Question 1

In the foreign exchange market, an increase in the exchange rate leads to

Accepted Answer

A)  an increase the quantity of dollars supplied and a movement along the supply curve of dollars. 
B)  an increase in the quantity of dollars demanded and a movement along the demand curve for dollars. 
C)  an increase the quantity of dollars supplied and no movement along the supply curve of dollars. 
D)  an increase in the quantity of dollars demanded and no movement along the demand curve for dollars. 
E)  a decrease the quantity of dollars supplied and a movement along the supply curve of dollars. 
A)  an increase the quantity of dollars supplied and a movement along the supply curve of dollars. 
B)  an increase in the quantity of dollars demanded and a movement along the demand curve for dollars. 
C)  an increase the quantity of dollars supplied and no movement along the supply curve of dollars. 
D)  an increase in the quantity of dollars demanded and no movement along the demand curve for dollars. 
E)  a decrease the quantity of dollars supplied and a movement along the supply curve of dollars.

Question 2

The current account balance equals

Accepted Answer

A)  net exports + net transfers + net interest. 
B)  net exports - net transfers + net interest. 
C)  net exports + net transfers - net interest. 
D)  net exports - net transfers - net interest. 
E)  net exports + net transfers. 
A)  net exports + net transfers + net interest. 
B)  net exports - net transfers + net interest. 
C)  net exports + net transfers - net interest. 
D)  net exports - net transfers - net interest. 
E)  net exports + net transfers.

Question 3

When a Mexican company purchases a U.S.-made computer, the Mexican company pays for it with

Accepted Answer

A)  U.S.dollars. 
B)  Mexican pesos. 
C)  gold. 
D)  Mexican goods and services. 
E)  Euros or yen. 
A)  U.S.dollars. 
B)  Mexican pesos. 
C)  gold. 
D)  Mexican goods and services. 
E)  Euros or yen.

Question 4

Everything else the same, in the foreign exchange market which of the following increases the demand for U.S.dollars and shifts the demand curve rightward?

Accepted Answer

A)  The Japanese interest rate rises. 
B)  The expected future exchange rate falls. 
C)  The U.S.interest rate rises. 
D)  The U.S.exchange rate rises. 
E)  The U.S.exchange rate falls. 
A)  The Japanese interest rate rises. 
B)  The expected future exchange rate falls. 
C)  The U.S.interest rate rises. 
D)  The U.S.exchange rate rises. 
E)  The U.S.exchange rate falls.

Question 5

A situation in which money buys the same amount of goods and services in different currencies is called

Accepted Answer

A)  exchange rate equilibrium. 
B)  purchasing power parity. 
C)  exchange rate surplus. 
D)  exchange rate balance. 
E)  a fixed exchange rate. 
A)  exchange rate equilibrium. 
B)  purchasing power parity. 
C)  exchange rate surplus. 
D)  exchange rate balance. 
E)  a fixed exchange rate.

Question 6

When there is a shortage of dollars in the foreign exchange market, the

Accepted Answer

A)  demand curve for dollars shifts leftward to restore the equilibrium. 
B)  U.S.exchange rate will appreciate. 
C)  U.S.exchange rate will depreciate. 
D)  supply curve of dollars shifts leftward to restore the equilibrium. 
E)  supply curve of dollars shifts rightward to restore the equilibrium. 
A)  demand curve for dollars shifts leftward to restore the equilibrium. 
B)  U.S.exchange rate will appreciate. 
C)  U.S.exchange rate will depreciate. 
D)  supply curve of dollars shifts leftward to restore the equilibrium. 
E)  supply curve of dollars shifts rightward to restore the equilibrium.

Question 7

The United States switched from being a ________ to being a ________ in the early 1980s, when it started to run large current account ________.

Accepted Answer

A)  net lender; net borrower; surpluses 
B)  net borrower; net lender; surpluses 
C)  net lender; net borrower; deficits 
D)  net borrower; net lender; deficits 
E)  debtor nation; creditor nation; deficits 
A)  net lender; net borrower; surpluses 
B)  net borrower; net lender; surpluses 
C)  net lender; net borrower; deficits 
D)  net borrower; net lender; deficits 
E)  debtor nation; creditor nation; deficits

Question 8

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

Accepted Answer

A)  rises; increases 
B)  falls; increases 
C)  falls; remains the same because it is the supply of U.S.dollars decreases so that the supply curve shifts leftward 
D)  rises; decreases 
E)  rises; remains the same because it is the supply of U.S.dollars increases so that the supply curve shifts rightward 
A)  rises; increases 
B)  falls; increases 
C)  falls; remains the same because it is the supply of U.S.dollars decreases so that the supply curve shifts leftward 
D)  rises; decreases 
E)  rises; remains the same because it is the supply of U.S.dollars increases so that the supply curve shifts rightward

Question 9

The current account balance is equal to net exports ________ net interest ________ net transfers.

Accepted Answer

A)  plus; plus 
B)  plus; minus 
C)  minus; plus 
D)  minus; minus 
E)  multiplied by; multiplied by 
A)  plus; plus 
B)  plus; minus 
C)  minus; plus 
D)  minus; minus 
E)  multiplied by; multiplied by

Question 10

Which of the following has not changed much as a percent of GDP over the last twenty years for the United States?
i. the official settlements account
ii. the capital account
iii. the current account

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  ii and iii 
E)  None of the above answers are correct because all three have had large swings over the last 20 years. 
A)  i only 
B)  ii only 
C)  iii only 
D)  ii and iii 
E)  None of the above answers are correct because all three have had large swings over the last 20 years.

Question 11

In the capital account, the most largest category of international transactions is

Accepted Answer

A)  net interest. 
B)  foreign investment in the United States. 
C)  net transfers. 
D)  exports and imports. 
E)  statistical discrepancy. 
A)  net interest. 
B)  foreign investment in the United States. 
C)  net transfers. 
D)  exports and imports. 
E)  statistical discrepancy.

Question 12

A country that is borrowing more from the rest of the world than it is lending is called a

Accepted Answer

A)  net lender. 
B)  net borrower. 
C)  net debtor. 
D)  net creditor. 
E)  net loaner country. 
A)  net lender. 
B)  net borrower. 
C)  net debtor. 
D)  net creditor. 
E)  net loaner country.

Question 13

If U.S.official reserves increase, is the official settlements account balance positive, negative, or unaffected?

Accepted Answer

If U.S.official rese

Question 14

Explain the three components of the balance of payments accounts.What must these three balances sum to?

Accepted Answer

The balance of payments has three sectio

Question 15

If U.S.official reserves increase, the

Accepted Answer

A)  current account increases. 
B)  balance of payments increases. 
C)  official settlements account balance is negative. 
D)  current account is positive. 
E)  official settlements account balance is positive. 
A)  current account increases. 
B)  balance of payments increases. 
C)  official settlements account balance is negative. 
D)  current account is positive. 
E)  official settlements account balance is positive.

Question 16

If private savings equals $1.2 billion and private investment equals $1.5 billion, then there is a

Accepted Answer

A)  private sector surplus. 
B)  private sector deficit. 
C)  government sector surplus. 
D)  government sector deficit. 
E)  current account balance. 
A)  private sector surplus. 
B)  private sector deficit. 
C)  government sector surplus. 
D)  government sector deficit. 
E)  current account balance.

Question 17

If purchasing power parity exists and the exchange rate is 1.50 U.S.dollars per British pound, than a latte that has a price of $4.00 in San Jose, California, has a price of ________ in London, England.

Accepted Answer

A)  8.00 pounds 
B)  4.00 pounds 
C)  6.00 pounds 
D)  2.67 pounds 
E)  0.37 pounds 
A)  8.00 pounds 
B)  4.00 pounds 
C)  6.00 pounds 
D)  2.67 pounds 
E)  0.37 pounds

Question 18

If the current account balance is negative, net interest is $100 billion and net transfer is -$100 billion, then

Accepted Answer

A)  imports exceed exports. 
B)  exports exceed imports. 
C)  real GDP exceeds potential GDP. 
D)  the official settlements account must be positive. 
E)  the official settlements account must be negative. 
A)  imports exceed exports. 
B)  exports exceed imports. 
C)  real GDP exceeds potential GDP. 
D)  the official settlements account must be positive. 
E)  the official settlements account must be negative.

Question 19

If the interest rate on a bank deposit in the United States is 3 percent while a similar deposit earns 6 percent in Britain, then we could expect that deposits would flow to

Accepted Answer

A)  Britain regardless of exchange rate expectations. 
B)  the United States regardless of exchange rate expectations. 
C)  Britain if the pound is expected to depreciate less than 3 percent. 
D)  Britain if the pound is expected to depreciate more than 3 percent. 
E)  the United States if the dollar is expected to appreciate less than 3 percent. 
A)  Britain regardless of exchange rate expectations. 
B)  the United States regardless of exchange rate expectations. 
C)  Britain if the pound is expected to depreciate less than 3 percent. 
D)  Britain if the pound is expected to depreciate more than 3 percent. 
E)  the United States if the dollar is expected to appreciate less than 3 percent.

Question 20

The private sector balance is equal to savings ________ investment and the government sector balance is equal to government expenditure ________ taxes. If there is a deficit in the private sector balance and a deficit in the government sector balance, then there must be a ________ in net exports.

Accepted Answer

A)  minus; minus; surplus 
B)  plus; minus; surplus 
C)  minus; minus; deficit 
D)  plus; plus; deficit 
E)  plus; plus; surplus 
A)  minus; minus; surplus 
B)  plus; minus; surplus 
C)  minus; minus; deficit 
D)  plus; plus; deficit 
E)  plus; plus; surplus

In the foreign exchange market, an increase in the exchange rate leads to

The current account balance equals

When a Mexican company purchases a U.S.-made computer, the Mexican company pays for it with

Everything else the same, in the foreign exchange market which of the following increases the demand for U.S.dollars and shifts the demand curve rightward?

A situation in which money buys the same amount of goods and services in different currencies is called

When there is a shortage of dollars in the foreign exchange market, the

The United States switched from being a to being a in the early 1980s, when it started to run large current account .

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

The current account balance is equal to net exports net interest net transfers.

Which of the following has not changed much as a percent of GDP over the last twenty years for the United States? i. the official settlements account ii. the capital account iii. the current account

In the capital account, the most largest category of international transactions is

A country that is borrowing more from the rest of the world than it is lending is called a

If U.S.official reserves increase, is the official settlements account balance positive, negative, or unaffected?

Explain the three components of the balance of payments accounts.What must these three balances sum to?

If U.S.official reserves increase, the

If private savings equals $1.2 billion and private investment equals $1.5 billion, then there is a

If purchasing power parity exists and the exchange rate is 1.50 U.S.dollars per British pound, than a latte that has a price of $4.00 in San Jose, California, has a price of ________ in London, England.

If the current account balance is negative, net interest is $100 billion and net transfer is -$100 billion, then

If the interest rate on a bank deposit in the United States is 3 percent while a similar deposit earns 6 percent in Britain, then we could expect that deposits would flow to

The private sector balance is equal to savings investment and the government sector balance is equal to government expenditure taxes. If there is a deficit in the private sector balance and a deficit in the government sector balance, then there must be a in net exports.

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, an increase in the exchange rate leads to

The current account balance equals

When a Mexican company purchases a U.S.-made computer, the Mexican company pays for it with

Everything else the same, in the foreign exchange market which of the following increases the demand for U.S.dollars and shifts the demand curve rightward?

A situation in which money buys the same amount of goods and services in different currencies is called

When there is a shortage of dollars in the foreign exchange market, the

The United States switched from being a ________ to being a ________ in the early 1980s, when it started to run large current account ________.

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

The current account balance is equal to net exports ________ net interest ________ net transfers.

Which of the following has not changed much as a percent of GDP over the last twenty years for the United States? i. the official settlements account ii. the capital account iii. the current account

In the capital account, the most largest category of international transactions is

A country that is borrowing more from the rest of the world than it is lending is called a

If U.S.official reserves increase, is the official settlements account balance positive, negative, or unaffected?

Explain the three components of the balance of payments accounts.What must these three balances sum to?

If U.S.official reserves increase, the

If private savings equals $1.2 billion and private investment equals $1.5 billion, then there is a

If purchasing power parity exists and the exchange rate is 1.50 U.S.dollars per British pound, than a latte that has a price of $4.00 in San Jose, California, has a price of ________ in London, England.

If the current account balance is negative, net interest is $100 billion and net transfer is -$100 billion, then

If the interest rate on a bank deposit in the United States is 3 percent while a similar deposit earns 6 percent in Britain, then we could expect that deposits would flow to

The private sector balance is equal to savings ________ investment and the government sector balance is equal to government expenditure ________ taxes. If there is a deficit in the private sector balance and a deficit in the government sector balance, then there must be a ________ in net exports.

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

The United States switched from being a to being a in the early 1980s, when it started to run large current account .

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

The current account balance is equal to net exports net interest net transfers.

The private sector balance is equal to savings investment and the government sector balance is equal to government expenditure taxes. If there is a deficit in the private sector balance and a deficit in the government sector balance, then there must be a in net exports.