Question 1

If a country has a current account balance of $100 billion and the official settlements account balance is zero, then the country's capital account balance must be

Accepted Answer

A)  equal to $100 billion. 
B)  positive but not necessarily equal to $100 billion. 
C)  equal to -$100 billion. 
D)  negative but not necessarily equal to -$100 billion. 
E)  zero. 
A)  equal to $100 billion. 
B)  positive but not necessarily equal to $100 billion. 
C)  equal to -$100 billion. 
D)  negative but not necessarily equal to -$100 billion. 
E)  zero.

Question 2

$$\begin{array} { l c } 
\text { Variables } & \text { (billions of dollars) } \
\hline \text { Imports of goods and services } & 1,400 \
\text { Exports of goods and services } & 1,600 \
\text { Net interest } & 0 \
\text { Net transfers } & 0 \
\text { Foreign investment in the United } & \
\text { States } & 480 \
\text { U.S. investment abroad } & 700 \
\hline
\end{array}$$ 
The table has some of the U.S.balance of payments account.
-If there is no statistical discrepancy, the capital account balance equals ________.

Accepted Answer

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

Question 3

-In the figure above, illustrate the effect of an increase in the U.S.interest rate.What is the effect on the foreign exchange rate?

Accepted Answer

@#IMG-DLM& The figure above shows the effect of th

Question 4

When the United States exports goods and services to France, there is an increase in the

Accepted Answer

A)  supply of dollars. 
B)  supply of French francs. 
C)  demand for dollars. 
D)  U.S.capital account balance. 
E)  U.S.official settlements account balance. 
A)  supply of dollars. 
B)  supply of French francs. 
C)  demand for dollars. 
D)  U.S.capital account balance. 
E)  U.S.official settlements account balance.

Question 5

$$\begin{array} { l c } 
\text { Variables } & \text { (billions of dollars) } \
\hline \text { Imports of goods and services } & 1,400 \
\text { Exports of goods and services } & 1,600 \
\text { Net interest } & 145 \
\text { Net transfers } & 0 \
\text { Foreign investment in the United } & \
\text { States } & 550 \
\text { U.S. investment abroad } & 900 \
\hline
\end{array}$$
-The table above gives some of the balance of payments accounts of the United States in 2015.
a. What is the current account balance?
b. What is the capital account balance?
c. What is the official settlements account balance?
d. What is the balance of all account payments?

Accepted Answer

a. The current account balance is $345 b

Question 6

The exchange rate between the United States and Japan

Accepted Answer

A)  consistently increases over time. 
B)  consistently decreases over time. 
C)  is fixed so it does not change. 
D)  fluctuates, sometimes rising and sometimes falling. 
E)  does not exist. 
A)  consistently increases over time. 
B)  consistently decreases over time. 
C)  is fixed so it does not change. 
D)  fluctuates, sometimes rising and sometimes falling. 
E)  does not exist.

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.
-Net exports equals

Accepted Answer

A)  -$200 billion. 
B)  $200 billion. 
C)  -$2,800 billion. 
D)  $2,800 billion. 
E)  $400 billion. 
A)  -$200 billion. 
B)  $200 billion. 
C)  -$2,800 billion. 
D)  $2,800 billion. 
E)  $400 billion.

Question 8

Microsoft's purchase of a factory in Mexico is entered into the U.S.balance of payments accounts as a

Accepted Answer

A)  negative entry in the capital account. 
B)  positive entry in the capital account. 
C)  negative entry in the current account. 
D)  positive entry in the current account. 
E)  negative entry in the settlements account. 
A)  negative entry in the capital account. 
B)  positive entry in the capital account. 
C)  negative entry in the current account. 
D)  positive entry in the current account. 
E)  negative entry in the settlements account.

Question 9

In the foreign exchange market, the demand for dollars increases and the demand curve for dollars shifts rightward if the

Accepted Answer

A)  U.S.interest rate differential increases. 
B)  expected future exchange rate falls. 
C)  foreign interest rate rises. 
D)  U.S.interest rate falls. 
E)  exchange rate falls. 
A)  U.S.interest rate differential increases. 
B)  expected future exchange rate falls. 
C)  foreign interest rate rises. 
D)  U.S.interest rate falls. 
E)  exchange rate falls.

Question 10

When a nation has no funds to finance economic development, how can it acquire the needed funds?
 Is the country a net lender or a net borrower?

Accepted Answer

Funds for development can be b

Question 11

Fluctuations in the current account balance are mainly the result of fluctuations in

Accepted Answer

A)  net exports. 
B)  net interest. 
C)  net transfers. 
D)  foreign reserves. 
E)  imports of capital. 
A)  net exports. 
B)  net interest. 
C)  net transfers. 
D)  foreign reserves. 
E)  imports of capital.

Question 12

The record of international receipts and payments is called the

Accepted Answer

A)  balance of payments. 
B)  current account. 
C)  official settlements account. 
D)  capital account. 
E)  U.S.official reserves. 
A)  balance of payments. 
B)  current account. 
C)  official settlements account. 
D)  capital account. 
E)  U.S.official reserves.

Question 13

As the U.S.exchange rate ________, the price of U.S.imports increases and the quantity supplied of dollars ________.

Accepted Answer

A)  falls; increases 
B)  rises; increases 
C)  falls; decreases 
D)  rises; decreases 
E)  falls; does not change 
A)  falls; increases 
B)  rises; increases 
C)  falls; decreases 
D)  rises; decreases 
E)  falls; does not change

Question 14

Changes in a currency's exchange rate adjust immediately to insure that

Accepted Answer

A)  purchasing power parity always prevails. 
B)  interest rate parity always prevails. 
C)  official settlements account parity always prevails. 
D)  net exports always equal zero. 
E)  current account balance equals zero. 
A)  purchasing power parity always prevails. 
B)  interest rate parity always prevails. 
C)  official settlements account parity always prevails. 
D)  net exports always equal zero. 
E)  current account balance equals zero.

Question 15

If the exchange rate changes from 1.10 euros per dollar to 1.00 euro per dollar, the dollar 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 16

If the current account balance is $235 billion and U.S.official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

Accepted Answer

The official settlements account equals

Question 17

The capital account records

Accepted Answer

A)  all the purchases and sales of capital goods in the United States. 
B)  the current value of the balance of payments in U.S.dollars. 
C)  transactions involving trade, interest payments, and net transfers. 
D)  transactions involving foreign investment in the United States and U.S.investment abroad. 
E)  imports and exports of capital goods. 
A)  all the purchases and sales of capital goods in the United States. 
B)  the current value of the balance of payments in U.S.dollars. 
C)  transactions involving trade, interest payments, and net transfers. 
D)  transactions involving foreign investment in the United States and U.S.investment abroad. 
E)  imports and exports of capital goods.

Question 18

If people expect the future exchange rate for dollars will be lower, then in the foreign exchange market the current

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 19

In the foreign exchange market, the

Accepted Answer

A)  quantity of dollars supplied increases as the exchange rate increases and the supply of dollars does not change. 
B)  quantity of dollars supplied increases as the exchange rate decreases and the supply of dollars does not change. 
C)  supply of dollars increases as the exchange rate increases and the quantity of dollars supplied does not change. 
D)  supply of dollars decreases as the exchange rate increases and the quantity of dollars supplied does not change. 
E)  both the quantity of dollars supplied and the supply of dollars increases as the exchange rate increases. 
A)  quantity of dollars supplied increases as the exchange rate increases and the supply of dollars does not change. 
B)  quantity of dollars supplied increases as the exchange rate decreases and the supply of dollars does not change. 
C)  supply of dollars increases as the exchange rate increases and the quantity of dollars supplied does not change. 
D)  supply of dollars decreases as the exchange rate increases and the quantity of dollars supplied does not change. 
E)  both the quantity of dollars supplied and the supply of dollars increases as the exchange rate increases.

Question 20

Net exports is the sum of

Accepted Answer

A)  exports and imports. 
B)  the private sector balance and the government sector balance. 
C)  the current account balance and capital account balance. 
D)  the balance of payments accounts. 
E)  the current account balance and the official settlements account balance. 
A)  exports and imports. 
B)  the private sector balance and the government sector balance. 
C)  the current account balance and capital account balance. 
D)  the balance of payments accounts. 
E)  the current account balance and the official settlements account balance.

If a country has a current account balance of $100 billion and the official settlements account balance is zero, then the country's capital account balance must be

-In the figure above, illustrate the effect of an increase in the U.S.interest rate.What is the effect on the foreign exchange rate?

When the United States exports goods and services to France, there is an increase in the

The exchange rate between the United States and Japan

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. -Net exports equals

Microsoft's purchase of a factory in Mexico is entered into the U.S.balance of payments accounts as a

In the foreign exchange market, the demand for dollars increases and the demand curve for dollars shifts rightward if the

When a nation has no funds to finance economic development, how can it acquire the needed funds? Is the country a net lender or a net borrower?

Fluctuations in the current account balance are mainly the result of fluctuations in

The record of international receipts and payments is called the

As the U.S.exchange rate , the price of U.S.imports increases and the quantity supplied of dollars .

Changes in a currency's exchange rate adjust immediately to insure that

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

If the current account balance is $235 billion and U.S.official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

The capital account records

If people expect the future exchange rate for dollars will be lower, then in the foreign exchange market the current

In the foreign exchange market, the

Net exports is the sum of

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

If a country has a current account balance of $100 billion and the official settlements account balance is zero, then the country's capital account balance must be

-In the figure above, illustrate the effect of an increase in the U.S.interest rate.What is the effect on the foreign exchange rate?

When the United States exports goods and services to France, there is an increase in the

The exchange rate between the United States and Japan

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. -Net exports equals

Microsoft's purchase of a factory in Mexico is entered into the U.S.balance of payments accounts as a

In the foreign exchange market, the demand for dollars increases and the demand curve for dollars shifts rightward if the

When a nation has no funds to finance economic development, how can it acquire the needed funds? Is the country a net lender or a net borrower?

Fluctuations in the current account balance are mainly the result of fluctuations in

The record of international receipts and payments is called the

As the U.S.exchange rate ________, the price of U.S.imports increases and the quantity supplied of dollars ________.

Changes in a currency's exchange rate adjust immediately to insure that

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

If the current account balance is $235 billion and U.S.official reserves increased by $35 billion, what is the official settlements account balance and the capital account balance?

The capital account records

If people expect the future exchange rate for dollars will be lower, then in the foreign exchange market the current

In the foreign exchange market, the

Net exports is the sum of

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 U.S.exchange rate , the price of U.S.imports increases and the quantity supplied of dollars .