Question 1

________ can intervene directly in the foreign exchange market by buying or selling dollars.

Accepted Answer

A)  Congress 
B)  The Fed 
C)  The International Monetary Fund 
D)  The U.S. Treasury department 
A)  Congress 
B)  The Fed 
C)  The International Monetary Fund 
D)  The U.S. Treasury department

Question 2

-In the above table, the private sector has a

Accepted Answer

A)  surplus of $300 billion. 
B)  deficit of $300 billion. 
C)  deficit of $200 billion. 
D)  deficit of $400 billion. 
A)  surplus of $300 billion. 
B)  deficit of $300 billion. 
C)  deficit of $200 billion. 
D)  deficit of $400 billion.

Question 3

Relative to the yen, from 2012-2015 the U.S. dollar

Accepted Answer

A)  depreciated due to an anticipated decrease in the interest rate differential and expectations of a lower future exchange rate. 
B)  appreciated due to an anticipated decrease in the interest rate differential and expectations of a lower future exchange rate. 
C)  depreciated due to an anticipated increase in the interest rate differential and expectations of a higher future exchange rate. 
D)  appreciated due to an anticipated increase in the interest rate differential and expectations of a higher future exchange rate. 
A)  depreciated due to an anticipated decrease in the interest rate differential and expectations of a lower future exchange rate. 
B)  appreciated due to an anticipated decrease in the interest rate differential and expectations of a lower future exchange rate. 
C)  depreciated due to an anticipated increase in the interest rate differential and expectations of a higher future exchange rate. 
D)  appreciated due to an anticipated increase in the interest rate differential and expectations of a higher future exchange rate.

Question 4

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

Accepted Answer

A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above 
A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above

Question 5

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

Accepted Answer

A)  -$500 billion. 
B)  $1,000 billion. 
C)  $500 billion. 
D)  $0. 
A)  -$500 billion. 
B)  $1,000 billion. 
C)  $500 billion. 
D)  $0.

Question 6

Which of the following contributes to a current account surplus for a country?

Accepted Answer

A)  having tourists visit the country 
B)  importing textiles 
C)  having foreigners buy government securities from the country's government 
D)  importing financial services 
A)  having tourists visit the country 
B)  importing textiles 
C)  having foreigners buy government securities from the country's government 
D)  importing financial services

Question 7

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world, the country is a

Accepted Answer

A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation. 
A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation.

Question 8

-The data in the table above illustrates items from the U.S. balance of payments accounts. What is the current account balance?

Accepted Answer

A)  $0 
B)  $150 billion 
C)  -$100 billion 
D)  -$150 billion 
A)  $0 
B)  $150 billion 
C)  -$100 billion 
D)  -$150 billion

Question 9

In the foreign exchange market, a decrease in the supply of dollars leads to an appreciation of the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 10

-Using the data in the above table, if net exports = -$500 billion and the government balances its budget, then

Accepted Answer

A)  the private sector must balance its budget. 
B)  savings must equal $150 billion. 
C)  the private sector runs a surplus of $850 billion. 
D)  saving must equal $650 billion. 
A)  the private sector must balance its budget. 
B)  savings must equal $150 billion. 
C)  the private sector runs a surplus of $850 billion. 
D)  saving must equal $650 billion.

Question 11

-Using the table above, if the current market value of the dollar is 90 francs

Accepted Answer

A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  investor C expects dollar depreciation, but A and B expect appreciation. 
C)  all three investors expect the dollar to appreciate. 
D)  all three investors expect the dollar to depreciate. 
A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  investor C expects dollar depreciation, but A and B expect appreciation. 
C)  all three investors expect the dollar to appreciate. 
D)  all three investors expect the dollar to depreciate.

Question 12

Over its history, Brazil has borrowed more from the rest of the world than it has loaned to the rest of the world. Brazil

Accepted Answer

A)  eventually will have a balance of payments account that does not balance. 
B)  is a debtor nation. 
C)  is a creditor nation. 
D)  has no current account balance. 
A)  eventually will have a balance of payments account that does not balance. 
B)  is a debtor nation. 
C)  is a creditor nation. 
D)  has no current account balance.

Question 13

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

Accepted Answer

A) True 
 B)False

Question 14

The Fed ________ intervene in the foreign exchange market by supplying dollars and the Fed ________ intervene in the foreign exchange market by demanding dollars.

Accepted Answer

A)  can; can 
B)  cannot; can 
C)  can; cannot 
D)  cannot; cannot 
A)  can; can 
B)  cannot; can 
C)  can; cannot 
D)  cannot; cannot

Question 15

When the U.S. dollar depreciates against the yen, the yen ________ and the exchange rate ________.

Accepted Answer

A)  appreciates; rises 
B)  depreciates; rises 
C)  appreciates; falls 
D)  depreciates; falls 
A)  appreciates; rises 
B)  depreciates; rises 
C)  appreciates; falls 
D)  depreciates; falls

Question 16

"If the official settlements balance is zero, a current account surplus must equal the capital account deficit." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is correct. The sum of the

Question 17

What is the relationship between net exports, the government sector surplus or deficit, and the private sector surplus or deficit?

Accepted Answer

The relationship is that net e

Question 18

Suppose Mitsubishi Bank (a Japanese bank) expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

Accepted Answer

A)  buys U.S. dollars today because it expects profit from buying U.S. dollars and holding them. 
B)  sells U.S. dollars today because it expects losses from buying U.S. dollars and holding them. 
C)  does not buy or sell any U.S. dollars today because it expects zero profit from buying U.S. dollars and holding them. 
D)  None of the above answers is correct because a foreign commercial bank cannot buy or sell U.S. dollars. 
A)  buys U.S. dollars today because it expects profit from buying U.S. dollars and holding them. 
B)  sells U.S. dollars today because it expects losses from buying U.S. dollars and holding them. 
C)  does not buy or sell any U.S. dollars today because it expects zero profit from buying U.S. dollars and holding them. 
D)  None of the above answers is correct because a foreign commercial bank cannot buy or sell U.S. dollars.

Question 19

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when

Accepted Answer

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

Question 20

Which of the following is CORRECT?

Accepted Answer

A)  Net exports equals the government sector balance plus the private sector balance. 
B)  The government sector balance equals net exports plus the private sector balance. 
C)  The private sector balance equals net exports plus the government sector balance. 
D)  Net exports equals the current account plus the capital account plus the official settlements account. 
A)  Net exports equals the government sector balance plus the private sector balance. 
B)  The government sector balance equals net exports plus the private sector balance. 
C)  The private sector balance equals net exports plus the government sector balance. 
D)  Net exports equals the current account plus the capital account plus the official settlements account.

________ can intervene directly in the foreign exchange market by buying or selling dollars.

-In the above table, the private sector has a

Relative to the yen, from 2012-2015 the U.S. dollar

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

Which of the following contributes to a current account surplus for a country?

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world, the country is a

-The data in the table above illustrates items from the U.S. balance of payments accounts. What is the current account balance?

In the foreign exchange market, a decrease in the supply of dollars leads to an appreciation of the U.S. dollar.

-Using the data in the above table, if net exports = -$500 billion and the government balances its budget, then

-Using the table above, if the current market value of the dollar is 90 francs

Over its history, Brazil has borrowed more from the rest of the world than it has loaned to the rest of the world. Brazil

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

The Fed intervene in the foreign exchange market by supplying dollars and the Fed intervene in the foreign exchange market by demanding dollars.

When the U.S. dollar depreciates against the yen, the yen and the exchange rate .

"If the official settlements balance is zero, a current account surplus must equal the capital account deficit." Is the previous statement correct or incorrect? Briefly explain your answer.

What is the relationship between net exports, the government sector surplus or deficit, and the private sector surplus or deficit?

Suppose Mitsubishi Bank (a Japanese bank) expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₂ could occur when

Which of the following is CORRECT?

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

________ can intervene directly in the foreign exchange market by buying or selling dollars.

-In the above table, the private sector has a

Relative to the yen, from 2012-2015 the U.S. dollar

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

Which of the following contributes to a current account surplus for a country?

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world, the country is a

-The data in the table above illustrates items from the U.S. balance of payments accounts. What is the current account balance?

In the foreign exchange market, a decrease in the supply of dollars leads to an appreciation of the U.S. dollar.

-Using the data in the above table, if net exports = -$500 billion and the government balances its budget, then

-Using the table above, if the current market value of the dollar is 90 francs

Over its history, Brazil has borrowed more from the rest of the world than it has loaned to the rest of the world. Brazil

In the foreign exchange market, a decrease in the exchange rate increases the quantity of dollars supplied.

The Fed ________ intervene in the foreign exchange market by supplying dollars and the Fed ________ intervene in the foreign exchange market by demanding dollars.

When the U.S. dollar depreciates against the yen, the yen ________ and the exchange rate ________.

"If the official settlements balance is zero, a current account surplus must equal the capital account deficit." Is the previous statement correct or incorrect? Briefly explain your answer.

What is the relationship between net exports, the government sector surplus or deficit, and the private sector surplus or deficit?

Suppose Mitsubishi Bank (a Japanese bank) expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

-In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when

Which of the following is CORRECT?

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

The Fed intervene in the foreign exchange market by supplying dollars and the Fed intervene in the foreign exchange market by demanding dollars.

When the U.S. dollar depreciates against the yen, the yen and the exchange rate .

-In the figure above, the shift in the demand curve for U.S. dollars from D₀ to D₂ could occur when