Question 1

Which of the following statements is true?

Accepted Answer

A) The demand for foreign currency in the United States increases as the volume of imports increases. 
B) The demand for foreign currency in the United States increases as the volume of exports increases. 
C) The demand for foreign currency in the United States decreases with a decrease in the inflation rate abroad. 
D) The demand for foreign currency in the United States decreases as foreign interest rates rise. 
E) The demand for foreign currency in the United States is unaffected by U.S.demand for foreign goods and services. 
A) The demand for foreign currency in the United States increases as the volume of imports increases. 
B) The demand for foreign currency in the United States increases as the volume of exports increases. 
C) The demand for foreign currency in the United States decreases with a decrease in the inflation rate abroad. 
D) The demand for foreign currency in the United States decreases as foreign interest rates rise. 
E) The demand for foreign currency in the United States is unaffected by U.S.demand for foreign goods and services. A

Question 2

The Bretton Woods agreement was reached:

Accepted Answer

A) immediately after the Civil War. 
B) just before World War I. 
C) just after World War I. 
D) just after the Great Depression. 
E) toward the end of World War II. 
A) immediately after the Civil War. 
B) just before World War I. 
C) just after World War I. 
D) just after the Great Depression. 
E) toward the end of World War II. E

Question 3

The balance of payments is also called the balance-of-economic transactions.See 20-1: Balance of Payments

Accepted Answer

A) True 
 B)False  True

Question 4

A German national who exchanges euros for dollars at a U.S.airport is:

Accepted Answer

A) contributing to U.S.exports of merchandise. 
B) lending dollars to Germany. 
C) participating in the foreign exchange market. 
D) engaging in speculative activities. 
E) engaging in illegal activities. 
A) contributing to U.S.exports of merchandise. 
B) lending dollars to Germany. 
C) participating in the foreign exchange market. 
D) engaging in speculative activities. 
E) engaging in illegal activities.

Question 5

Which of the following is a credit item in the U.S.balance of payments?

Accepted Answer

A) U.S.companies selling merchandise abroad 
B) Foreign companies selling merchandise to U.S.consumers 
C) U.S.consumers sending money to foreign companies 
D) Immigrants to the United States sending money back to their families in their native countries 
E) Immigrants to the United States sending gifts back to their families in their native countries 
A) U.S.companies selling merchandise abroad 
B) Foreign companies selling merchandise to U.S.consumers 
C) U.S.consumers sending money to foreign companies 
D) Immigrants to the United States sending money back to their families in their native countries 
E) Immigrants to the United States sending gifts back to their families in their native countries

Question 6

If the U.S.demand for British pounds increases,then:​

Accepted Answer

A) the dollar price of British pounds will increase. 
B) the dollar price of British pounds will decrease. 
C) the exchange rate between dollars and pounds will be less than the equilibrium exchange rate. 
D) the pound will fall in value vis-à-vis the dollar. 
E) there will be no change in either the value of the dollar or the pound. 
A) the dollar price of British pounds will increase. 
B) the dollar price of British pounds will decrease. 
C) the exchange rate between dollars and pounds will be less than the equilibrium exchange rate. 
D) the pound will fall in value vis-à-vis the dollar. 
E) there will be no change in either the value of the dollar or the pound.

Question 7

A fixed exchange rate is enforced by:

Accepted Answer

A) national governments,who establish appropriate trade barriers for each country they trade with. 
B) national governments,who manipulate gold reserves appropriately. 
C) central banks,who buy and sell appropriate currencies. 
D) the International Monetary Fund,which offers loans to its member countries. 
E) local governments,who manipulate capital reserves appropriately. 
A) national governments,who establish appropriate trade barriers for each country they trade with. 
B) national governments,who manipulate gold reserves appropriately. 
C) central banks,who buy and sell appropriate currencies. 
D) the International Monetary Fund,which offers loans to its member countries. 
E) local governments,who manipulate capital reserves appropriately.

Question 8

If interest rates fall in country A,other things constant,which of the following statements is true?

Accepted Answer

A) The demand for country A's currency will fall and the currency will depreciate. 
B) The demand for country A's currency will fall and the currency will appreciate. 
C) The demand for country A's currency will increase and the currency will depreciate. 
D) The demand for country A's currency will increase and the currency will appreciate. 
E) There will be a net inflow of foreign investments in country A. 
A) The demand for country A's currency will fall and the currency will depreciate. 
B) The demand for country A's currency will fall and the currency will appreciate. 
C) The demand for country A's currency will increase and the currency will depreciate. 
D) The demand for country A's currency will increase and the currency will appreciate. 
E) There will be a net inflow of foreign investments in country A.

Question 9

The International Monetary Fund was founded in _____.

Accepted Answer

A) 1938 
B) 1961 
C) 1971 
D) 1991 
E) 1944 
A) 1938 
B) 1961 
C) 1971 
D) 1991 
E) 1944

Question 10

Which of the following contributed to the collapse of the Bretton Woods system?

Accepted Answer

A) Chronic U.S.trade surpluses 
B) Fixed exchange rates 
C) An insufficient gold supply 
D) West Germany allowing the dollar to float against the mark 
E) West Germany not wanting the dollar to appreciate 
A) Chronic U.S.trade surpluses 
B) Fixed exchange rates 
C) An insufficient gold supply 
D) West Germany allowing the dollar to float against the mark 
E) West Germany not wanting the dollar to appreciate

Question 11

The exchange rate is the:

Accepted Answer

A) ratio of exports to imports. 
B) interest rate the U.S.government charges on international loans. 
C) percentage of domestic goods that are exported. 
D) cost of one nation's currency in terms of another nation's currency. 
E) rate that central banks charge each other for currency exchanges. 
A) ratio of exports to imports. 
B) interest rate the U.S.government charges on international loans. 
C) percentage of domestic goods that are exported. 
D) cost of one nation's currency in terms of another nation's currency. 
E) rate that central banks charge each other for currency exchanges.

Question 12

Critics of the system of flexible exchange rates allege that it:

Accepted Answer

A) causes inflation. 
B) causes unemployment. 
C) gives central banks too little discretion over their money supplies. 
D) restricts the growth of developing countries. 
E) gives too much financial power to industrial countries. 
A) causes inflation. 
B) causes unemployment. 
C) gives central banks too little discretion over their money supplies. 
D) restricts the growth of developing countries. 
E) gives too much financial power to industrial countries.

Question 13

In the balance of payments accounts,there will be a surplus in the financial account of a country if:

Accepted Answer

A) it sells more goods to foreign countries than it imports. 
B) it buys more goods from foreign countries than it exports. 
C) it sells more assets to individuals in other countries than the assets it buys from them. 
D) it buys more assets from individuals in other countries than the assets it sells to them. 
E) it imports less machinery than it exports. 
A) it sells more goods to foreign countries than it imports. 
B) it buys more goods from foreign countries than it exports. 
C) it sells more assets to individuals in other countries than the assets it buys from them. 
D) it buys more assets from individuals in other countries than the assets it sells to them. 
E) it imports less machinery than it exports.

Question 14

The exchange rate is the:

Accepted Answer

A) opportunity cost of producing exportable goods in a country . 
B) total monetary value of exports minus imports. 
C) amount of a country's currency that can be exchanged for one ounce of gold. 
D) sum of net unilateral transfers. 
E) price of one country's currency in terms of another country's currency. 
A) opportunity cost of producing exportable goods in a country . 
B) total monetary value of exports minus imports. 
C) amount of a country's currency that can be exchanged for one ounce of gold. 
D) sum of net unilateral transfers. 
E) price of one country's currency in terms of another country's currency.

Question 15

If the exchange rate changes from 1 euro per U.S.dollar to 1.2 euros per U.S.dollar,the Euro has:

Accepted Answer

A) appreciated,since its value has increased. 
B) appreciated,since the price of U.S.dollars has increased. 
C) appreciated,making U.S.goods cheaper in European countries. 
D) depreciated,since its value has declined. 
E) depreciated,since its value has increased. 
A) appreciated,since its value has increased. 
B) appreciated,since the price of U.S.dollars has increased. 
C) appreciated,making U.S.goods cheaper in European countries. 
D) depreciated,since its value has declined. 
E) depreciated,since its value has increased.

Question 16

Under the gold standard,_____.

Accepted Answer

A) a nation's currency was traded for gold at a fixed rate 
B) a nation's central bank or monetary authority had absolute control over its money supply 
C) new discoveries of gold had no effect on money supply or prices 
D) prices were constant globally 
E) all international transactions were financed with gold 
A) a nation's currency was traded for gold at a fixed rate 
B) a nation's central bank or monetary authority had absolute control over its money supply 
C) new discoveries of gold had no effect on money supply or prices 
D) prices were constant globally 
E) all international transactions were financed with gold

Question 17

The Bretton Woods system:

Accepted Answer

A) established a worldwide gold standard. 
B) established a worldwide system of fixed exchange rates. 
C) established a worldwide system of flexible exchange rates. 
D) harmonized tariff systems. 
E) was restricted to industrialized nations. 
A) established a worldwide gold standard. 
B) established a worldwide system of fixed exchange rates. 
C) established a worldwide system of flexible exchange rates. 
D) harmonized tariff systems. 
E) was restricted to industrialized nations.

Question 18

The demand curve for euros shows:

Accepted Answer

A) a direct relationship between the dollar price of euro and the quantity of euros demanded. 
B) an inverse relation between the dollar price of euro and the quantity of euros demanded. 
C) that the higher the dollar price of euro,the greater the quantity of euros demanded. 
D) that the more expensive it is to buy euros,the larger the quantity of European goods demanded by Americans. 
E) that the dollar price of euro is being fixed by the European Union. 
A) a direct relationship between the dollar price of euro and the quantity of euros demanded. 
B) an inverse relation between the dollar price of euro and the quantity of euros demanded. 
C) that the higher the dollar price of euro,the greater the quantity of euros demanded. 
D) that the more expensive it is to buy euros,the larger the quantity of European goods demanded by Americans. 
E) that the dollar price of euro is being fixed by the European Union.

Question 19

The Bretton Woods system fixed all exchange rates in terms of the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 20

If the purchasing power parity theory were literally true:

Accepted Answer

A) we should see some nations devaluing their currencies relative to the U.S.dollar,while other nations revalue their currencies. 
B) the price of a traded good should be the same everywhere in the world. 
C) the price of a Big Mac should be the different everywhere in the world. 
D) the exchange rate should be the same between all the countries. 
E) prices should tend toward equality with exchange rates. 
A) we should see some nations devaluing their currencies relative to the U.S.dollar,while other nations revalue their currencies. 
B) the price of a traded good should be the same everywhere in the world. 
C) the price of a Big Mac should be the different everywhere in the world. 
D) the exchange rate should be the same between all the countries. 
E) prices should tend toward equality with exchange rates.

Which of the following statements is true?

The Bretton Woods agreement was reached:

The balance of payments is also called the balance-of-economic transactions.See 20-1: Balance of Payments

A German national who exchanges euros for dollars at a U.S.airport is:

Which of the following is a credit item in the U.S.balance of payments?

If the U.S.demand for British pounds increases,then:

A fixed exchange rate is enforced by:

If interest rates fall in country A,other things constant,which of the following statements is true?

The International Monetary Fund was founded in _____.

Which of the following contributed to the collapse of the Bretton Woods system?

The exchange rate is the:

Critics of the system of flexible exchange rates allege that it:

In the balance of payments accounts,there will be a surplus in the financial account of a country if:

The exchange rate is the:

If the exchange rate changes from 1 euro per U.S.dollar to 1.2 euros per U.S.dollar,the Euro has:

Under the gold standard,_____.

The Bretton Woods system:

The demand curve for euros shows:

The Bretton Woods system fixed all exchange rates in terms of the U.S.dollar.

If the purchasing power parity theory were literally true:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

Economic Development

Filters

Exam 18: International Finance

Which of the following statements is true?

The Bretton Woods agreement was reached:

The balance of payments is also called the balance-of-economic transactions.See 20-1: Balance of Payments

A German national who exchanges euros for dollars at a U.S.airport is:

Which of the following is a credit item in the U.S.balance of payments?

If the U.S.demand for British pounds increases,then:​

A fixed exchange rate is enforced by:

If interest rates fall in country A,other things constant,which of the following statements is true?

The International Monetary Fund was founded in _____.

Which of the following contributed to the collapse of the Bretton Woods system?

The exchange rate is the:

Critics of the system of flexible exchange rates allege that it:

In the balance of payments accounts,there will be a surplus in the financial account of a country if:

The exchange rate is the:

If the exchange rate changes from 1 euro per U.S.dollar to 1.2 euros per U.S.dollar,the Euro has:

Under the gold standard,_____.

The Bretton Woods system:

The demand curve for euros shows:

The Bretton Woods system fixed all exchange rates in terms of the U.S.dollar.

If the purchasing power parity theory were literally true:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

Economic Development

Filters

If the U.S.demand for British pounds increases,then: