Question 1

Under the gold standard, major currencies were convertible into gold at a floating rate.

Accepted Answer

A) True 
 B)False

Question 2

Under a floating rate system, exchange rates are determined by supply and demand in the foreign exchange market without government intervention.

Accepted Answer

A) True 
 B)False

Question 3

A nation has a favorable balance of trade when _____

Accepted Answer

A)  it has a surplus in its balance of payments. 
B)  it has a deficit in its balance of payments. 
C)  the value of its imports is greater than the value of its exports. 
D)  merchandise exports exceed merchandise imports. 
E)  it has high tariffs. 
A)  it has a surplus in its balance of payments. 
B)  it has a deficit in its balance of payments. 
C)  the value of its imports is greater than the value of its exports. 
D)  merchandise exports exceed merchandise imports. 
E)  it has high tariffs.

Question 4

The government of a country is not considered a resident while calculating the balance of payments.

Accepted Answer

A) True 
 B)False

Question 5

Flexible exchange rates are determined by the market and not by the government.

Accepted Answer

A) True 
 B)False

Question 6

In 2016, America's imports from China were about _____ its exports to China.

Accepted Answer

A)  two times 
B)  three times 
C)  four times 
D)  six times 
E)  ten times 
A)  two times 
B)  three times 
C)  four times 
D)  six times 
E)  ten times

Question 7

A nation has an unfavorable balance of trade when _____

Accepted Answer

A)  it has a surplus in its balance of payments. 
B)  it has a deficit in its balance of payments. 
C)  the value of its imports is greater than the value of its exports. 
D)  merchandise exports exceed merchandise imports. 
E)  it has high tariffs. 
A)  it has a surplus in its balance of payments. 
B)  it has a deficit in its balance of payments. 
C)  the value of its imports is greater than the value of its exports. 
D)  merchandise exports exceed merchandise imports. 
E)  it has high tariffs.

Question 8

The exchange rate is _____

Accepted Answer

A)  the price of foreign exchange determined by the interaction of supply and demand. 
B)  an interest rate for foreign loans determined by the interaction of supply and demand. 
C)  fixed by the International Monetary Fund. 
D)  always fixed for any two currencies by the two nations involved, regardless of any agreements made with other nations. 
E)  fixed by GATT. 
A)  the price of foreign exchange determined by the interaction of supply and demand. 
B)  an interest rate for foreign loans determined by the interaction of supply and demand. 
C)  fixed by the International Monetary Fund. 
D)  always fixed for any two currencies by the two nations involved, regardless of any agreements made with other nations. 
E)  fixed by GATT.

Question 9

The present international exchange rate system operates under the gold standard.

Accepted Answer

A) True 
 B)False

Question 10

A country runs a deficit in its current account if _____

Accepted Answer

A)  it consumes less goods and services compared to what it produces. 
B)  the interest and dividends earned by its residents on foreign assets exceed the interest and dividends earned by foreigners who invest in domestic assets. 
C)  it follows the double-entry bookkeeping requirement that total debits must equal total credits. 
D)  foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers. 
E)  foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers. 
A)  it consumes less goods and services compared to what it produces. 
B)  the interest and dividends earned by its residents on foreign assets exceed the interest and dividends earned by foreigners who invest in domestic assets. 
C)  it follows the double-entry bookkeeping requirement that total debits must equal total credits. 
D)  foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers. 
E)  foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers.

Question 11

The merchandise trade balance does not include _____

Accepted Answer

A)  exports of refrigerators. 
B)  imports of automobiles. 
C)  exports of agricultural products. 
D)  shipping and insurance services. 
E)  imports of food items with heavy tariffs. 
A)  exports of refrigerators. 
B)  imports of automobiles. 
C)  exports of agricultural products. 
D)  shipping and insurance services. 
E)  imports of food items with heavy tariffs.

Question 12

In the U.S balance-of-payments accounts, credit entries in the current or financial accounts _____

Accepted Answer

A)  increase the demand for foreign exchange. 
B)  decrease the demand for foreign exchange 
C)  increase the supply for foreign exchange. 
D)  decrease the supply for foreign exchange. 
E)  result in a depreciation of the dollar. 
A)  increase the demand for foreign exchange. 
B)  decrease the demand for foreign exchange 
C)  increase the supply for foreign exchange. 
D)  decrease the supply for foreign exchange. 
E)  result in a depreciation of the dollar.

Question 13

What summarizes the transactions that occur during a given time period between residents of that country and residents of other countries?

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 14

Under the gold standard, _____

Accepted Answer

A)  the U.S. dollar could be redeemed at the U.S. Treasury for one-twentieth of an ounce of gold. 
B)  the U.S. dollar could be redeemed at the U.S. Treasury for one-half of an ounce of gold. 
C)  the British pound could be redeemed at the British Exchequer for one-fifth of an ounce of gold. 
D)  the British pound could be redeemed at the British Exchequer for one-tenth of an ounce of gold. 
E)  all international transactions were financed with gold. 
A)  the U.S. dollar could be redeemed at the U.S. Treasury for one-twentieth of an ounce of gold. 
B)  the U.S. dollar could be redeemed at the U.S. Treasury for one-half of an ounce of gold. 
C)  the British pound could be redeemed at the British Exchequer for one-fifth of an ounce of gold. 
D)  the British pound could be redeemed at the British Exchequer for one-tenth of an ounce of gold. 
E)  all international transactions were financed with gold.

Question 15

Which of the following would be represented as a debit in the U.S. balance of payments?

Accepted Answer

A)  a U.S. purchase of cars from Italy 
B)  a U.S. sale of beef to Israel 
C)  transfers received by the U.S. government from foreign governments 
D)  gifts received by U.S. residents from friends abroad 
E)  income received by U.S. residents from overseas investments 
A)  a U.S. purchase of cars from Italy 
B)  a U.S. sale of beef to Israel 
C)  transfers received by the U.S. government from foreign governments 
D)  gifts received by U.S. residents from friends abroad 
E)  income received by U.S. residents from overseas investments

Question 16

A statistical discrepancy _____

Accepted Answer

A)  is always positive but less than 1. 
B)  is always negative and greater than −1. 
C)  must be reduced to zero and eliminated from the balance of payments before the records become official. 
D)  is a residual factor that indicates the net error in the balance of payments data. 
E)  is a record of all transactions between residents of two countries over a specified period. 
A)  is always positive but less than 1. 
B)  is always negative and greater than −1. 
C)  must be reduced to zero and eliminated from the balance of payments before the records become official. 
D)  is a residual factor that indicates the net error in the balance of payments data. 
E)  is a record of all transactions between residents of two countries over a specified period.

Question 17

In 2016, the United States had the largest merchandise trade deficit with _____

Accepted Answer

A)  the European Union. 
B)  Canada. 
C)  China. 
D)  Mexico. 
E)  Brazil. 
A)  the European Union. 
B)  Canada. 
C)  China. 
D)  Mexico. 
E)  Brazil.

Question 18

In the balance of payments accounts, there will be a surplus in the financial account of a country if _____

Accepted Answer

A)  it sells more goods to foreign countries than it imports. 
B)  it buys more goods from foreign countries than it exports. 
C)  it sells more assets to individuals in other countries than the assets it buys from them. 
D)  it buys more assets from individuals in other countries than the assets it sells to them. 
E)  it imports less machinery than it exports. 
A)  it sells more goods to foreign countries than it imports. 
B)  it buys more goods from foreign countries than it exports. 
C)  it sells more assets to individuals in other countries than the assets it buys from them. 
D)  it buys more assets from individuals in other countries than the assets it sells to them. 
E)  it imports less machinery than it exports.

Question 19

If the U.S. dollar appreciates in the foreign exchange market, then _____

Accepted Answer

A)  American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans. 
B)  American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans. 
C)  more U.S. dollars will be required to buy a foreign currency. 
D)  U.S. exports will increase. 
E)  neither the price of U.S. exports nor the price of U.S. imports will change. 
A)  American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans. 
B)  American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans. 
C)  more U.S. dollars will be required to buy a foreign currency. 
D)  U.S. exports will increase. 
E)  neither the price of U.S. exports nor the price of U.S. imports will change.

Question 20

The Bretton Woods system fixed all exchange rates in terms of the U.S. dollar.

Accepted Answer

A) True 
 B)False

Under the gold standard, major currencies were convertible into gold at a floating rate.

Under a floating rate system, exchange rates are determined by supply and demand in the foreign exchange market without government intervention.

A nation has a favorable balance of trade when _____

The government of a country is not considered a resident while calculating the balance of payments.

Flexible exchange rates are determined by the market and not by the government.

In 2016, America's imports from China were about _____ its exports to China.

A nation has an unfavorable balance of trade when _____

The exchange rate is _____

The present international exchange rate system operates under the gold standard.

A country runs a deficit in its current account if _____

The merchandise trade balance does not include _____

In the U.S balance-of-payments accounts, credit entries in the current or financial accounts _____

What summarizes the transactions that occur during a given time period between residents of that country and residents of other countries?

Under the gold standard, _____

Which of the following would be represented as a debit in the U.S. balance of payments?

A statistical discrepancy _____

In 2016, the United States had the largest merchandise trade deficit with _____

In the balance of payments accounts, there will be a surplus in the financial account of a country if _____

If the U.S. dollar appreciates in the foreign exchange market, then _____

The Bretton Woods system fixed all exchange rates in terms of the U.S. dollar.

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.

Under the gold standard, major currencies were convertible into gold at a floating rate.

Under a floating rate system, exchange rates are determined by supply and demand in the foreign exchange market without government intervention.

A nation has a favorable balance of trade when _____

The government of a country is not considered a resident while calculating the balance of payments.

Flexible exchange rates are determined by the market and not by the government.

In 2016, America's imports from China were about _____ its exports to China.

A nation has an unfavorable balance of trade when _____

The exchange rate is _____

The present international exchange rate system operates under the gold standard.

A country runs a deficit in its current account if _____

The merchandise trade balance does not include _____

In the U.S balance-of-payments accounts, credit entries in the current or financial accounts _____

What summarizes the transactions that occur during a given time period between residents of that country and residents of other countries?

Under the gold standard, _____

Which of the following would be represented as a debit in the U.S. balance of payments?

A statistical discrepancy _____

In 2016, the United States had the largest merchandise trade deficit with _____

In the balance of payments accounts, there will be a surplus in the financial account of a country if _____

If the U.S. dollar appreciates in the foreign exchange market, then _____

The Bretton Woods system fixed all exchange rates in terms of the U.S. dollar.

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