Exam 9: The Exchange Rate and the Balance of Payments

The current account balance is defined as

Which of the following examples definitely illustrates an appreciation of the U.S. dollar?

If U.S. official reserves increase, is the official settlements account balance positive, negative, or unaffected?

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

Consider the market for dollars. The higher the exchange rate, the ________ is the expected profit from holding foreign currency and the greater is the ________.

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. Which of the following equations represents the private sector balance?

-Using the data in the above table, if saving equals $650 billion and exports are greater than imports,

If the exchange rate rises from 100 yen per dollar to 120 yen per dollar, the dollar has appreciated.

Looking at the U.S. balance of payments for the last two decades, how have the current account and the capital account changed?

Today, the dollar is worth 1.15 euros. Due to changes in economic conditions, people expect that the dollar will be worth 1.20 euros in the next month. This belief

"Fluctuations in exchange rates, other things remaining the same, creates a situation in which money buys the same amount of goods and services in different currencies." What does the previous statement describe? Will these fluctuations occur in the short run or the long run?

-The table above gives some of the entries in the national income and product accounts. The government sector has a ________, and the private sector has a ________.

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. If investors flocked to the dollar

If the U.S. interest rate differential increases, then in the foreign exchange market the

If a country has a capital and financial account surplus, that country's stock of international indebtedness is

Which of the following statements is INCORRECT?

-The figure above shows the demand and supply of dollars in the foreign exchange market. The equilibrium in the market occurs at a price of ________ Brazilian reals per dollar and a quantity of ________ billion dollars.

Suppose that $1 U.S. costs $1.50 Canadian. If in St. Louis a CD costs $10 U.S. and in Montreal it costs $15 Canadian, then

A decrease in the demand for U.S. exports ________ the demand for U.S. dollars and shifts the demand curve for U.S. dollars ________.

-In the figure above, an increase in the U.S. interest rate relative to that in Canada shifts the demand curve for U.S. dollars ________ and shifts the supply curve of U.S. dollars ________.