Question 1

U.S. capital outflows occur when foreigners purchase U.S. assets.

Accepted Answer

A) True 
 B)False

Question 2

The gold standard _____

Accepted Answer

A)  has been in operation since the establishment of the Federal Reserve Board. 
B)  has been in operation since shortly after World War I. 
C)  has been in operation since the Bretton Woods agreement was signed. 
D)  was in operation for about 35 years before World War I. 
E)  was in operation from the date of the Bretton Woods agreement until the devaluation of the U.S. dollar in 1971. 
A)  has been in operation since the establishment of the Federal Reserve Board. 
B)  has been in operation since shortly after World War I. 
C)  has been in operation since the Bretton Woods agreement was signed. 
D)  was in operation for about 35 years before World War I. 
E)  was in operation from the date of the Bretton Woods agreement until the devaluation of the U.S. dollar in 1971.

Question 3

The current account reflects _____

Accepted Answer

A)  trade in only tangible products. 
B)  trade in goods as well as services. 
C)  trade in services only. 
D)  the purchase of securities from foreigners. 
E)  the sale of securities to foreigners. 
A)  trade in only tangible products. 
B)  trade in goods as well as services. 
C)  trade in services only. 
D)  the purchase of securities from foreigners. 
E)  the sale of securities to foreigners.

Question 4

Table 18.1
 $$\begin{array}{l}
\text { Table } 18.1\
\begin{array} { | l | c | } 
\hline \text { Current Account } & ( \$ ) \
\hline \text { Merchandise exports } & + 1000 \
\hline \text { Merchandise imports } & + 3000 \
\hline \text { Merchandise trade balance } & \
\hline \text { Service exports } & + 1500 \
\hline \text { Service imports } & + 1000 \
\hline \text { Goods and services balance } & 100 \
\hline \text { Net investment income from abroad } & - 1,000 \
\hline \text { Net unilateral transfers } & \
\hline \text { Current account balance } & \
\hline
\end{array}
\end{array}$$
-Refer to Table 18.1, which shows a balance-of-payments account. What is the current account balance?

Accepted Answer

A)  ?$1,500 
B)  ?$2,000 
C)  ?$2,400 
D)  ?$2,420 
E)  $500 
A)  ?$1,500 
B)  ?$2,000 
C)  ?$2,400 
D)  ?$2,420 
E)  $500

Question 5

The current account records _____

Accepted Answer

A)  last year's flows of funds into and out of the country. 
B)  the current flows of imports and exports of goods and services, net income earned by residents from foreign assets, and net transfer payments. 
C)  all the foreign direct investment received by a country in a year. 
D)  the purchases of financial assets, such as stocks and bonds, by the residents of a country in a year. 
E)  the purchases of all real assets, such as land and housing, by the citizens of a country in a year. 
A)  last year's flows of funds into and out of the country. 
B)  the current flows of imports and exports of goods and services, net income earned by residents from foreign assets, and net transfer payments. 
C)  all the foreign direct investment received by a country in a year. 
D)  the purchases of financial assets, such as stocks and bonds, by the residents of a country in a year. 
E)  the purchases of all real assets, such as land and housing, by the citizens of a country in a year.

Question 6

The International Monetary Fund was founded in _____

Accepted Answer

A)  Paris. 
B)  Brentwood. 
C)  Washington. 
D)  New York. 
E)  Bretton Woods. 
A)  Paris. 
B)  Brentwood. 
C)  Washington. 
D)  New York. 
E)  Bretton Woods.

Question 7

The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.

Accepted Answer

A) True 
 B)False

Question 8

In the United States, imports have exceeded exports every year since 1979.

Accepted Answer

A) True 
 B)False

Question 9

If under the gold standard, the dollar was worth one-twentieth of an ounce of gold, and the British pound was worth one-fourth of an ounce of gold, then one British pound was worth _____

Accepted Answer

A)  $5. 
B)  $20. 
C)  $4. 
D)  $1. 
E)  half an ounce of gold. 
A)  $5. 
B)  $20. 
C)  $4. 
D)  $1. 
E)  half an ounce of gold.

Question 10

A revaluation _____

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

Under the Bretton Woods agreement, the world monetary system operated exactly like the gold standard of the pre-World War I era.

Accepted Answer

A) True 
 B)False

Question 12

If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the euro has _____

Accepted Answer

A)  appreciated, since its value has increased. 
B)  appreciated, since the price of U.S. dollars has increased. 
C)  appreciated, making U.S. goods cheaper in European countries. 
D)  depreciated, since its value has declined. 
E)  depreciated, since its value has increased. 
A)  appreciated, since its value has increased. 
B)  appreciated, since the price of U.S. dollars has increased. 
C)  appreciated, making U.S. goods cheaper in European countries. 
D)  depreciated, since its value has declined. 
E)  depreciated, since its value has increased.

Question 13

What did the gold standard provide?

Accepted Answer

A)  an unpredictable exchange rate 
B)  a predictable exchange rate 
C)  a floating exchange rate 
D)  a pegged exchange rate 
E)  a monetary policy that was not influenced by the supply of gold 
A)  an unpredictable exchange rate 
B)  a predictable exchange rate 
C)  a floating exchange rate 
D)  a pegged exchange rate 
E)  a monetary policy that was not influenced by the supply of gold

Question 14

The term foreign exchange is used to denote the value of domestic currency held to finance international trade.

Accepted Answer

A) True 
 B)False

Question 15

The U.S. dollar will appreciate if _____

Accepted Answer

A)  the U.S. demand for foreign exchange decreases. 
B)  the U.S. demand for foreign exchange increases. 
C)  the supply of foreign exchange increases in the foreign exchange market. 
D)  Americans want to buy more foreign goods. 
E)  foreigners want fewer American goods. 
A)  the U.S. demand for foreign exchange decreases. 
B)  the U.S. demand for foreign exchange increases. 
C)  the supply of foreign exchange increases in the foreign exchange market. 
D)  Americans want to buy more foreign goods. 
E)  foreigners want fewer American goods.

Question 16

Which account equals the value of merchandise exports minus the value of merchandise imports?

Accepted Answer

A)  the balance of payments 
B)  the merchandise trade balance 
C)  the financial account 
D)  the trade deficit 
E)  the current account 
A)  the balance of payments 
B)  the merchandise trade balance 
C)  the financial account 
D)  the trade deficit 
E)  the current account

Question 17

If the U.S. dollar appreciates, it becomes cheaper for Australians to visit their relatives in the United States.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements defines trade balance?

Accepted Answer

A)  The trade balance is the sum of the services balance, the current account balance, and the capital account balance. 
B)  The trade balance is merchandise exports minus merchandise imports. 
C)  The trade balance is the sum of the current account balance and the capital account balance. 
D)  The trade balance is foreign purchases of domestic assets minus domestic purchases of foreign assets. 
E)  The trade balance is the sum of the services balance and the capital account balance. 
A)  The trade balance is the sum of the services balance, the current account balance, and the capital account balance. 
B)  The trade balance is merchandise exports minus merchandise imports. 
C)  The trade balance is the sum of the current account balance and the capital account balance. 
D)  The trade balance is foreign purchases of domestic assets minus domestic purchases of foreign assets. 
E)  The trade balance is the sum of the services balance and the capital account balance.

Question 19

If foreigners increase their ownership of U.S. assets, this would help to offset _____

Accepted Answer

A)  a deficit in the U.S. current account. 
B)  a deficit in the U.S. capital account. 
C)  a surplus in the U.S. current account. 
D)  a surplus in the U.S. capital account. 
E)  a surplus in the overall balance of payments. 
A)  a deficit in the U.S. current account. 
B)  a deficit in the U.S. capital account. 
C)  a surplus in the U.S. current account. 
D)  a surplus in the U.S. capital account. 
E)  a surplus in the overall balance of payments.

Question 20

The trade balance of the country of Utopia would be in deficit only if _____

Accepted Answer

A)  its import of services exceed its export of services. 
B)  its merchandise exports exceed its merchandise imports. 
C)  its merchandise imports exceed its merchandise exports. 
D)  foreign investors invest in domestic assets. 
E)  the citizens of Utopia purchase foreign securities to earn a high return and diversify their investment. 
A)  its import of services exceed its export of services. 
B)  its merchandise exports exceed its merchandise imports. 
C)  its merchandise imports exceed its merchandise exports. 
D)  foreign investors invest in domestic assets. 
E)  the citizens of Utopia purchase foreign securities to earn a high return and diversify their investment.

U.S. capital outflows occur when foreigners purchase U.S. assets.

The gold standard _____

The current account reflects _____

The current account records _____

The International Monetary Fund was founded in _____

The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.

In the United States, imports have exceeded exports every year since 1979.

If under the gold standard, the dollar was worth one-twentieth of an ounce of gold, and the British pound was worth one-fourth of an ounce of gold, then one British pound was worth _____

A revaluation _____

Under the Bretton Woods agreement, the world monetary system operated exactly like the gold standard of the pre-World War I era.

If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the euro has _____

What did the gold standard provide?

The term foreign exchange is used to denote the value of domestic currency held to finance international trade.

The U.S. dollar will appreciate if _____

Which account equals the value of merchandise exports minus the value of merchandise imports?

If the U.S. dollar appreciates, it becomes cheaper for Australians to visit their relatives in the United States.

Which of the following statements defines trade balance?

If foreigners increase their ownership of U.S. assets, this would help to offset _____

The trade balance of the country of Utopia would be in deficit only if _____

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.

U.S. capital outflows occur when foreigners purchase U.S. assets.

The gold standard _____

The current account reflects _____

The current account records _____

The International Monetary Fund was founded in _____

The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.

In the United States, imports have exceeded exports every year since 1979.

If under the gold standard, the dollar was worth one-twentieth of an ounce of gold, and the British pound was worth one-fourth of an ounce of gold, then one British pound was worth _____

A revaluation _____

Under the Bretton Woods agreement, the world monetary system operated exactly like the gold standard of the pre-World War I era.

If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the euro has _____

What did the gold standard provide?

The term foreign exchange is used to denote the value of domestic currency held to finance international trade.

The U.S. dollar will appreciate if _____

Which account equals the value of merchandise exports minus the value of merchandise imports?

If the U.S. dollar appreciates, it becomes cheaper for Australians to visit their relatives in the United States.

Which of the following statements defines trade balance?

If foreigners increase their ownership of U.S. assets, this would help to offset _____

The trade balance of the country of Utopia would be in deficit only if _____

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