Question 1

The U.S. dollar will depreciate in value if

Accepted Answer

A)  the demand for the dollar increases. 
B)  the demand for the dollar decreases. 
C)  the supply of foreign exchange decreases. 
D)  U.S. citizens choose to buy fewer foreign goods. 
A)  the demand for the dollar increases. 
B)  the demand for the dollar decreases. 
C)  the supply of foreign exchange decreases. 
D)  U.S. citizens choose to buy fewer foreign goods.

Question 2

If the Fed sells U.S. dollars, the exchange rate

Accepted Answer

A)  rises. 
B)  does not change. 
C)  falls. 
D)  changes, but the direction depends on whether the Fed affected the demand for dollars or the supply of dollars. 
A)  rises. 
B)  does not change. 
C)  falls. 
D)  changes, but the direction depends on whether the Fed affected the demand for dollars or the supply of dollars.

Question 3

What are the main components of the current account? What has been the recent U.S. experience with these items?

Accepted Answer

The current account records payments for

Question 4

If we import more than we export from the rest of the world we

Accepted Answer

A)  must borrow an equal amount from the rest of the world. 
B)  can lend an equal amount to the rest of the world. 
C)  are running a trade surplus. 
D)  are helping to finance investment in the rest of the world. 
A)  must borrow an equal amount from the rest of the world. 
B)  can lend an equal amount to the rest of the world. 
C)  are running a trade surplus. 
D)  are helping to finance investment in the rest of the world.

Question 5

People expect that the exchange rate for the dollar will rise from 90 yen per dollar to 111 yen per dollar in a month. As a result

Accepted Answer

A)  the supply curve of dollars shifts leftward. 
B)  the supply curve of dollars shifts rightward. 
C)  the demand curve for dollars shifts leftward. 
D)  there is a downward movement along the supply curve of dollars. 
A)  the supply curve of dollars shifts leftward. 
B)  the supply curve of dollars shifts rightward. 
C)  the demand curve for dollars shifts leftward. 
D)  there is a downward movement along the supply curve of dollars.

Question 6

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

Accepted Answer

A)  $1,772 billion 
B)  $32 billion 
C)  -$43 billion 
D)  -$32 billion 
A)  $1,772 billion 
B)  $32 billion 
C)  -$43 billion 
D)  -$32 billion

Question 7

If the demand for a country's currency increases, the currency

Accepted Answer

A)  appreciates. 
B)  depreciates. 
C)  stays the same. 
D)  could either appreciate, depreciate, or stay the same. 
A)  appreciates. 
B)  depreciates. 
C)  stays the same. 
D)  could either appreciate, depreciate, or stay the same.

Question 8

Given the U.S. price level P, the foreign country price level P*, and the nominal exchange rate E expressed in foreign currency per U.S. dollar, the real exchange rate RER is given by

Accepted Answer

A)  RER = E × (P/P*). 
B)  RER = E × (P*/P). 
C)  RER = (P/P*) / E. 
D)  RER = P / (E/P*). 
A)  RER = E × (P/P*). 
B)  RER = E × (P*/P). 
C)  RER = (P/P*) / E. 
D)  RER = P / (E/P*).

Question 9

Which of the following statements is INCORRECT?

Accepted Answer

A)  Net exports equals exports minus imports. 
B)  The government sector balance equals net taxes minus government expenditures on goods and services. 
C)  The private sector balance equals private investment minus private saving. 
D)  The sum of the government sector balance and the private sector balance equals net exports. 
A)  Net exports equals exports minus imports. 
B)  The government sector balance equals net taxes minus government expenditures on goods and services. 
C)  The private sector balance equals private investment minus private saving. 
D)  The sum of the government sector balance and the private sector balance equals net exports.

Question 10

Over the last 25 years, according to the United States balance of payments

Accepted Answer

A)  the current account and the capital and financial account balances tend to move in the same direction. 
B)  the current account and the capital and financial account balances tend to move in opposite directions. 
C)  there is no clear relationship between the current account balance and the capital and financial account balance. 
D)  the official settlements balance fluctuates greatly from year to year. 
A)  the current account and the capital and financial account balances tend to move in the same direction. 
B)  the current account and the capital and financial account balances tend to move in opposite directions. 
C)  there is no clear relationship between the current account balance and the capital and financial account balance. 
D)  the official settlements balance fluctuates greatly from year to year.

Question 11

-The data in the table above illustrates items from the U.S. balance of payments accounts. The capital and financial account balance is

Accepted Answer

A)  $0. 
B)  -$80 billion. 
C)  -$200 billion. 
D)  +$200 billion. 
A)  $0. 
B)  -$80 billion. 
C)  -$200 billion. 
D)  +$200 billion.

Question 12

Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar. Then the yen has

Accepted Answer

A)  depreciated against the dollar, and the dollar has appreciated against the yen. 
B)  depreciated against the dollar, and the dollar has depreciated against the yen. 
C)  appreciated against the dollar, and the dollar has appreciated against the yen. 
D)  appreciated against the dollar, and the dollar has depreciated against the yen. 
A)  depreciated against the dollar, and the dollar has appreciated against the yen. 
B)  depreciated against the dollar, and the dollar has depreciated against the yen. 
C)  appreciated against the dollar, and the dollar has appreciated against the yen. 
D)  appreciated against the dollar, and the dollar has depreciated against the yen.

Question 13

-In the table above, the government's sector balance has

Accepted Answer

A)  a deficit of $700 billion. 
B)  a surplus of $600 billion. 
C)  a deficit of $100 billion. 
D)  a surplus of #100 billion. 
A)  a deficit of $700 billion. 
B)  a surplus of $600 billion. 
C)  a deficit of $100 billion. 
D)  a surplus of #100 billion.

Question 14

Airbus is an European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result

Accepted Answer

A)  the demand curve for European euros and the supply curve for Indian rupees both shift rightward. 
B)  the demand curve for European euros shifts rightward and the supply curve for Indian rupees shifts leftward. 
C)  only the demand curve for Indian rupees shifts rightward. 
D)  only the demand curve for European euros shifts rightward. 
A)  the demand curve for European euros and the supply curve for Indian rupees both shift rightward. 
B)  the demand curve for European euros shifts rightward and the supply curve for Indian rupees shifts leftward. 
C)  only the demand curve for Indian rupees shifts rightward. 
D)  only the demand curve for European euros shifts rightward.

Question 15

-The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

Accepted Answer

A)  $80 billion 
B)  $62 billion 
C)  $84 billion 
D)  $47 billion 
A)  $80 billion 
B)  $62 billion 
C)  $84 billion 
D)  $47 billion

Question 16

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

Accepted Answer

A change in the exch

Question 17

-Using the above figure, which of the following is CORRECT?

Accepted Answer

A)  1 guilder will sell for $2. 
B)  1 dollar will sell for 1/2 guilder. 
C)  A shortage of guilders exists at an exchange rate above $0.60. 
D)  A surplus of guilders exists at an exchange rate above $0.60. 
A)  1 guilder will sell for $2. 
B)  1 dollar will sell for 1/2 guilder. 
C)  A shortage of guilders exists at an exchange rate above $0.60. 
D)  A surplus of guilders exists at an exchange rate above $0.60.

Question 18

-The table above shows some data for Wiland, a country whose currency is the bont. The official settlement balance, net interest income, and net transfers from abroad are zero.
a) What is Wiland's imports of goods and services?
b) What is Wiland's current account balance?
c) What is Wiland's capital account balance?
d) What is Wiland's net taxes?
e) What is Wiland's private sector balance?

Accepted Answer

a) The country's net exports are GDP min

Question 19

If foreign investment in the United States exceeds U.S. investment abroad, there is a ________; and when U.S. investment abroad exceeds foreign investment in the United States, there is ________.

Accepted Answer

A)  current account surplus; a current account deficit 
B)  current account surplus; an official accounts surplus 
C)  capital and financial account surplus; a capital and financial account deficit 
D)  capital and financial account deficit; a capital and financial account surplus 
A)  current account surplus; a current account deficit 
B)  current account surplus; an official accounts surplus 
C)  capital and financial account surplus; a capital and financial account deficit 
D)  capital and financial account deficit; a capital and financial account surplus

Question 20

When Safeway supermarkets in the United States buys strawberries from Mexico

Accepted Answer

A)  it uses dollars to pay Mexican farmers. 
B)  it uses pesos to pay Mexican farmers. 
C)  it may use any currency it chooses. 
D)  the transaction shows up in the U.S. capital account. 
A)  it uses dollars to pay Mexican farmers. 
B)  it uses pesos to pay Mexican farmers. 
C)  it may use any currency it chooses. 
D)  the transaction shows up in the U.S. capital account.

The U.S. dollar will depreciate in value if

If the Fed sells U.S. dollars, the exchange rate

What are the main components of the current account? What has been the recent U.S. experience with these items?

If we import more than we export from the rest of the world we

People expect that the exchange rate for the dollar will rise from 90 yen per dollar to 111 yen per dollar in a month. As a result

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

If the demand for a country's currency increases, the currency

Given the U.S. price level P, the foreign country price level P*, and the nominal exchange rate E expressed in foreign currency per U.S. dollar, the real exchange rate RER is given by

Which of the following statements is INCORRECT?

Over the last 25 years, according to the United States balance of payments

-The data in the table above illustrates items from the U.S. balance of payments accounts. The capital and financial account balance is

Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar. Then the yen has

-In the table above, the government's sector balance has

Airbus is an European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result

-The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

-Using the above figure, which of the following is CORRECT?

If foreign investment in the United States exceeds U.S. investment abroad, there is a ; and when U.S. investment abroad exceeds foreign investment in the United States, there is .

When Safeway supermarkets in the United States buys strawberries from Mexico

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

The U.S. dollar will depreciate in value if

If the Fed sells U.S. dollars, the exchange rate

What are the main components of the current account? What has been the recent U.S. experience with these items?

If we import more than we export from the rest of the world we

People expect that the exchange rate for the dollar will rise from 90 yen per dollar to 111 yen per dollar in a month. As a result

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

If the demand for a country's currency increases, the currency

Given the U.S. price level P, the foreign country price level P*, and the nominal exchange rate E expressed in foreign currency per U.S. dollar, the real exchange rate RER is given by

Which of the following statements is INCORRECT?

Over the last 25 years, according to the United States balance of payments

-The data in the table above illustrates items from the U.S. balance of payments accounts. The capital and financial account balance is

Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar. Then the yen has

-In the table above, the government's sector balance has

Airbus is an European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result

-The above table shows some of the balance of payments accounts for Urland. What is Urland's balance on the current account?

In the foreign exchange market, what factor leads to a movement along the demand curve for dollars?

-Using the above figure, which of the following is CORRECT?

If foreign investment in the United States exceeds U.S. investment abroad, there is a ________; and when U.S. investment abroad exceeds foreign investment in the United States, there is ________.

When Safeway supermarkets in the United States buys strawberries from Mexico

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

If foreign investment in the United States exceeds U.S. investment abroad, there is a ; and when U.S. investment abroad exceeds foreign investment in the United States, there is .