Question 1

A nation's trade deficit will tend to shrink when its

Accepted Answer

A)  economy is expanding. 
B)  economy is shrinking. 
C)  investment environment is attractive to foreigners. 
D)  economy is growing at a normal rate. 
A)  economy is expanding. 
B)  economy is shrinking. 
C)  investment environment is attractive to foreigners. 
D)  economy is growing at a normal rate.

Question 2

An increase in incomes in other countries, other things equal, would tend to cause U.S.

Accepted Answer

A)  exports to decrease and imports to increase. 
B)  exports to increase and imports to increase. 
C)  imports to decrease and exports to decrease. 
D)  imports to increase and exports would remain unchanged. 
E)  imports to remain unchanged and exports to increase. 
A)  exports to decrease and imports to increase. 
B)  exports to increase and imports to increase. 
C)  imports to decrease and exports to decrease. 
D)  imports to increase and exports would remain unchanged. 
E)  imports to remain unchanged and exports to increase.

Question 3

If the value of a nation's merchandise exports exceeds merchandise imports, the nation is running a

Accepted Answer

A)  capital account deficit. 
B)  capital account surplus. 
C)  balance of trade surplus. 
D)  balance of trade deficit. 
A)  capital account deficit. 
B)  capital account surplus. 
C)  balance of trade surplus. 
D)  balance of trade deficit.

Question 4

Under a system of flexible exchange rates, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

A)  a decrease in domestic interest rates 
B)  an increase in foreign interest rates 
C)  domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices 
D)  stable domestic prices while the nation's trading partners are experiencing 10 percent inflation 
A)  a decrease in domestic interest rates 
B)  an increase in foreign interest rates 
C)  domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices 
D)  stable domestic prices while the nation's trading partners are experiencing 10 percent inflation

Question 5

Which of the following is a current account transaction?

Accepted Answer

A)  the purchase of a foreign engineering firm by a domestic investor 
B)  the import of shoes by a domestic retailer 
C)  a loan by a domestic bank to a foreigner 
D)  a loan by a foreign bank to a domestic manufacturer 
A)  the purchase of a foreign engineering firm by a domestic investor 
B)  the import of shoes by a domestic retailer 
C)  a loan by a domestic bank to a foreigner 
D)  a loan by a foreign bank to a domestic manufacturer

Question 6

If Australian tourists visit Grand Canyon National Park, what is the effect in the foreign exchange market?

Accepted Answer

A)  It will increase demand for U.S. dollars. 
B)  It will decrease demand for U.S. dollars. 
C)  It will increase supply of U.S. dollars. 
D)  It will decrease supply of U.S. dollars. 
A)  It will increase demand for U.S. dollars. 
B)  It will decrease demand for U.S. dollars. 
C)  It will increase supply of U.S. dollars. 
D)  It will decrease supply of U.S. dollars.

Question 7

Under a system of flexible exchange rates, an increase in the supply of foreign exchange (an increase in the demand for the dollar) will cause the

Accepted Answer

A)  dollar to appreciate. 
B)  dollar to depreciate. 
C)  U.S. trade deficit to decrease. 
D)  U.S. inflation rate to increase. 
A)  dollar to appreciate. 
B)  dollar to depreciate. 
C)  U.S. trade deficit to decrease. 
D)  U.S. inflation rate to increase.

Question 8

If a German student pays her way to attend Harvard University, her actions will

Accepted Answer

A)  create a supply of dollars and a demand for Euros in the foreign currency market. 
B)  create a supply of Euros and a demand for dollars in the foreign currency market. 
C)  cause the German Euro to appreciate. 
D)  cause the U.S. dollar to depreciate. 
A)  create a supply of dollars and a demand for Euros in the foreign currency market. 
B)  create a supply of Euros and a demand for dollars in the foreign currency market. 
C)  cause the German Euro to appreciate. 
D)  cause the U.S. dollar to depreciate.

A nation's trade deficit will tend to shrink when its

An increase in incomes in other countries, other things equal, would tend to cause U.S.

If the value of a nation's merchandise exports exceeds merchandise imports, the nation is running a

Under a system of flexible exchange rates, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Which of the following is a current account transaction?

If Australian tourists visit Grand Canyon National Park, what is the effect in the foreign exchange market?

Under a system of flexible exchange rates, an increase in the supply of foreign exchange (an increase in the demand for the dollar) will cause the

If a German student pays her way to attend Harvard University, her actions will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

Special Topics

Filters

Exam 19: International Finance and the Foreign Exchange Market

A nation's trade deficit will tend to shrink when its

An increase in incomes in other countries, other things equal, would tend to cause U.S.

If the value of a nation's merchandise exports exceeds merchandise imports, the nation is running a

Under a system of flexible exchange rates, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Which of the following is a current account transaction?

If Australian tourists visit Grand Canyon National Park, what is the effect in the foreign exchange market?

Under a system of flexible exchange rates, an increase in the supply of foreign exchange (an increase in the demand for the dollar) will cause the

If a German student pays her way to attend Harvard University, her actions will

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

Special Topics

Filters