Question 1

Americans needing foreign currencies get those currencies from a bank.The ultimate source of these currencies is

Accepted Answer

A)  U.S. investments abroad. 
B)  U.S. exports to foreign countries. 
C)  U.S. imports of foreign goods and services. 
D)  the International Monetary Fund. 
A)  U.S. investments abroad. 
B)  U.S. exports to foreign countries. 
C)  U.S. imports of foreign goods and services. 
D)  the International Monetary Fund. B

Question 2

Differentiate between the current account balance and the capital account balance.

Accepted Answer

The current account balance includes international purchases and sales of goods and services,cross-border interest and dividend payments,and cross-border gifts to and from both private individuals and governments.The capital account balance includes purchases and sales of financial assets to and from citizens and companies of other countries.

Question 3

Fixed exchange rates are determined in free markets by the forces of demand and supply.

Accepted Answer

A) True 
 B)False  False

Question 4

Lately,the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

Accepted Answer

A)  managed-float; devalued 
B)  currency peg; depreciated 
C)  floating rate; revalued 
D)  currency peg; appreciated 
A)  managed-float; devalued 
B)  currency peg; depreciated 
C)  floating rate; revalued 
D)  currency peg; appreciated

Question 5

Under a gold standard,a balance of payments deficit automatically

Accepted Answer

A)  raised interest rates. 
B)  decreased exports. 
C)  increased domestic prices. 
D)  increased imports. 
A)  raised interest rates. 
B)  decreased exports. 
C)  increased domestic prices. 
D)  increased imports.

Question 6

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Accepted Answer

A)  balance on current account 
B)  balance on capital account 
C)  balance of merchandise trade 
D)  balance on long-term capital 
A)  balance on current account 
B)  balance on capital account 
C)  balance of merchandise trade 
D)  balance on long-term capital

Question 7

Table 19-1
  
-From Table 19-1,what is the exchange rate between the dollar and the pound?

Accepted Answer

A)  One dollar is worth two pounds. 
B)  One pound is worth two dollars. 
C)  One pound is worth one dollar. 
D)  One pound is worth 50 cents. 
A)  One dollar is worth two pounds. 
B)  One pound is worth two dollars. 
C)  One pound is worth one dollar. 
D)  One pound is worth 50 cents.

Question 8

If a currency increases in value in response to market forces,this process is known as

Accepted Answer

A)  reflation. 
B)  revaluation. 
C)  appreciation. 
D)  value-added. 
A)  reflation. 
B)  revaluation. 
C)  appreciation. 
D)  value-added.

Question 9

Figure 19-1
  
-Of the graphs in Figure 19-1,which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 10

The current exchange rate system for most currencies is described most accurately as one of

Accepted Answer

A)  fixed exchange rates. 
B)  freely flexible exchange rates. 
C)  gold standard rates. 
D)  dirty or managed floating. 
A)  fixed exchange rates. 
B)  freely flexible exchange rates. 
C)  gold standard rates. 
D)  dirty or managed floating.

Question 11

The demand for euros would come from

Accepted Answer

A)  American exports to Europe. 
B)  European demand for U.S. government bonds. 
C)  American demand for European real estate. 
D)  All of the above are correct. 
A)  American exports to Europe. 
B)  European demand for U.S. government bonds. 
C)  American demand for European real estate. 
D)  All of the above are correct.

Question 12

Exchange rates determined by the forces of demand and supply are called

Accepted Answer

A)  fixed exchange rates. 
B)  floating exchange rates. 
C)  equilibrium exchange rates. 
D)  dirty exchange rates. 
A)  fixed exchange rates. 
B)  floating exchange rates. 
C)  equilibrium exchange rates. 
D)  dirty exchange rates.

Question 13

Define the following terms and explain their importance to the study of macroeconomics:
a.exchange rate
b.depreciation
c.devaluation
d.fixed exchange rates

Accepted Answer

a.The exchange rate states the price,in

Question 14

Under a gold standard,a balance of payments surplus automatically

Accepted Answer

A)  raised interest rates. 
B)  increased exports. 
C)  increased domestic prices. 
D)  decreased imports. 
A)  raised interest rates. 
B)  increased exports. 
C)  increased domestic prices. 
D)  decreased imports.

Question 15

On May 11,2011,it cost 11.601 Mexican pesos to buy one U.S.dollar.How many U.S.dollars did it take to buy a Mexican peso?

Accepted Answer

A)  $11.11 
B)  $10.82 
C)  $8.92 
D)  $0.09 
A)  $11.11 
B)  $10.82 
C)  $8.92 
D)  $0.09

Question 16

In general,speculators tend to make a floating exchange rate system more stable.

Accepted Answer

A) True 
 B)False

Question 17

The demand for U.S.dollars is derived from foreign demand for U.S.exports.

Accepted Answer

A) True 
 B)False

Question 18

If a currency decreases in value in response to market forces,this process is known as

Accepted Answer

A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration. 
A)  devaluation. 
B)  depreciation. 
C)  deflation. 
D)  degeneration.

Question 19

An economic recession in the United States would shift the demand for foreign currencies outward,that is,increase demand.

Accepted Answer

A) True 
 B)False

Question 20

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

Accepted Answer

A)  increasing unemployment that accompanies foreign investment. 
B)  rapid outflows of funds that put pressure on exchange rates. 
C)  the deflation that accompanies inflows of foreign capital. 
D)  the inflation that accompanies outflows of foreign capital. 
A)  increasing unemployment that accompanies foreign investment. 
B)  rapid outflows of funds that put pressure on exchange rates. 
C)  the deflation that accompanies inflows of foreign capital. 
D)  the inflation that accompanies outflows of foreign capital.

Americans needing foreign currencies get those currencies from a bank.The ultimate source of these currencies is

Differentiate between the current account balance and the capital account balance.

Fixed exchange rates are determined in free markets by the forces of demand and supply.

Lately,the Chinese authorities seem to be backing away from and the Yuan has relative to the dollar.

Under a gold standard,a balance of payments deficit automatically

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Table 19-1 -From Table 19-1,what is the exchange rate between the dollar and the pound?

If a currency increases in value in response to market forces,this process is known as

Figure 19-1 -Of the graphs in Figure 19-1,which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?

The current exchange rate system for most currencies is described most accurately as one of

The demand for euros would come from

Exchange rates determined by the forces of demand and supply are called

Define the following terms and explain their importance to the study of macroeconomics: a.exchange rate b.depreciation c.devaluation d.fixed exchange rates

Under a gold standard,a balance of payments surplus automatically

On May 11,2011,it cost 11.601 Mexican pesos to buy one U.S.dollar.How many U.S.dollars did it take to buy a Mexican peso?

In general,speculators tend to make a floating exchange rate system more stable.

The demand for U.S.dollars is derived from foreign demand for U.S.exports.

If a currency decreases in value in response to market forces,this process is known as

An economic recession in the United States would shift the demand for foreign currencies outward,that is,increase demand.

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

Exchange Rates and the Macroeconomy

Filters

Exam 19: The International Monetary System: Order or Disorder?

Americans needing foreign currencies get those currencies from a bank.The ultimate source of these currencies is

Differentiate between the current account balance and the capital account balance.

Fixed exchange rates are determined in free markets by the forces of demand and supply.

Lately,the Chinese authorities seem to be backing away from ____ and the Yuan has ____ relative to the dollar.

Under a gold standard,a balance of payments deficit automatically

Which of the following do most economists consider to be the most basic measure of a nation's international transactions?

Table 19-1 -From Table 19-1,what is the exchange rate between the dollar and the pound?

If a currency increases in value in response to market forces,this process is known as

Figure 19-1 -Of the graphs in Figure 19-1,which one shows that an expansion of the Japanese economy leads to a depreciation of the yen?

The current exchange rate system for most currencies is described most accurately as one of

The demand for euros would come from

Exchange rates determined by the forces of demand and supply are called

Define the following terms and explain their importance to the study of macroeconomics: a.exchange rate b.depreciation c.devaluation d.fixed exchange rates

Under a gold standard,a balance of payments surplus automatically

On May 11,2011,it cost 11.601 Mexican pesos to buy one U.S.dollar.How many U.S.dollars did it take to buy a Mexican peso?

In general,speculators tend to make a floating exchange rate system more stable.

The demand for U.S.dollars is derived from foreign demand for U.S.exports.

If a currency decreases in value in response to market forces,this process is known as

An economic recession in the United States would shift the demand for foreign currencies outward,that is,increase demand.

For developing countries,one of the dangers inherent in the inflows of capital that finance investment is

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

Exchange Rates and the Macroeconomy

Filters

Lately,the Chinese authorities seem to be backing away from and the Yuan has relative to the dollar.