Exam 19: International Finance

Variables (billions of dollars) Imports of goods and services 1,000 Exports of goods and services 900 Net interest -100 Net transfers 0 Foreign investment in the United States 1,190 U.S. investment abroad 1,000 Decrease in U.S. official reserves 10 The table above gives data on the U.S.balance of payments in 2015. -The current account balance is

An increase in the U.S.interest rate relative to other countries will lead to ________ in the supply of dollars and a ________ in the exchange rate.

In the long run, the exchange rate between two currencies is

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

In the foreign exchange market, how will each of the following influences affect the demand for dollars and the demand curve for dollars? a. an increase in the exchange rate. b. an increase in the U.S.interest rate. c. a fall in the expected future exchange rate.

When the U.S.interest rate differential ________, the demand for dollars ________ and the demand curve for dollars shifts rightward.

Define net borrower, net lender, creditor nation, and debtor nation.Discuss the difference between a net borrower and a debtor nation.

What balance of payment account records foreign investment between countries?

A nation that currently has a surplus in its current account is called a

The U.S.current account records

Suppose that the U.S.government acquires more foreign currency.This change is entered into which of the balance of payments accounts?

Balance of payments accounts (billions of dollars) Syldavia investment abroad 170 Exports of goods and services 140 Net transfers 0 Change in official reserves 0 Net interest 0 Imports of goods and services 180 Foreign investment in Syldavia 210 -The table above gives data for the nation of Syldavia.The current account has a

The expected future exchange rate has ________ on the supply of dollars and has ________ on the demand for dollars.

For most of the years since 1981, the United States has had

A nation that is a net borrower each year over time will become a ________ nation. A nation that is a net lender each year over time will become a ________ nation. Since the early 1980s, the United States has been a ________ due to the current account ________.

________ increases the supply of dollars in the foreign exchange market.

When the U.S.capital account shows a positive balance, that is an indication of

Why can exchange rates be very volatile?

In the foreign exchange market, when the U.S.interest rate rises, the supply of dollars ________ and the foreign exchange rate ________.

Which of the following is true?