Exam 9: The Exchange Rate and the Balance of Payments

Suppose the target exchange rate set by the Fed is 150 yen per dollar. If the demand for dollars permanently decreases, then the Fed

When there is a current account deficit and the official settlements account equals zero, then

If the Japanese yen was 123 per dollar and now it is 114 yen per dollar, it can be said that

Which of the following will lead to an appreciation of the U.S. dollar against the British pound?

When a good is imported into the United States, a ________ is created.

In July 2016, a British pound could buy $2. By October 2016, a pound could buy $1.55. Over the four months, the

-In the figure above, suppose the economy is initially at point B. Then the interest rate in Japan rises relative to the interest rate in the United States. This change ________ the supply of dollars and the market moves to a point such as ________.

If the government sector is running a deficit of $120 million and the private sector is running a surplus of $200 million, then net exports equal

The idea that the value of money is equal across countries is known as

If the U.S. interest rate differential increases, in the foreign exchange market the demand for U.S. dollars ________ and the supply of U.S. dollars ________.

With everything else the same, in the foreign exchange market which of the following increases the supply of U.S. dollars? I. a fall in the U.S. interest rate II. a fall in interest rates in foreign countries III. a rise in expected future exchange rate

-In the above figure, suppose the economy is initially at point A. People come to expect the future U.S. exchange rate to be higher. As a result there is a change from point A to a point such as

Suppose this year Angola borrows $100 million from foreign countries, while it lends $15 million to other countries. Angola definitely is a

Suppose a Japanese bank offers a 4 percent interest rate and U.S. banks offer a 2 percent interest rate. People must expect the yen to

During most of the 1980s, 1990s, and 2000s the United States has had a ________ current account balance and a ________ capital and financial account balance.

Which of the following statements about the balance of payments accounts is CORRECT?

Which of the following transactions directly leads to a surplus on the U.S. capital and financial account?

-In the above table, net exports equal a

If the exchange rate falls, then the expected profit from holding the domestic currency

When the U.S. exchange rate falls, U.S. goods become ________ to foreign residents and U.S. exports ________.