S.dollar in foreign markets for goods and services. 
C) decreases the purchasing power of the U.S.dollar in foreign markets for goods and services. 
D) is the same thing as an increase in the consumer price level. 
A) is the same thing as a decrease in the consumer price level. 
B) increases the purchasing power of the U.S.dollar in foreign markets for goods and services. 
C) decreases the purchasing power of the U.S.dollar in foreign markets for goods and services. 
D) is the same thing as an increase in the consumer price level.

Question 7

Under a currency board regime, if domestic citizens are buying more (imports) from foreigners than they are selling to them (exports),

Accepted Answer

A) the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, increase the domestic money supply. 
B) the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, decrease the domestic money supply. 
C) the amount of the domestic currency exchanged for the foreign currency will increase and, thus, increase the domestic money supply. 
D) the amount of the domestic currency exchanged for the foreign currency will increase and, thus, decrease the domestic money supply. 
A) the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, increase the domestic money supply. 
B) the amount of the domestic currency exchanged for the foreign currency will decrease and, thus, decrease the domestic money supply. 
C) the amount of the domestic currency exchanged for the foreign currency will increase and, thus, increase the domestic money supply. 
D) the amount of the domestic currency exchanged for the foreign currency will increase and, thus, decrease the domestic money supply.

Question 8

Which one of the following is a credit in the U.S. current account?

Accepted Answer

A) the purchase of a U.S.car by a German 
B) the purchase of insurance from Lloyd's of London by an American 
C) a trip to Mexico by an American student 
D) the purchase of Japanese bonds by an American investor 
A) the purchase of a U.S.car by a German 
B) the purchase of insurance from Lloyd's of London by an American 
C) a trip to Mexico by an American student 
D) the purchase of Japanese bonds by an American investor

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

If the exchange rate between the U.S. dollar and the euro was 1.20 ($1.20 = one euro), what would be the price in dollars of a bottle of French wine selling for 40 euro?

An appreciation in the U.S. dollar benefits which of the following groups of people?

If Thailand fixes the foreign exchange value of its currency and follows a highly expansionary monetary policy,

Use the figure below to answer the following question(s). Figure 18-1 -Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.20, which of the following is true?

An appreciation of the U.S. dollar

Under a currency board regime, if domestic citizens are buying more (imports) from foreigners than they are selling to them (exports),

Which one of the following is a credit in the U.S. current account?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

Filters

Exam 19: International Finance and the Foreign Exchange Market

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

If the exchange rate between the U.S. dollar and the euro was 1.20 ($1.20 = one euro), what would be the price in dollars of a bottle of French wine selling for 40 euro?

An appreciation in the U.S. dollar benefits which of the following groups of people?

If Thailand fixes the foreign exchange value of its currency and follows a highly expansionary monetary policy,

Use the figure below to answer the following question(s). Figure 18-1 -Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.20, which of the following is true?

An appreciation of the U.S. dollar

Under a currency board regime, if domestic citizens are buying more (imports) from foreigners than they are selling to them (exports),

Which one of the following is a credit in the U.S. current account?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

Filters