Question 1

If Americans buy 100 million British pounds at an equilibrium exchange rate of $2 per pound,how many dollars are they supplying?

Accepted Answer

A)  $2 million 
B)  $50 million 
C)  $2 
D)  $200 million 
E)  $100 million 
A)  $2 million 
B)  $50 million 
C)  $2 
D)  $200 million 
E)  $100 million

Question 2

Managed floats are equivalent to fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would lead to a leftward shift in the supply curve for Czech kroner?

Accepted Answer

A)  A decrease in the dollar-krona exchange rate 
B)  An increase in the Czech Republic's GDP relative to U.S.GDP 
C)  Expectation that the dollar price of the krona will rise 
D)  Stronger Czech interest in U.S.audio CDs 
E)  An increase in the U.S.interest rate relative to the Czech interest rate. 
A)  A decrease in the dollar-krona exchange rate 
B)  An increase in the Czech Republic's GDP relative to U.S.GDP 
C)  Expectation that the dollar price of the krona will rise 
D)  Stronger Czech interest in U.S.audio CDs 
E)  An increase in the U.S.interest rate relative to the Czech interest rate.

Question 4

Moral hazard is a problem for the insurance industry.

Accepted Answer

A) True 
 B)False

Question 5

An appreciating currency is always a sign of economic health.

Accepted Answer

A) True 
 B)False

Question 6

If we know that the exchange rate is $1.60 per pound then the exchange rate of pounds per dollar is

Accepted Answer

A)  greater than 1.60 
B)  0.80 
C)  1.00 
D)  0.625 
E)  1.60. 
A)  greater than 1.60 
B)  0.80 
C)  1.00 
D)  0.625 
E)  1.60.

Question 7

Which of the following expresses the trade deficit?

Accepted Answer

A)  Exports / imports. 
B)  Exports + imports. 
C)  Exports > imports. 
D)  Imports > exports. 
E)  Imports / exports. 
A)  Exports / imports. 
B)  Exports + imports. 
C)  Exports > imports. 
D)  Imports > exports. 
E)  Imports / exports.

Question 8

-Refer to Figure 17-2.If the dollar price of the guilder is $0.70,we would expect

Accepted Answer

A)  Dutch exports to be very attractive to Americans 
B)  a recession in the United States 
C)  a decrease in the exchange rate until it achieves equilibrium at $0.50 per guilder 
D)  the demand curve for guilders to shift to the right 
E)  the supply of guilders curve to shift to the left. 
A)  Dutch exports to be very attractive to Americans 
B)  a recession in the United States 
C)  a decrease in the exchange rate until it achieves equilibrium at $0.50 per guilder 
D)  the demand curve for guilders to shift to the right 
E)  the supply of guilders curve to shift to the left.

Question 9

Why do Americans want to buy pounds?

Accepted Answer

A)  To buy goods and services from British firms and to buy British assets. 
B)  To purchase a British soccer shirt in New York. 
C)  To purchase stock in British companies on the New York Stock Exchange. 
D)  To purchase Canadian bonds. 
E)  To buy goods and services only. 
A)  To buy goods and services from British firms and to buy British assets. 
B)  To purchase a British soccer shirt in New York. 
C)  To purchase stock in British companies on the New York Stock Exchange. 
D)  To purchase Canadian bonds. 
E)  To buy goods and services only.

Question 10

One reason why purchasing power parity may not work perfectly is that some goods,because of their nature,are difficult to trade.

Accepted Answer

A) True 
 B)False

Question 11

What does a positive U.S.capital inflow signify?

Accepted Answer

A)  Nothing 
B)  That the government is running a budget deficit 
C)  That more funds were invested in the U.S.by foreigners than the U.S.invested abroad during a given time period 
D)  That the U.S.is running a trade surplus 
E)  The U.S.net exports are positive. 
A)  Nothing 
B)  That the government is running a budget deficit 
C)  That more funds were invested in the U.S.by foreigners than the U.S.invested abroad during a given time period 
D)  That the U.S.is running a trade surplus 
E)  The U.S.net exports are positive.

Question 12

Under a managed float,a country's central bank

Accepted Answer

A)  buys or sells its currency in order to keep its money supply stable 
B)  buys or sells its currency in order to maintain a stable exchange rate 
C)  may sell its currency in order to prevent a depreciation 
D)  may buy a foreign currency in order to prevent its appreciation 
E)  prints money and uses it to buy foreign currency 
A)  buys or sells its currency in order to keep its money supply stable 
B)  buys or sells its currency in order to maintain a stable exchange rate 
C)  may sell its currency in order to prevent a depreciation 
D)  may buy a foreign currency in order to prevent its appreciation 
E)  prints money and uses it to buy foreign currency

Question 13

If the dollars per pound exchange rate falls,there is a(n)

Accepted Answer

A)  rightward movement along a single supply of pounds curve 
B)  leftward movement along a single supply of pounds curve 
C)  leftward shift of the supply of pounds curve 
D)  rightward shift of the U.S.supply of pounds curve 
E)  tendency for the U.S.supply of pounds curve to become steeper 
A)  rightward movement along a single supply of pounds curve 
B)  leftward movement along a single supply of pounds curve 
C)  leftward shift of the supply of pounds curve 
D)  rightward shift of the U.S.supply of pounds curve 
E)  tendency for the U.S.supply of pounds curve to become steeper

Question 14

In the dollar-pound market,the equilibrium price of the pound will change

Accepted Answer

A)  only when there is a shift of the demand curve for pounds 
B)  only when there is a shift of the supply curve for pounds 
C)  only when there are shifts of both the supply for pounds and demand for pounds curves 
D)  whenever there is a shift of either the supply or demand curves for pounds 
E)  whenever there is movement along either the supply or the demand for pounds curves 
A)  only when there is a shift of the demand curve for pounds 
B)  only when there is a shift of the supply curve for pounds 
C)  only when there are shifts of both the supply for pounds and demand for pounds curves 
D)  whenever there is a shift of either the supply or demand curves for pounds 
E)  whenever there is movement along either the supply or the demand for pounds curves

Question 15

In the market for British pounds,if the current exchange rate is above the equilibrium rate,

Accepted Answer

A)  there is an excess supply of pounds and those who hold pounds will be able to sell them and make a profit 
B)  there is an excess supply of pounds and the exchange rate will fall 
C)  there is an excess demand for pounds and suppliers will not be able to supply enough pounds to meet the demand 
D)  there is an excess demand for pounds and the exchange rate will rise 
E)  the quantity of pounds supplied is barely sufficient to meet the quantity demanded 
A)  there is an excess supply of pounds and those who hold pounds will be able to sell them and make a profit 
B)  there is an excess supply of pounds and the exchange rate will fall 
C)  there is an excess demand for pounds and suppliers will not be able to supply enough pounds to meet the demand 
D)  there is an excess demand for pounds and the exchange rate will rise 
E)  the quantity of pounds supplied is barely sufficient to meet the quantity demanded

Question 16

Which of the following would lead to a rightward movement along the demand curve for British pounds?

Accepted Answer

A)  An increase in the dollar price of a pound 
B)  A decrease in U.S.GDP 
C)  A renewed interest in British beef products 
D)  A decrease in the dollar price of a pound 
E)  An increase in U.S.GDP. 
A)  An increase in the dollar price of a pound 
B)  A decrease in U.S.GDP 
C)  A renewed interest in British beef products 
D)  A decrease in the dollar price of a pound 
E)  An increase in U.S.GDP.

Question 17

If the U.S.interest rate falls while the British interest rate remains constant,which of the following will happen in the market for pounds?

Accepted Answer

A)  A rightward shift of the demand curve,a leftward shift of the supply curve,and an appreciation of the pound 
B)  A leftward shift of the demand curve,a rightward shift of the supply curve,and an appreciation of the pound 
C)  A leftward shift of the demand curve,a leftward shift of the supply curve,and a depreciation of the pound 
D)  A rightward shift of the demand curve,a rightward shift of the supply curve,and an appreciation of the pound 
E)  A leftward shift of the demand curve,a rightward shift of the supply curve,and a depreciation of the pound. 
A)  A rightward shift of the demand curve,a leftward shift of the supply curve,and an appreciation of the pound 
B)  A leftward shift of the demand curve,a rightward shift of the supply curve,and an appreciation of the pound 
C)  A leftward shift of the demand curve,a leftward shift of the supply curve,and a depreciation of the pound 
D)  A rightward shift of the demand curve,a rightward shift of the supply curve,and an appreciation of the pound 
E)  A leftward shift of the demand curve,a rightward shift of the supply curve,and a depreciation of the pound.

Question 18

-Refer to Figure 17-1.Assume the equilibrium exchange rate is $0.008 per yen at point A.If U.S.consumers decide to purchase more automobiles from Japan,then

Accepted Answer

A)  nothing will happen 
B)  the supply curve will shift to S' and the demand curve will shift to D' 
C)  the supply curve will shift to S' 
D)  the exchange will rise to $0.012 per yen 
E)  exchange rate will return to $0.008 as soon as the market adjusts. 
A)  nothing will happen 
B)  the supply curve will shift to S' and the demand curve will shift to D' 
C)  the supply curve will shift to S' 
D)  the exchange will rise to $0.012 per yen 
E)  exchange rate will return to $0.008 as soon as the market adjusts.

Question 19

Which of the following is equivalent to the trade deficit?

Accepted Answer

A)  Imports÷ exports 
B)  Net capital inflow 
C)  Exports + imports 
D)  Net exports - imports 
E)  Exports× imports. 
A)  Imports÷ exports 
B)  Net capital inflow 
C)  Exports + imports 
D)  Net exports - imports 
E)  Exports× imports.

Question 20

The 1997-1998 Asian crisis began as a crisis of confidence in China's financial system.

Accepted Answer

A) True 
 B)False

If Americans buy 100 million British pounds at an equilibrium exchange rate of $2 per pound,how many dollars are they supplying?

Managed floats are equivalent to fixed exchange rates.

Which of the following would lead to a leftward shift in the supply curve for Czech kroner?

Moral hazard is a problem for the insurance industry.

An appreciating currency is always a sign of economic health.

If we know that the exchange rate is $1.60 per pound then the exchange rate of pounds per dollar is

Which of the following expresses the trade deficit?

-Refer to Figure 17-2.If the dollar price of the guilder is $0.70,we would expect

Why do Americans want to buy pounds?

One reason why purchasing power parity may not work perfectly is that some goods,because of their nature,are difficult to trade.

What does a positive U.S.capital inflow signify?

Under a managed float,a country's central bank

If the dollars per pound exchange rate falls,there is a(n)

In the dollar-pound market,the equilibrium price of the pound will change

In the market for British pounds,if the current exchange rate is above the equilibrium rate,

Which of the following would lead to a rightward movement along the demand curve for British pounds?

If the U.S.interest rate falls while the British interest rate remains constant,which of the following will happen in the market for pounds?

-Refer to Figure 17-1.Assume the equilibrium exchange rate is $0.008 per yen at point A.If U.S.consumers decide to purchase more automobiles from Japan,then

Which of the following is equivalent to the trade deficit?

The 1997-1998 Asian crisis began as a crisis of confidence in China's financial system.

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

If Americans buy 100 million British pounds at an equilibrium exchange rate of $2 per pound,how many dollars are they supplying?

Managed floats are equivalent to fixed exchange rates.

Which of the following would lead to a leftward shift in the supply curve for Czech kroner?

Moral hazard is a problem for the insurance industry.

An appreciating currency is always a sign of economic health.

If we know that the exchange rate is $1.60 per pound then the exchange rate of pounds per dollar is

Which of the following expresses the trade deficit?

-Refer to Figure 17-2.If the dollar price of the guilder is $0.70,we would expect

Why do Americans want to buy pounds?

One reason why purchasing power parity may not work perfectly is that some goods,because of their nature,are difficult to trade.

What does a positive U.S.capital inflow signify?

Under a managed float,a country's central bank

If the dollars per pound exchange rate falls,there is a(n)

In the dollar-pound market,the equilibrium price of the pound will change

In the market for British pounds,if the current exchange rate is above the equilibrium rate,

Which of the following would lead to a rightward movement along the demand curve for British pounds?

If the U.S.interest rate falls while the British interest rate remains constant,which of the following will happen in the market for pounds?

-Refer to Figure 17-1.Assume the equilibrium exchange rate is $0.008 per yen at point A.If U.S.consumers decide to purchase more automobiles from Japan,then

Which of the following is equivalent to the trade deficit?

The 1997-1998 Asian crisis began as a crisis of confidence in China's financial system.

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