Exam 9: The Exchange Rate and the Balance of Payments

The exchange rate is the

Suppose the exchange rate of the U.S. dollar was 1.00 euro = $0.50 on Thursday, and on Friday the exchange rate was $1.00 = 2.10 euros. Which of the following best explains what has happened between Thursday and Friday?

If in Chicago, U.S., the interest rate is 5 percent a year and in Vancouver, Canada, it is 4 percent a year, then

If the U.S. exchange rate rises, the price to foreigners of U.S.-produced goods and services ________ and the quantity of U.S. dollars demanded ________.

U.S. residents come to believe that the dollar will depreciate in the future, that is, the exchange rate in the future will be lower than the current exchange rate. As a result

If net interest and net transfers are zero, and a country's exports exceed its imports, the country definitely has

Suppose the exchange rate between the U.S. dollar and the Mexican peso was $1 = 5 pesos. A can of Pepsi sells for $2 in Boston and for 12 pesos in Mexico City.

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world, the country is a

-Using the table above, if the current market value of the dollar is 110 francs

The official settlements account records the change in official U.S. reserves.

China has used a fixed yuan exchange rate and a crawling peg exchange rate. In both cases, China pegs its currency to the

-Using the data in the above table, if exports = $1,150 billion and the private sector runs a surplus of $300 billion, the government sector will run

Other things remaining the same, the higher the current exchange rate, the larger is the expected profit from buying dollars.

Suppose the peso-dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar. Then the peso has ________ against the dollar and the dollar has ________ against the peso.

During this year a country reports imports of $1,000 billion, exports of $1,100 billion, foreign investment in the country of $900 billion, investment abroad of $1,200 billion, net interest and net transfers of zero. What is the country's current account balance?

What factors can change expectations about the exchange rate?

Important factors that change the demand for dollars and hence shift the demand curve for dollars include which of the following? I. interest rates around the world II. the current exchange rate III. the expected future exchange rate

"In the foreign exchange market, if the demand for the U.S. dollar increases, the U.S. dollar appreciates in value." Briefly explain whether the previous statement is correct or incorrect.

The supply curve of U.S. dollars shifts leftward. This could have been influenced by

Everything else being the same, if the interest rate in the United States increases, then in the foreign exchange market the