Question 1

In the foreign exchange market, how does a change in expected future U.S.exchange rate affect the demand for dollars?

Accepted Answer

Changes in the expected future exchange

Question 2

If imports are $1,200 billion and exports are $1,300 billion, while net interest income and net transfers are zero, what is the current account balance?

Accepted Answer

The current account balance eq

Question 3

If the current account balance is -$450 billion, the capital account balance is $440 billion, then the official settlements balance is

Accepted Answer

A)  $10 billion. 
B)  -$10 billion. 
C)  $890 billion. 
D)  -$890 billion. 
E)  $0 because it is always zero. 
A)  $10 billion. 
B)  -$10 billion. 
C)  $890 billion. 
D)  -$890 billion. 
E)  $0 because it is always zero.

Question 4

Which of the following are balance of payments accounts?
i. capital account
ii. tariff account
iii. current account

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

When the exchange rate between the U.S.dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has ________ and U.S.goods have become ________ to people in Europe so that quantity of U.S.dollars demanded ________.

Accepted Answer

A)  depreciated; cheaper; increases 
B)  depreciated; more expensive; decreases 
C)  depreciated; cheaper; decreases 
D)  appreciated; more expensive; decreases 
E)  appreciated; cheaper; increases 
A)  depreciated; cheaper; increases 
B)  depreciated; more expensive; decreases 
C)  depreciated; cheaper; decreases 
D)  appreciated; more expensive; decreases 
E)  appreciated; cheaper; increases

Question 6

In 2008, the current account balance was -706 billion and the capital account balance was +711 billion.Therefore, the official settlements account balance was ________ and the balance of all payments accounts was ________.

Accepted Answer

A)  -5; zero 
B)  +5; zero 
C)  not enough information to determine; most likely negative 
D)  negative; negative 
E)  positive; positive 
A)  -5; zero 
B)  +5; zero 
C)  not enough information to determine; most likely negative 
D)  negative; negative 
E)  positive; positive

Question 7

$$\begin{array} { l l } 
\text { Variables } & \text { (billions of dollars) } \
\hline \text { Imports of goods and services } & 1,300 \
\text { Exports of goods and services } & 1,500 \
\text { Investment } & 1,900 \
\text { Saving } & 1,200 \
\text { Government expenditure } & 1,000 \
\text { Net taxes } & 1,900 \
\hline
\end{array}$$ 
The table above has information about the U.S.economy.
-The government sector balance is a

Accepted Answer

A)  $900 billion deficit. 
B)  $900 billion surplus. 
C)  $2,900 billion balanced budget. 
D)  $2,900 billion trade deficit. 
E)  $500 billion deficit. 
A)  $900 billion deficit. 
B)  $900 billion surplus. 
C)  $2,900 billion balanced budget. 
D)  $2,900 billion trade deficit. 
E)  $500 billion deficit.

Question 8

If the exchange rate changes from 1.00 euro per dollar to 1.10 euros per dollar, the euro has

Accepted Answer

A)  depreciated against the euro. 
B)  appreciated against the euro. 
C)  fallen inversely in value. 
D)  appreciated against the dollar. 
E)  depreciated against the dollar. 
A)  depreciated against the euro. 
B)  appreciated against the euro. 
C)  fallen inversely in value. 
D)  appreciated against the dollar. 
E)  depreciated against the dollar.

Question 9

Exchange rate changes are

Accepted Answer

A)  not very volatile because of offsetting changes in demand and supply. 
B)  very volatile because of government intervention in the market. 
C)  not very volatile because of government intervention. 
D)  very volatile because supply and demand changes reinforce each other. 
E)  infrequent because the exchange rate rarely changes. 
A)  not very volatile because of offsetting changes in demand and supply. 
B)  very volatile because of government intervention in the market. 
C)  not very volatile because of government intervention. 
D)  very volatile because supply and demand changes reinforce each other. 
E)  infrequent because the exchange rate rarely changes.

Question 10

Suppose the Fed had tried to keep the exchange rate at its 2001 level.In that case the Fed would have ________ dollars and its foreign reserves would have ________.

Accepted Answer

A)  bought; decreased 
B)  sold; decreased 
C)  bought; increased 
D)  sold; increased 
E)  None of the above are correct because the Fed cannot affect the exchange rate. 
A)  bought; decreased 
B)  sold; decreased 
C)  bought; increased 
D)  sold; increased 
E)  None of the above are correct because the Fed cannot affect the exchange rate.

Question 11

If an investment of $100 million from the United Kingdom is made in the United States, the $100 million is listed as a ________ entry in the ________ account.

Accepted Answer

A)  positive; current 
B)  negative; capital 
C)  positive; capital 
D)  negative; current 
E)  positive; official settlements 
A)  positive; current 
B)  negative; capital 
C)  positive; capital 
D)  negative; current 
E)  positive; official settlements

Question 12

A country's balance of payments accounts records its

Accepted Answer

A)  tax receipts and expenditures. 
B)  tariffs and nontariff revenue and government purchases. 
C)  international trading, borrowing, and lending. 
D)  international exports and imports and nothing else. 
E)  its tariff receipts and what it pays in tariffs to other nations. 
A)  tax receipts and expenditures. 
B)  tariffs and nontariff revenue and government purchases. 
C)  international trading, borrowing, and lending. 
D)  international exports and imports and nothing else. 
E)  its tariff receipts and what it pays in tariffs to other nations.

Question 13

If the exchange rate is constant and U.S.exports increase, then in the foreign exchange market the

Accepted Answer

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

Question 14

If the U.S.dollars depreciates against the euro, what can the Fed do to keep the dollar's exchange rate stable?

Accepted Answer

A)  nothing 
B)  decrease U.S.imports by increasing tariffs 
C)  sell dollars in the foreign exchange market 
D)  buy dollars in the foreign exchange market 
E)  buy euros in the foreign exchange market 
A)  nothing 
B)  decrease U.S.imports by increasing tariffs 
C)  sell dollars in the foreign exchange market 
D)  buy dollars in the foreign exchange market 
E)  buy euros in the foreign exchange market

Question 15

If the equilibrium exchange rate of the dollar is 1.10 euros per dollar and currently the exchange rate is 0.90 euros per dollar, then there is a ________ of dollars that leads to ________.

Accepted Answer

A)  surplus; a rise in the exchange rate 
B)  shortage; the demand curve for dollars shifting rightward 
C)  surplus; the supply curve of dollars shifting leftward 
D)  shortage; a rise in the exchange rate 
E)  shortage; the supply curve of dollars shifting rightward 
A)  surplus; a rise in the exchange rate 
B)  shortage; the demand curve for dollars shifting rightward 
C)  surplus; the supply curve of dollars shifting leftward 
D)  shortage; a rise in the exchange rate 
E)  shortage; the supply curve of dollars shifting rightward

In the foreign exchange market, how does a change in expected future U.S.exchange rate affect the demand for dollars?

If imports are $1,200 billion and exports are $1,300 billion, while net interest income and net transfers are zero, what is the current account balance?

If the current account balance is -$450 billion, the capital account balance is $440 billion, then the official settlements balance is

Which of the following are balance of payments accounts? i. capital account ii. tariff account iii. current account

When the exchange rate between the U.S.dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has and U.S.goods have become to people in Europe so that quantity of U.S.dollars demanded .

In 2008, the current account balance was -706 billion and the capital account balance was +711 billion.Therefore, the official settlements account balance was and the balance of all payments accounts was .

Variables (billions of dollars) Imports of goods and services 1,300 Exports of goods and services 1,500 Investment 1,900 Saving 1,200 Government expenditure 1,000 Net taxes 1,900 The table above has information about the U.S.economy. -The government sector balance is a

If the exchange rate changes from 1.00 euro per dollar to 1.10 euros per dollar, the euro has

Exchange rate changes are

Suppose the Fed had tried to keep the exchange rate at its 2001 level.In that case the Fed would have dollars and its foreign reserves would have .

If an investment of $100 million from the United Kingdom is made in the United States, the $100 million is listed as a entry in the account.

A country's balance of payments accounts records its

If the exchange rate is constant and U.S.exports increase, then in the foreign exchange market the

If the U.S.dollars depreciates against the euro, what can the Fed do to keep the dollar's exchange rate stable?

If the equilibrium exchange rate of the dollar is 1.10 euros per dollar and currently the exchange rate is 0.90 euros per dollar, then there is a of dollars that leads to .

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

In the foreign exchange market, how does a change in expected future U.S.exchange rate affect the demand for dollars?

If imports are $1,200 billion and exports are $1,300 billion, while net interest income and net transfers are zero, what is the current account balance?

If the current account balance is -$450 billion, the capital account balance is $440 billion, then the official settlements balance is

Which of the following are balance of payments accounts? i. capital account ii. tariff account iii. current account

When the exchange rate between the U.S.dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has ________ and U.S.goods have become ________ to people in Europe so that quantity of U.S.dollars demanded ________.

In 2008, the current account balance was -706 billion and the capital account balance was +711 billion.Therefore, the official settlements account balance was ________ and the balance of all payments accounts was ________.

Variables (billions of dollars) Imports of goods and services 1,300 Exports of goods and services 1,500 Investment 1,900 Saving 1,200 Government expenditure 1,000 Net taxes 1,900 The table above has information about the U.S.economy. -The government sector balance is a

If the exchange rate changes from 1.00 euro per dollar to 1.10 euros per dollar, the euro has

Exchange rate changes are

Suppose the Fed had tried to keep the exchange rate at its 2001 level.In that case the Fed would have ________ dollars and its foreign reserves would have ________.

If an investment of $100 million from the United Kingdom is made in the United States, the $100 million is listed as a ________ entry in the ________ account.

A country's balance of payments accounts records its

If the exchange rate is constant and U.S.exports increase, then in the foreign exchange market the

If the U.S.dollars depreciates against the euro, what can the Fed do to keep the dollar's exchange rate stable?

If the equilibrium exchange rate of the dollar is 1.10 euros per dollar and currently the exchange rate is 0.90 euros per dollar, then there is a ________ of dollars that leads to ________.

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

When the exchange rate between the U.S.dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has and U.S.goods have become to people in Europe so that quantity of U.S.dollars demanded .

In 2008, the current account balance was -706 billion and the capital account balance was +711 billion.Therefore, the official settlements account balance was and the balance of all payments accounts was .

Suppose the Fed had tried to keep the exchange rate at its 2001 level.In that case the Fed would have dollars and its foreign reserves would have .

If an investment of $100 million from the United Kingdom is made in the United States, the $100 million is listed as a entry in the account.

If the equilibrium exchange rate of the dollar is 1.10 euros per dollar and currently the exchange rate is 0.90 euros per dollar, then there is a of dollars that leads to .