Question 1

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D1 could occur when

Accepted Answer

A)  foreign interest rates increase. 
B)  the U.S. interest rate falls. 
C)  people expect that the dollar will depreciate. 
D)  the expected future exchange rate increases. 
A)  foreign interest rates increase. 
B)  the U.S. interest rate falls. 
C)  people expect that the dollar will depreciate. 
D)  the expected future exchange rate increases.

Question 2

-In the above table, the government sector balance has a

Accepted Answer

A)  surplus of $200 billion. 
B)  deficit of $200 billion. 
C)  surplus of $100 billion. 
D)  deficit of $100 billion. 
A)  surplus of $200 billion. 
B)  deficit of $200 billion. 
C)  surplus of $100 billion. 
D)  deficit of $100 billion.

Question 3

The ________ the expected profit from holding a foreign currency, the greater is the ________ in the foreign exchange market.

Accepted Answer

A)  larger; quantity demanded of dollars 
B)  smaller; quantity demanded of foreign currency 
C)  larger; quantity supplied of dollars 
D)  None of the above is correct because the expected profit has nothing to do with the supply and demand for dollars or foreign currency. 
A)  larger; quantity demanded of dollars 
B)  smaller; quantity demanded of foreign currency 
C)  larger; quantity supplied of dollars 
D)  None of the above is correct because the expected profit has nothing to do with the supply and demand for dollars or foreign currency.

Question 4

-In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a ________ of ________currency and the exchange rate will________.

Accepted Answer

A)  surplus; domestic; fall 
B)  surplus; foreign; fall 
C)  surplus; domestic; rise 
D)  shortage; domestic; fall 
A)  surplus; domestic; fall 
B)  surplus; foreign; fall 
C)  surplus; domestic; rise 
D)  shortage; domestic; fall

Question 5

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 2.40 Brazilian reals per dollar

Accepted Answer

A)  there will be a shortage of dollars. 
B)  $40 billion dollars will be demanded. 
C)  $40 billion dollars will be supplied. 
D)  there will be a surplus of dollars. 
A)  there will be a shortage of dollars. 
B)  $40 billion dollars will be demanded. 
C)  $40 billion dollars will be supplied. 
D)  there will be a surplus of dollars.

Question 6

-The data in the table above illustrates items from the U.S. balance of payments accounts. The sum of the current account plus capital and financial account plus official settlements account is equal to

Accepted Answer

A)  $0. 
B)  -$335 billion. 
C)  $140 billion. 
D)  -$60 billion. 
A)  $0. 
B)  -$335 billion. 
C)  $140 billion. 
D)  -$60 billion.

Question 7

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

Accepted Answer

A)  an increase in the demand for dollars, a decrease in the supply of dollars, and a rise in the equilibrium exchange rate. 
B)  an increase in the demand for dollars, a decrease in the supply of dollars, and a fall in the equilibrium exchange rate. 
C)  a decrease in the demand for dollars, an increase in the supply of dollars, and a rise in the equilibrium exchange rate. 
D)  a decrease in the demand for dollars, an increase in the supply of dollars, and a fall in the equilibrium exchange rate. 
A)  an increase in the demand for dollars, a decrease in the supply of dollars, and a rise in the equilibrium exchange rate. 
B)  an increase in the demand for dollars, a decrease in the supply of dollars, and a fall in the equilibrium exchange rate. 
C)  a decrease in the demand for dollars, an increase in the supply of dollars, and a rise in the equilibrium exchange rate. 
D)  a decrease in the demand for dollars, an increase in the supply of dollars, and a fall in the equilibrium exchange rate.

Question 8

If the interest rate on Japanese yen assets falls while interest rates in the United States remain constant, the

Accepted Answer

A)  quantity of dollars demanded will increase. 
B)  quantity of dollars demanded will decrease. 
C)  demand for dollars will increase. 
D)  demand for dollars will decrease. 
A)  quantity of dollars demanded will increase. 
B)  quantity of dollars demanded will decrease. 
C)  demand for dollars will increase. 
D)  demand for dollars will decrease.

Question 9

Which of the following creates a demand for U.S. dollars?

Accepted Answer

A)  Toyota, a Japanese firm, purchasing land in Texas 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  a U.S. tourist catching a show in London 
D)  a Japanese tourist catching a show in London 
A)  Toyota, a Japanese firm, purchasing land in Texas 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  a U.S. tourist catching a show in London 
D)  a Japanese tourist catching a show in London

Question 10

The Federal Reserve can influence the exchange rate by

Accepted Answer

A)  changing interest rates. 
B)  buying or selling dollars. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct. 
A)  changing interest rates. 
B)  buying or selling dollars. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct.

Question 11

The U.S. dollar is regarded as the "safe haven" currency; investors flock to it when they are worried about the outlook for the global economy. Fears were at their greatest in late 2008 and early 2009 after the collapse of the Lehman Brothers investment bank in September 2008. As investors flocked to the dollar

Accepted Answer

A)  the demand for dollars increased and the exchange rate increased. 
B)  the demand for dollars decreased and the exchange rate decreased. 
C)  the supply of dollars increased and the exchange rate decreased. 
D)  the supply of dollars decreased and the exchange rate increased. 
A)  the demand for dollars increased and the exchange rate increased. 
B)  the demand for dollars decreased and the exchange rate decreased. 
C)  the supply of dollars increased and the exchange rate decreased. 
D)  the supply of dollars decreased and the exchange rate increased.

Question 12

Suppose that a dollar buys 120 yen. If a DVD player sells for 18,600 yen in Japan, the price of the DVD player in dollars is

Accepted Answer

A)  $186.00. 
B)  $223.20. 
C)  $120.00. 
D)  $155.00 
A)  $186.00. 
B)  $223.20. 
C)  $120.00. 
D)  $155.00

Question 13

The demand for one money is the supply of another money.

Accepted Answer

A) True 
 B)False

Question 14

As the expected profit from holding dollars ________, the quantity of ________.

Accepted Answer

A)  increases; dollars demanded increases 
B)  increases; dollars demanded decreases 
C)  decrease; foreign currency demanded decreases 
D)  None of the above answers is correct. 
A)  increases; dollars demanded increases 
B)  increases; dollars demanded decreases 
C)  decrease; foreign currency demanded decreases 
D)  None of the above answers is correct.

Question 15

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now ________ and the capital and financial account surplus is now ________.

Accepted Answer

A)  larger; larger 
B)  larger; smaller 
C)  smaller; larger 
D)  smaller; smaller 
A)  larger; larger 
B)  larger; smaller 
C)  smaller; larger 
D)  smaller; smaller

Question 16

The nominal exchange rate is

Accepted Answer

A)  the value of the U.S. dollar expressed in units of foreign currency per U.S. dollar. 
B)  the real exchange rate multiplied by the ratio of the U.S. price level to the foreign price level. 
C)  the relative price of U.S. produced goods to foreign produced goods. 
D)  a measure of the quantity of the nominal GDP of other countries per unit of U.S. nominal GDP. 
A)  the value of the U.S. dollar expressed in units of foreign currency per U.S. dollar. 
B)  the real exchange rate multiplied by the ratio of the U.S. price level to the foreign price level. 
C)  the relative price of U.S. produced goods to foreign produced goods. 
D)  a measure of the quantity of the nominal GDP of other countries per unit of U.S. nominal GDP.

Question 17

A net borrower is a country that ________, while a net lender is a country that ________.

Accepted Answer

A)  borrows more than it lends; owes more to foreigners than foreigners owe to it 
B)  decreases its stock of outstanding foreign debt; lends more than it borrows 
C)  borrows more than it lends; lends more than it borrows 
D)  lends more than it borrows; borrows more than it lends 
A)  borrows more than it lends; owes more to foreigners than foreigners owe to it 
B)  decreases its stock of outstanding foreign debt; lends more than it borrows 
C)  borrows more than it lends; lends more than it borrows 
D)  lends more than it borrows; borrows more than it lends

Question 18

-In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the exchange rate?

Accepted Answer

@#IMG-DLM& The figure above shows the effect of th

Question 19

-The above table gives data for the nation of Sueland. What is the private sector balance?

Accepted Answer

A)  $11 billion 
B)  -$11 billion 
C)  -$43 billion 
D)  $43 billion 
A)  $11 billion 
B)  -$11 billion 
C)  -$43 billion 
D)  $43 billion

Question 20

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

Accepted Answer

A)  it has a $1 billion surplus in its balance of payments. 
B)  it has a $1 billion deficit in its current account. 
C)  it has a $1 billion surplus in its current account. 
D)  its capital and financial account shows a surplus. 
A)  it has a $1 billion surplus in its balance of payments. 
B)  it has a $1 billion deficit in its current account. 
C)  it has a $1 billion surplus in its current account. 
D)  its capital and financial account shows a surplus.

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₁ could occur when

-In the above table, the government sector balance has a

The the expected profit from holding a foreign currency, the greater is the in the foreign exchange market.

-In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a of currency and the exchange rate will.

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 2.40 Brazilian reals per dollar

-The data in the table above illustrates items from the U.S. balance of payments accounts. The sum of the current account plus capital and financial account plus official settlements account is equal to

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

If the interest rate on Japanese yen assets falls while interest rates in the United States remain constant, the

Which of the following creates a demand for U.S. dollars?

The Federal Reserve can influence the exchange rate by

Suppose that a dollar buys 120 yen. If a DVD player sells for 18,600 yen in Japan, the price of the DVD player in dollars is

The demand for one money is the supply of another money.

As the expected profit from holding dollars , the quantity of .

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now and the capital and financial account surplus is now .

The nominal exchange rate is

A net borrower is a country that , while a net lender is a country that .

-In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the exchange rate?

-The above table gives data for the nation of Sueland. What is the private sector balance?

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 9: The Exchange Rate and the Balance of Payments

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D1 could occur when

-In the above table, the government sector balance has a

The ________ the expected profit from holding a foreign currency, the greater is the ________ in the foreign exchange market.

-In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a ________ of ________currency and the exchange rate will________.

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 2.40 Brazilian reals per dollar

-The data in the table above illustrates items from the U.S. balance of payments accounts. The sum of the current account plus capital and financial account plus official settlements account is equal to

Suppose that the U.S. exchange rate is expected to fall in the future. As a result, in the foreign exchange market, there will be

If the interest rate on Japanese yen assets falls while interest rates in the United States remain constant, the

Which of the following creates a demand for U.S. dollars?

The Federal Reserve can influence the exchange rate by

Suppose that a dollar buys 120 yen. If a DVD player sells for 18,600 yen in Japan, the price of the DVD player in dollars is

The demand for one money is the supply of another money.

As the expected profit from holding dollars ________, the quantity of ________.

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now ________ and the capital and financial account surplus is now ________.

The nominal exchange rate is

A net borrower is a country that ________, while a net lender is a country that ________.

-In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the exchange rate?

-The above table gives data for the nation of Sueland. What is the private sector balance?

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₁ could occur when

The the expected profit from holding a foreign currency, the greater is the in the foreign exchange market.

-In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a of currency and the exchange rate will.

As the expected profit from holding dollars , the quantity of .

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now and the capital and financial account surplus is now .

A net borrower is a country that , while a net lender is a country that .