Question 1

The trade between countries is recorded in accounts called the balance of

Accepted Answer

A)  international trade accounts. 
B)  export and import accounts. 
C)  payments accounts. 
D)  currency accounts. 
E)  U.S.official trade account. 
A)  international trade accounts. 
B)  export and import accounts. 
C)  payments accounts. 
D)  currency accounts. 
E)  U.S.official trade account.

Question 2

A nation that has invested more in the rest of the world than other countries have invested in it is called a

Accepted Answer

A)  debtor nation. 
B)  creditor nation. 
C)  net borrower. 
D)  net lender. 
E)  saver nation. 
A)  debtor nation. 
B)  creditor nation. 
C)  net borrower. 
D)  net lender. 
E)  saver nation.

Question 3

Suppose that a currency's value is found to be overvalued by using purchasing power parity.Then

Accepted Answer

A)  we know when and how much the currency will appreciate. 
B)  the currency will depreciate in the future but we don't know when. 
C)  the currency will appreciate in the future but we don't know when. 
D)  we know when and how much the currency will depreciate. 
E)  the interest rate in the country will change in order to restore purchasing power parity. 
A)  we know when and how much the currency will appreciate. 
B)  the currency will depreciate in the future but we don't know when. 
C)  the currency will appreciate in the future but we don't know when. 
D)  we know when and how much the currency will depreciate. 
E)  the interest rate in the country will change in order to restore purchasing power parity.

Question 4

The figure above shows the market for foreign exchange in 2001 and 2009.
-Which of the following could have lead to the shifts illustrated in the figure above?
i. The U.S.exchange rate was expected to depreciate between 2001 and 2009.
ii. The U.S.exchange rate was expected to appreciate between 2001 and 2009.
iii. The U.S.interest rate rose relative to interest rates in other countries between 2001 and 2009.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 5

If the current account balance is -$100 billion, the capital account balance is $80 billion, then the official settlements account balance is

Accepted Answer

A)  0. 
B)  $180 billion. 
C)  $20 billion. 
D)  -$20 billion. 
E)  -$180 billion. 
A)  0. 
B)  $180 billion. 
C)  $20 billion. 
D)  -$20 billion. 
E)  -$180 billion.

Question 6

If the U.S.interest rate differential decreases, then in the foreign exchange market the

Accepted Answer

A)  quantity demanded of dollars decreases. 
B)  quantity demanded of dollars increases. 
C)  demand for dollars decreases. 
D)  demand for dollars increases. 
E)  supply of dollars decreases. 
A)  quantity demanded of dollars decreases. 
B)  quantity demanded of dollars increases. 
C)  demand for dollars decreases. 
D)  demand for dollars increases. 
E)  supply of dollars decreases.

Question 7

The figure above shows supply curves of dollars in the foreign exchange market.
-Based on the figure above, which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

Accepted Answer

A)  a rise in the U.S.exchange rate 
B)  a fall in the U.S.exchange rate 
C)  a fall in the U.S.interest rate 
D)  a rise in expected future U.S.exchange rate 
E)  a fall in foreign interest rates 
A)  a rise in the U.S.exchange rate 
B)  a fall in the U.S.exchange rate 
C)  a fall in the U.S.interest rate 
D)  a rise in expected future U.S.exchange rate 
E)  a fall in foreign interest rates

Question 8

$$\begin{array} { l c } 
\text { Variables } & \text { (billions of dollars) } \
\hline \text { Imports of goods and services } & 1,400 \
\text { Exports of goods and services } & 1,600 \
\text { Net interest } & 0 \
\text { Net transfers } & 0 \
\text { Foreign investment in the United } & \
\text { States } & 480 \
\text { U.S. investment abroad } & 700 \
\hline
\end{array}$$ 
The table has some of the U.S.balance of payments account.
-The current account balance is equal to ________.

Accepted Answer

A)  +$200 billion 
B)  -$200 billion 
C)  +$220 billion 
D)  -$220 billion 
E)  +$20 billion 
A)  +$200 billion 
B)  -$200 billion 
C)  +$220 billion 
D)  -$220 billion 
E)  +$20 billion

Question 9

In 2008, the U.S.current account balance was -$706 billion, net interest was +$119 billion, net transfers were -$128 billion, and exports were +$1,827 billion.Therefore, imports were ________.

Accepted Answer

A)  -$2,524 billion 
B)  +$2,524 billion 
C)  +$1,112 billion 
D)  -$1,112 billion 
E)  +$2,780 billion 
A)  -$2,524 billion 
B)  +$2,524 billion 
C)  +$1,112 billion 
D)  -$1,112 billion 
E)  +$2,780 billion

Question 10

The figure above shows supply curves of dollars in the foreign exchange market.
-The supply curve shifts rightward from S₀ to S₂ when the U.S.interest rate ________ and foreign interest rates are unchanged. The supply curve shifts rightward from S₀ to S₂ when the expected future exchange rate ________.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
E)  None of the above answers are correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve. 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
E)  None of the above answers are correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.

Question 11

If the U.S.interest rate differential rises, then the effect in the foreign exchange market on the demand for dollars is that the

Accepted Answer

A)  quantity of dollars demanded decreases. 
B)  quantity of dollars demanded increases. 
C)  demand for dollars increases. 
D)  demand for dollars decreases. 
E)  demand for dollars does not change and the quantity of dollars demanded also does not change. 
A)  quantity of dollars demanded decreases. 
B)  quantity of dollars demanded increases. 
C)  demand for dollars increases. 
D)  demand for dollars decreases. 
E)  demand for dollars does not change and the quantity of dollars demanded also does not change.

Question 12

What are the "deep" factors that change exchange rate expectations?

Accepted Answer

The "deep" factors that change exchange

Question 13

Because of the large current account deficits accumulated by the United States since 1981, the United States has become a

Accepted Answer

A)  creditor nation. 
B)  broke nation. 
C)  balanced nation. 
D)  debtor nation. 
E)  nation with no official reserves. 
A)  creditor nation. 
B)  broke nation. 
C)  balanced nation. 
D)  debtor nation. 
E)  nation with no official reserves.

Question 14

$$\begin{array} { l r } 
\text { Variables } & \text { (billions of dollars) } \
\hline \text { Imports of goods and services } & 1,000 \
\text { Exports of goods and services } & 900 \
\text { Net interest } & - 100 \
\text { Net transfers } & 0 \
\text { Foreign investment in the United States } & 1,190 \
\text { U.S. investment abroad } & 1,000 \
\text { Decrease in U.S. official reserves } & 10
\end{array}$$ 
The table above gives data on the U.S.balance of payments in 2015.
-The capital account balance is

Accepted Answer

A)  -$200 billion. 
B)  $200 billion. 
C)  -$190 billion. 
D)  $190 billion. 
E)  $1,900 billion. 
A)  -$200 billion. 
B)  $200 billion. 
C)  -$190 billion. 
D)  $190 billion. 
E)  $1,900 billion.

Question 15

If the Fed wants to lower the U.S.exchange rate, what action should it take in the foreign exchange market?
 Why does the action lower the exchange rate?

Accepted Answer

To lower the exchange rate, th

Question 16

As the exchange rate ________ the quantity supplied of U.S.dollars ________.

Accepted Answer

A)  rises; increases 
B)  falls; increases 
C)  falls; remains the same 
D)  rises; decreases 
E)  rises; remains the same 
A)  rises; increases 
B)  falls; increases 
C)  falls; remains the same 
D)  rises; decreases 
E)  rises; remains the same

Question 17

Purchasing power parity is defined as

Accepted Answer

A)  a constant value for a currency. 
B)  an equal value of money across currencies. 
C)  a currency whose value falls. 
D)  a currency whose value rises. 
E)  an equal value of interest rates across currencies. 
A)  a constant value for a currency. 
B)  an equal value of money across currencies. 
C)  a currency whose value falls. 
D)  a currency whose value rises. 
E)  an equal value of interest rates across currencies.

Question 18

When a U.S.company purchases $1 million worth of French cheese, the value of that transaction is recorded in the

Accepted Answer

A)  capital account. 
B)  investment account. 
C)  current account. 
D)  transfer account. 
E)  goods account. 
A)  capital account. 
B)  investment account. 
C)  current account. 
D)  transfer account. 
E)  goods account.

Question 19

When Del Monte, an American company, purchases Mexican tomatoes, Del Monte pays for the tomatoes with

Accepted Answer

A)  Canadian dollars. 
B)  Mexican pesos. 
C)  gold. 
D)  Mexican goods and services. 
E)  euros. 
A)  Canadian dollars. 
B)  Mexican pesos. 
C)  gold. 
D)  Mexican goods and services. 
E)  euros.

Question 20

Suppose interest rates in foreign countries increase relative to the U.S.interest rate.As a result, there is ________ the demand curve for dollars.

Accepted Answer

A)  an upward movement along 
B)  a downward movement along 
C)  a leftward shift of 
D)  a rightward shift of 
E)  neither a movement along nor a shift of 
A)  an upward movement along 
B)  a downward movement along 
C)  a leftward shift of 
D)  a rightward shift of 
E)  neither a movement along nor a shift of

The trade between countries is recorded in accounts called the balance of

A nation that has invested more in the rest of the world than other countries have invested in it is called a

Suppose that a currency's value is found to be overvalued by using purchasing power parity.Then

If the current account balance is -$100 billion, the capital account balance is $80 billion, then the official settlements account balance is

If the U.S.interest rate differential decreases, then in the foreign exchange market the

The figure above shows supply curves of dollars in the foreign exchange market. -Based on the figure above, which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

In 2008, the U.S.current account balance was -$706 billion, net interest was +$119 billion, net transfers were -$128 billion, and exports were +$1,827 billion.Therefore, imports were ________.

The figure above shows supply curves of dollars in the foreign exchange market. -The supply curve shifts rightward from S₀ to S₂ when the U.S.interest rate and foreign interest rates are unchanged. The supply curve shifts rightward from S₀ to S₂ when the expected future exchange rate .

If the U.S.interest rate differential rises, then the effect in the foreign exchange market on the demand for dollars is that the

What are the "deep" factors that change exchange rate expectations?

Because of the large current account deficits accumulated by the United States since 1981, the United States has become a

If the Fed wants to lower the U.S.exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?

As the exchange rate the quantity supplied of U.S.dollars .

Purchasing power parity is defined as

When a U.S.company purchases $1 million worth of French cheese, the value of that transaction is recorded in the

When Del Monte, an American company, purchases Mexican tomatoes, Del Monte pays for the tomatoes with

Suppose interest rates in foreign countries increase relative to the U.S.interest rate.As a result, there is ________ the demand curve for dollars.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 19: International Finance

The trade between countries is recorded in accounts called the balance of

A nation that has invested more in the rest of the world than other countries have invested in it is called a

Suppose that a currency's value is found to be overvalued by using purchasing power parity.Then

If the current account balance is -$100 billion, the capital account balance is $80 billion, then the official settlements account balance is

If the U.S.interest rate differential decreases, then in the foreign exchange market the

The figure above shows supply curves of dollars in the foreign exchange market. -Based on the figure above, which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

In 2008, the U.S.current account balance was -$706 billion, net interest was +$119 billion, net transfers were -$128 billion, and exports were +$1,827 billion.Therefore, imports were ________.

If the U.S.interest rate differential rises, then the effect in the foreign exchange market on the demand for dollars is that the

What are the "deep" factors that change exchange rate expectations?

Because of the large current account deficits accumulated by the United States since 1981, the United States has become a

If the Fed wants to lower the U.S.exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?

As the exchange rate ________ the quantity supplied of U.S.dollars ________.

Purchasing power parity is defined as

When a U.S.company purchases $1 million worth of French cheese, the value of that transaction is recorded in the

When Del Monte, an American company, purchases Mexican tomatoes, Del Monte pays for the tomatoes with

Suppose interest rates in foreign countries increase relative to the U.S.interest rate.As a result, there is ________ the demand curve for dollars.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

As the exchange rate the quantity supplied of U.S.dollars .