Question 1

The Bretton Woods system _____

Accepted Answer

A)  pegged exchange rates in terms of U.S. dollars. 
B)  pegged exchange rates in terms of all major currencies in the world. 
C)  pegged exchange rates in terms of pounds. 
D)  established a system of flexible exchange rates. 
E)  established the European monetary system. 
A)  pegged exchange rates in terms of U.S. dollars. 
B)  pegged exchange rates in terms of all major currencies in the world. 
C)  pegged exchange rates in terms of pounds. 
D)  established a system of flexible exchange rates. 
E)  established the European monetary system.

Question 2

Since 1983, the United States has typically run a financial account surplus.

Accepted Answer

A) True 
 B)False

Question 3

In the balance-of-payments account, the outflow of payments to the rest of the world, are entered as _____

Accepted Answer

A)  credits. 
B)  debits. 
C)  payments. 
D)  investments. 
E)  unilateral transfers. 
A)  credits. 
B)  debits. 
C)  payments. 
D)  investments. 
E)  unilateral transfers.

Question 4

When supply and demand analysis is used to study the exchange rate, foreign exchange is treated just like _____

Accepted Answer

A)  a normal good. 
B)  a debt. 
C)  fiat money. 
D)  commodity money. 
E)  an investment. 
A)  a normal good. 
B)  a debt. 
C)  fiat money. 
D)  commodity money. 
E)  an investment.

Question 5

A drop in the dollar price of British pounds implies that _____

Accepted Answer

A)  fewer U.S. dollars are needed to buy British pounds. 
B)  more dollars are needed to buy British pounds. 
C)  the pound has appreciated. 
D)  the dollar has depreciated. 
E)  British goods are now more expensive to Americans. 
A)  fewer U.S. dollars are needed to buy British pounds. 
B)  more dollars are needed to buy British pounds. 
C)  the pound has appreciated. 
D)  the dollar has depreciated. 
E)  British goods are now more expensive to Americans.

Question 6

Which of the following is not considered a unilateral transfer?

Accepted Answer

A)  foreign aid from one government to another 
B)  income earned from foreign investments 
C)  personal gifts to friends in foreign countries 
D)  donations to foreign countries from non-government domestic charities 
E)  government transfers to foreign residents 
A)  foreign aid from one government to another 
B)  income earned from foreign investments 
C)  personal gifts to friends in foreign countries 
D)  donations to foreign countries from non-government domestic charities 
E)  government transfers to foreign residents

Question 7

Which of the following is not true about the U.S. trade balance since 1976?

Accepted Answer

A)  Imports and exports have been equal. 
B)  Exports exceeded imports. 
C)  Imports exceeded exports. 
D)  When the economy expanded, the demand for imports increased. 
E)  When the economy expanded, the trade balance worsened. 
A)  Imports and exports have been equal. 
B)  Exports exceeded imports. 
C)  Imports exceeded exports. 
D)  When the economy expanded, the demand for imports increased. 
E)  When the economy expanded, the trade balance worsened.

Question 8

The fact that exchange rates are nearly identical in different markets around the world is due to _____

Accepted Answer

A)  the actions of speculators. 
B)  official action by central banks around the world. 
C)  the actions of arbitrageurs. 
D)  the agreement by the policy makers of major industrial countries. 
E)  the actions of currency converters. 
A)  the actions of speculators. 
B)  official action by central banks around the world. 
C)  the actions of arbitrageurs. 
D)  the agreement by the policy makers of major industrial countries. 
E)  the actions of currency converters.

Question 9

Fixed exchange rates are more volatile than floating exchange rates.

Accepted Answer

A) True 
 B)False

Question 10

Devaluation of a domestic currency _____

Accepted Answer

A)  is a decrease in the pegged exchange rate. 
B)  refers to an increase in a floating exchange rate. 
C)  refers to a decrease in a floating exchange rate. 
D)  refers to an increase in a fixed exchange rate. 
E)  refers to a decrease in a fixed exchange rate. 
A)  is a decrease in the pegged exchange rate. 
B)  refers to an increase in a floating exchange rate. 
C)  refers to a decrease in a floating exchange rate. 
D)  refers to an increase in a fixed exchange rate. 
E)  refers to a decrease in a fixed exchange rate.

Question 11

A flexible exchange rate _____

Accepted Answer

A)  is determined by the national governments involved. 
B)  remains extremely stable over long periods of time. 
C)  is determined by the actions of central banks. 
D)  is allowed to vary only within a narrow range. 
E)  adjusts in response to market forces. 
A)  is determined by the national governments involved. 
B)  remains extremely stable over long periods of time. 
C)  is determined by the actions of central banks. 
D)  is allowed to vary only within a narrow range. 
E)  adjusts in response to market forces.

Question 12

Which of the following is not classified as a service in the current account?

Accepted Answer

A)  transportation 
B)  insurance 
C)  tour guidance 
D)  computer software development 
E)  unilateral transfers 
A)  transportation 
B)  insurance 
C)  tour guidance 
D)  computer software development 
E)  unilateral transfers

Question 13

If an American citizen is planning to visit wildlife reserves in Kenya, he will hope that the U.S. dollar appreciates against Kenyan shillings.

Accepted Answer

A) True 
 B)False

Question 14

Suppose a basket of internationally traded goods that sells for $8,000 in the United States sells for €10,000 in the euro zone. According to the purchasing power parity theory, the equilibrium exchange rate should be equal to _____

Accepted Answer

A)  $2.50 per euro. 
B)  $1.50 per euro. 
C)  $1.25 per euro. 
D)  $1.00 per euro. 
E)  $0.80 per euro. 
A)  $2.50 per euro. 
B)  $1.50 per euro. 
C)  $1.25 per euro. 
D)  $1.00 per euro. 
E)  $0.80 per euro.

Question 15

A rightward shift of Mexico's demand curve for U.S. dollars will _____

Accepted Answer

A)  decrease the price of dollars in terms of pesos. 
B)  increase the value of pesos relative to dollars. 
C)  make American goods less expensive in terms of pesos. 
D)  make American goods more expensive in terms of pesos. 
E)  make Mexican goods more expensive in terms of dollars. 
A)  decrease the price of dollars in terms of pesos. 
B)  increase the value of pesos relative to dollars. 
C)  make American goods less expensive in terms of pesos. 
D)  make American goods more expensive in terms of pesos. 
E)  make Mexican goods more expensive in terms of dollars.

The Bretton Woods system _____

Since 1983, the United States has typically run a financial account surplus.

In the balance-of-payments account, the outflow of payments to the rest of the world, are entered as _____

When supply and demand analysis is used to study the exchange rate, foreign exchange is treated just like _____

A drop in the dollar price of British pounds implies that _____

Which of the following is not considered a unilateral transfer?

Which of the following is not true about the U.S. trade balance since 1976?

The fact that exchange rates are nearly identical in different markets around the world is due to _____

Fixed exchange rates are more volatile than floating exchange rates.

Devaluation of a domestic currency _____

A flexible exchange rate _____

Which of the following is not classified as a service in the current account?

If an American citizen is planning to visit wildlife reserves in Kenya, he will hope that the U.S. dollar appreciates against Kenyan shillings.

Suppose a basket of internationally traded goods that sells for $8,000 in the United States sells for €10,000 in the euro zone. According to the purchasing power parity theory, the equilibrium exchange rate should be equal to _____

A rightward shift of Mexico's demand curve for U.S. dollars will _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

Economic Development.

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Exam 18: International Finance.

The Bretton Woods system _____

Since 1983, the United States has typically run a financial account surplus.

In the balance-of-payments account, the outflow of payments to the rest of the world, are entered as _____

When supply and demand analysis is used to study the exchange rate, foreign exchange is treated just like _____

A drop in the dollar price of British pounds implies that _____

Which of the following is not considered a unilateral transfer?

Which of the following is not true about the U.S. trade balance since 1976?

The fact that exchange rates are nearly identical in different markets around the world is due to _____

Fixed exchange rates are more volatile than floating exchange rates.

Devaluation of a domestic currency _____

A flexible exchange rate _____

Which of the following is not classified as a service in the current account?

If an American citizen is planning to visit wildlife reserves in Kenya, he will hope that the U.S. dollar appreciates against Kenyan shillings.

Suppose a basket of internationally traded goods that sells for $8,000 in the United States sells for €10,000 in the euro zone. According to the purchasing power parity theory, the equilibrium exchange rate should be equal to _____

A rightward shift of Mexico's demand curve for U.S. dollars will _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

Economic Development.

Filters