Question 1

Holders of a foreign currency are willing to supply that currency to Americans in exchange for dollars

Accepted Answer

A)  only because they want to buy American goods 
B)  only because they want to purchase American services 
C)  primarily because they want to purchase American assets 
D)  because they want to purchase American goods,services and assets 
E)  because their governments force them to do so 
A)  only because they want to buy American goods 
B)  only because they want to purchase American services 
C)  primarily because they want to purchase American assets 
D)  because they want to purchase American goods,services and assets 
E)  because their governments force them to do so

Question 2

A reliable indicator of a healthy economy is a stable currency.

Accepted Answer

A) True 
 B)False

Question 3

The exchange rate is

Accepted Answer

A)  the rate at which one currency is traded for another 
B)  always constant 
C)  the tax a foreign nation imposes to change its currency into dollars 
D)  irrelevant to those who do not travel to foreign countries 
E)  controlled by the Federal Reserve 
A)  the rate at which one currency is traded for another 
B)  always constant 
C)  the tax a foreign nation imposes to change its currency into dollars 
D)  irrelevant to those who do not travel to foreign countries 
E)  controlled by the Federal Reserve

Question 4

A rise in U.S.real GDP would cause

Accepted Answer

A)  leftward shifts of the demand curves for foreign currencies 
B)  rightward shifts of the demand curves for foreign currencies 
C)  rightward movements along the demand curves for foreign currencies 
D)  no change in the demand curves for foreign currencies 
E)  initial rightward movements along the demand curves for foreign currencies,followed by leftward shifts of those curves. 
A)  leftward shifts of the demand curves for foreign currencies 
B)  rightward shifts of the demand curves for foreign currencies 
C)  rightward movements along the demand curves for foreign currencies 
D)  no change in the demand curves for foreign currencies 
E)  initial rightward movements along the demand curves for foreign currencies,followed by leftward shifts of those curves.

Question 5

If the demand for British pounds increases,

Accepted Answer

A)  the equilibrium price of the pound will increase 
B)  the equilibrium price of the pound will decrease 
C)  the equilibrium price of the pound will not change 
D)  the equilibrium price of the pound will change,but we need additional information to predict the direction of the change 
E)  no one can predict what will happen 
A)  the equilibrium price of the pound will increase 
B)  the equilibrium price of the pound will decrease 
C)  the equilibrium price of the pound will not change 
D)  the equilibrium price of the pound will change,but we need additional information to predict the direction of the change 
E)  no one can predict what will happen

Question 6

If British real GDP rose relative to U.S.real GDP,there would be

Accepted Answer

A)  a rightward movement along the supply of British pounds curve in the dollar-pound market 
B)  a leftward movement along the supply of British pounds curve in the dollar-pound market 
C)  a rightward shift of the supply of British pounds curve in the dollar-pound market 
D)  a leftward shift of the supply of British pounds curve in the dollar-pound market 
E)  the tendency for the supply of British pounds curve to become flatter in the dollar-pound market 
A)  a rightward movement along the supply of British pounds curve in the dollar-pound market 
B)  a leftward movement along the supply of British pounds curve in the dollar-pound market 
C)  a rightward shift of the supply of British pounds curve in the dollar-pound market 
D)  a leftward shift of the supply of British pounds curve in the dollar-pound market 
E)  the tendency for the supply of British pounds curve to become flatter in the dollar-pound market

Question 7

The amount of wealth in American hands has been decreasing as a result of the growing trade deficit.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound.If the current exchange rate is $1.60 per pound,we know that

Accepted Answer

A)  the dollar-pound market is in equilibrium 
B)  there is an excess demand for pounds,so the dollar price of the pound will rise 
C)  there is an excess demand for pounds,and the pound is overvalued 
D)  there is an excess supply of pounds,and the dollar price of the pound will rise 
E)  there is an excess supply of pounds,and the dollar price of the pound will fall 
A)  the dollar-pound market is in equilibrium 
B)  there is an excess demand for pounds,so the dollar price of the pound will rise 
C)  there is an excess demand for pounds,and the pound is overvalued 
D)  there is an excess supply of pounds,and the dollar price of the pound will rise 
E)  there is an excess supply of pounds,and the dollar price of the pound will fall

Question 9

If the dollar-per-pound exchange rate decreases,

Accepted Answer

A)  British goods become more expensive to the British. 
B)  British goods become more expensive to Americans. 
C)  British goods become less expensive to Americans. 
D)  British goods become less expensive to Europeans. 
E)  none of the above. 
A)  British goods become more expensive to the British. 
B)  British goods become more expensive to Americans. 
C)  British goods become less expensive to Americans. 
D)  British goods become less expensive to Europeans. 
E)  none of the above.

Question 10

-Which of the following would cause the demand curve for yen to shift as indicated in Figure 17-5 above?

Accepted Answer

A)  A decrease in the U.S.price level. 
B)  An increase in the U.S.interest rate. 
C)  An increase in Japanese real GDP. 
D)  An increase in U.S.real GDP. 
E)  A decrease in U.S.real GDP. 
A)  A decrease in the U.S.price level. 
B)  An increase in the U.S.interest rate. 
C)  An increase in Japanese real GDP. 
D)  An increase in U.S.real GDP. 
E)  A decrease in U.S.real GDP.

Question 11

The foreign exchange rate can be influenced by the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 12

Managed floats are only effective in the long run.

Accepted Answer

A) True 
 B)False

Question 13

If the exchange rate (dollars per unit of foreign currency)has increased,we say there has been a(n)

Accepted Answer

A)  appreciation of the foreign currency 
B)  depreciation of the foreign currency 
C)  revaluation of the foreign currency 
D)  devaluation of the foreign currency 
E)  fixing of the foreign currency 
A)  appreciation of the foreign currency 
B)  depreciation of the foreign currency 
C)  revaluation of the foreign currency 
D)  devaluation of the foreign currency 
E)  fixing of the foreign currency

Question 14

If U.S.goods became less desirable to the British,there would be

Accepted Answer

A)  a rightward movement along the supply of British pounds curve in the dollar-pound market 
B)  a leftward movement along the supply of British pounds curve in the dollar-pound market 
C)  a rightward shift of the supply of British pounds curve in the dollar-pound market 
D)  a leftward shift of the supply of British pounds curve in the dollar-pound market 
E)  no change in the supply of British pounds curve in the dollar-pound market 
A)  a rightward movement along the supply of British pounds curve in the dollar-pound market 
B)  a leftward movement along the supply of British pounds curve in the dollar-pound market 
C)  a rightward shift of the supply of British pounds curve in the dollar-pound market 
D)  a leftward shift of the supply of British pounds curve in the dollar-pound market 
E)  no change in the supply of British pounds curve in the dollar-pound market

Question 15

Managed floats are

Accepted Answer

A)  generally used in the very short run to prevent large,sudden changes in exchange rates 
B)  used most often in the long run to maintain equilibrium exchange rates 
C)  used most often in the short run to keep a country's currency from depreciating 
D)  considered unnecessary by most free market economies 
E)  most often used by the central banks of European countries to prevent depreciation of their currencies 
A)  generally used in the very short run to prevent large,sudden changes in exchange rates 
B)  used most often in the long run to maintain equilibrium exchange rates 
C)  used most often in the short run to keep a country's currency from depreciating 
D)  considered unnecessary by most free market economies 
E)  most often used by the central banks of European countries to prevent depreciation of their currencies

Question 16

The demand curve for a foreign currency

Accepted Answer

A)  slopes upward 
B)  slopes downward 
C)  is horizontal 
D)  has a slope of 45 degrees 
E)  is vertical 
A)  slopes upward 
B)  slopes downward 
C)  is horizontal 
D)  has a slope of 45 degrees 
E)  is vertical

Question 17

In the long run,if the inflation rate is positive,a currency depreciates to maintain purchasing power parity.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would lead to an increase in the supply of Russian rubles?

Accepted Answer

A)  An increase in the dollar price of the ruble 
B)  An increase in Russian GDP 
C)  An increase in the U.S.price level relative to the Russian price level 
D)  A decrease in the dollar-ruble exchange rate 
E)  Expectation that the price of the ruble will rise. 
A)  An increase in the dollar price of the ruble 
B)  An increase in Russian GDP 
C)  An increase in the U.S.price level relative to the Russian price level 
D)  A decrease in the dollar-ruble exchange rate 
E)  Expectation that the price of the ruble will rise.

Question 19

The lower the price of a foreign currency,the more expensive that foreign country's goods and services are to individuals in the domestic economy.

Accepted Answer

A) True 
 B)False

Question 20

In the market for euros,Americans want to buy euros

Accepted Answer

A)  only to buy goods from European firms 
B)  primarily to buy services from European firms 
C)  only to buy European assets 
D)  only to buy European goods and assets 
E)  to buy European goods,services,and assets 
A)  only to buy goods from European firms 
B)  primarily to buy services from European firms 
C)  only to buy European assets 
D)  only to buy European goods and assets 
E)  to buy European goods,services,and assets

Holders of a foreign currency are willing to supply that currency to Americans in exchange for dollars

A reliable indicator of a healthy economy is a stable currency.

The exchange rate is

A rise in U.S.real GDP would cause

If the demand for British pounds increases,

If British real GDP rose relative to U.S.real GDP,there would be

The amount of wealth in American hands has been decreasing as a result of the growing trade deficit.

Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound.If the current exchange rate is $1.60 per pound,we know that

If the dollar-per-pound exchange rate decreases,

-Which of the following would cause the demand curve for yen to shift as indicated in Figure 17-5 above?

The foreign exchange rate can be influenced by the Federal Reserve.

Managed floats are only effective in the long run.

If the exchange rate (dollars per unit of foreign currency)has increased,we say there has been a(n)

If U.S.goods became less desirable to the British,there would be

Managed floats are

The demand curve for a foreign currency

In the long run,if the inflation rate is positive,a currency depreciates to maintain purchasing power parity.

Which of the following would lead to an increase in the supply of Russian rubles?

The lower the price of a foreign currency,the more expensive that foreign country's goods and services are to individuals in the domestic economy.

In the market for euros,Americans want to buy euros

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Filters

Exam 17: Exchange Rates and Macroeconomic Policy

Holders of a foreign currency are willing to supply that currency to Americans in exchange for dollars

A reliable indicator of a healthy economy is a stable currency.

The exchange rate is

A rise in U.S.real GDP would cause

If the demand for British pounds increases,

If British real GDP rose relative to U.S.real GDP,there would be

The amount of wealth in American hands has been decreasing as a result of the growing trade deficit.

Suppose that equilibrium in the dollar-pound market occurs where 300 million pounds are demanded at a price of $1.75 per pound.If the current exchange rate is $1.60 per pound,we know that

If the dollar-per-pound exchange rate decreases,

-Which of the following would cause the demand curve for yen to shift as indicated in Figure 17-5 above?

The foreign exchange rate can be influenced by the Federal Reserve.

Managed floats are only effective in the long run.

If the exchange rate (dollars per unit of foreign currency)has increased,we say there has been a(n)

If U.S.goods became less desirable to the British,there would be

Managed floats are

The demand curve for a foreign currency

In the long run,if the inflation rate is positive,a currency depreciates to maintain purchasing power parity.

Which of the following would lead to an increase in the supply of Russian rubles?

The lower the price of a foreign currency,the more expensive that foreign country's goods and services are to individuals in the domestic economy.

In the market for euros,Americans want to buy euros

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Filters