Exam 19: International Finance

Variables (billions of dollars) Imports of goods and services 1,400 Exports of goods and services 1,600 Net interest 0 Net transfers 0 Foreign investment in the United States 480 U.S. investment abroad 700 The table has some of the U.S.balance of payments account. -If there is no statistical discrepancy, the official settlement account balance equals ________.

What happens in the foreign exchange market if the U.S.interest rate increases? What is the effect on the exchange rate?

What is a "debtor nation? " Is the United States a debtor nation?

If the exchange rate depreciates, then the

In 2007, a dollar could be traded for 100 yen and in 2008 a dollar could be traded for 90 yen.Between these two years, the dollar has become ________ valuable and so the dollar has ________.

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

On the foreign exchange market, an increase in a country's exchange rate

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

Which of the following are reasons why U.S.residents supply dollars to the foreign exchange market? To buy i. U.S.exports. ii. foreign real estate. iii. foreign bonds.

Purchasing power parity can be used as

Name three factors in the foreign exchange market that affect either the quantity of dollars demanded or the demand for dollars.Discuss whether the factor increases or decreases the number of dollars people want to hold.

If the current exchange rate is 1.00 euro per dollar and the expected exchange rate at the end of the month rises to 1.20 euros per dollar, then the demand for dollars ________ because people expect holding of dollars to become ________ profitable.

When the government increases the level of official reserves by $50 million, the change is recorded in the

In the foreign exchange market, an increase in the U.S.interest rate leads to ________ in the exchange rate because the supply of dollars ________.

The ________ the expected future exchange rate, the greater is the expected profit from holding dollars and so the ________.

The sum of the balances of the three accounts of the balance of payments (the current account, the capital account, and the official settlements account) is

When the exchange rate between the U.S.dollar and the euro changes from 1.07 euros per dollar to 0.93 euros per dollar, then the

When the U.S.dollar rises in value relative to the Mexican peso, the dollar has ________ and when the dollar falls in value, it has ________.

If one day the dollar is trading at 1.00 euro per dollar and the next day the exchange rate is 0.88 euros per dollar, one possible factor that might have led to this change is

In the balance of payments accounts, changes in U.S.official reserves are recorded in the