Question 1

The financing of U.S. import transactions, ceteris paribus

Accepted Answer

A) reduces U.S. interest rates. 
B) increases the amount of foreign currency held by the Fed. 
C) increases U.S. GDP. 
D) decreases the amount of foreign currency held by U.S. banks. 
A) reduces U.S. interest rates. 
B) increases the amount of foreign currency held by the Fed. 
C) increases U.S. GDP. 
D) decreases the amount of foreign currency held by U.S. banks.

Question 2

Suppose the U.S. dollar price of the Japanese yen decreases. Given this information, which of the following is correct?

Accepted Answer

A) The dollar has appreciated. 
B) The dollar has depreciated. 
C) The yen has appreciated. 
D) The yen price of the dollar decreased. 
A) The dollar has appreciated. 
B) The dollar has depreciated. 
C) The yen has appreciated. 
D) The yen price of the dollar decreased.

Question 3

If there is unrest in the Middle East that threatens the economic stability of Saudi Arabia, the

Accepted Answer

A) demand for Saudi Arabian currency will fall. 
B) demand for Saudi Arabian currency will rise. 
C) supply of Saudi Arabian currency will fall. 
D) supply of Saudi Arabian currency will rise. 
A) demand for Saudi Arabian currency will fall. 
B) demand for Saudi Arabian currency will rise. 
C) supply of Saudi Arabian currency will fall. 
D) supply of Saudi Arabian currency will rise.

Question 4

Country X-2015 Transactions (billions of dollars)
  
-In the above table, the trade balance on goods and services for Country X is ________ billion dollars.

Accepted Answer

A) +25 
B) -100 
C) +100 
D) -25 
A) +25 
B) -100 
C) +100 
D) -25

Question 5

Which of the following is NOT a category in the U.S. balance of payments account?

Accepted Answer

A) current account 
B) past-due account 
C) capital account 
D) official reserve transactions account 
A) current account 
B) past-due account 
C) capital account 
D) official reserve transactions account

Question 6

The market in which households, firms and governments buy and sell national currencies is known as

Accepted Answer

A) the foreign exchange market. 
B) standard drawing rights. 
C) the exchange rate. 
D) flexible exchange rates. 
A) the foreign exchange market. 
B) standard drawing rights. 
C) the exchange rate. 
D) flexible exchange rates.

Question 7

To know whether a particular situation for a family, business, or government involves an equilibrium or not, one must

Accepted Answer

A) understand the circumstances fully. 
B) determine whether the accounts are in balance. 
C) determine whether the credits equal the debits. 
D) determine whether a particular portion of the accounts are in balance or not. 
A) understand the circumstances fully. 
B) determine whether the accounts are in balance. 
C) determine whether the credits equal the debits. 
D) determine whether a particular portion of the accounts are in balance or not.

Question 8

-Refer to the above table. The capital account balance is

Accepted Answer

A) 0. 
B) -$260. 
C) -$200. 
D) -$155. 
A) 0. 
B) -$260. 
C) -$200. 
D) -$155.

Question 9

Unilateral transfers represent

Accepted Answer

A) the balance of services coming into a country. 
B) the balance of government bonds bought and sold by residents of a country. 
C) the balance of financial gifts-both private and public-entering and leaving a country. 
D) the balance of official transfers within an economy. 
A) the balance of services coming into a country. 
B) the balance of government bonds bought and sold by residents of a country. 
C) the balance of financial gifts-both private and public-entering and leaving a country. 
D) the balance of official transfers within an economy.

Question 10

If the exchange rate measured in euros per dollar increases, then

Accepted Answer

A) the dollar depreciates relative to the euro. 
B) the euro appreciates relative to the dollar. 
C) the euro depreciates relative to the dollar. 
D) neither currency appreciates or depreciates. 
A) the dollar depreciates relative to the euro. 
B) the euro appreciates relative to the dollar. 
C) the euro depreciates relative to the dollar. 
D) neither currency appreciates or depreciates.

Question 11

All of the following are surplus items in the balance of payments EXCEPT

Accepted Answer

A) purchases of foreign assets. 
B) exports of merchandise. 
C) foreign tourist expenditures. 
D) funds deposited in this country by foreign residents. 
A) purchases of foreign assets. 
B) exports of merchandise. 
C) foreign tourist expenditures. 
D) funds deposited in this country by foreign residents.

Question 12

An increase in the market clearing exchange value of the home nation's currency in terms of the currency of another nation is a home currency

Accepted Answer

A) appreciation. 
B) depreciation. 
C) devaluation. 
D) revaluation. 
A) appreciation. 
B) depreciation. 
C) devaluation. 
D) revaluation.

Question 13

Flexible exchange rates are determined by

Accepted Answer

A) the government of the exporting country. 
B) the government of the importing country. 
C) the forces of supply and demand. 
D) the IMF. 
A) the government of the exporting country. 
B) the government of the importing country. 
C) the forces of supply and demand. 
D) the IMF.

Question 14

A market in which businesses, households, and governments buy and sell national currencies is

Accepted Answer

A) the foreign exchange market. 
B) the currency exchange market. 
C) the money exchange market. 
D) the dollar exchange market. 
A) the foreign exchange market. 
B) the currency exchange market. 
C) the money exchange market. 
D) the dollar exchange market.

Question 15

Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as

Accepted Answer

A) an appreciation. 
B) a depreciation. 
C) a devaluation. 
D) a revaluation. 
A) an appreciation. 
B) a depreciation. 
C) a devaluation. 
D) a revaluation.

Question 16

Which agreement was signed in 1944 with the purpose of creating a new international payment system?

Accepted Answer

A) Philadelphia Accord 
B) Bretton Woods 
C) Camp David 
D) Lake Geneva 
A) Philadelphia Accord 
B) Bretton Woods 
C) Camp David 
D) Lake Geneva

Question 17

Assets that the IMF created to be used by countries to settle international payment obligations are called

Accepted Answer

A) capital intervention accounts. 
B) foreign currency reserves. 
C) gold reserves. 
D) special drawing rights. 
A) capital intervention accounts. 
B) foreign currency reserves. 
C) gold reserves. 
D) special drawing rights.

Question 18

What happens if the Brazilian real appreciates relative to the U.S. dollar?

Accepted Answer

A) Brazilians will buy fewer U.S. goods, which generates an increase in the quantity supplied of dollars. 
B) The quantity demanded of reals increases as U.S. residents want to buy more Brazilian products. 
C) The quantity of reals supplied increases because the lower price (in reals)for U.S. goods induces Brazilians to buy more U.S. products. 
D) The U.S. Federal Reserve Bank increases the supply of dollars to the world economy. 
A) Brazilians will buy fewer U.S. goods, which generates an increase in the quantity supplied of dollars. 
B) The quantity demanded of reals increases as U.S. residents want to buy more Brazilian products. 
C) The quantity of reals supplied increases because the lower price (in reals)for U.S. goods induces Brazilians to buy more U.S. products. 
D) The U.S. Federal Reserve Bank increases the supply of dollars to the world economy.

Question 19

The sum of the current account, the capital account, and the official reserve transaction account is

Accepted Answer

A) always positive. 
B) always negative. 
C) positive when exports are greater than imports. 
D) zero. 
A) always positive. 
B) always negative. 
C) positive when exports are greater than imports. 
D) zero.

Question 20

Someone in Germany has just ordered a U.S. car to be exported to Germany. In the U.S. balance of payments, this purchase is a(n)

Accepted Answer

A) accounting identity. 
B) special draw. 
C) surplus item. 
D) deficit item. 
A) accounting identity. 
B) special draw. 
C) surplus item. 
D) deficit item.

The financing of U.S. import transactions, ceteris paribus

Suppose the U.S. dollar price of the Japanese yen decreases. Given this information, which of the following is correct?

If there is unrest in the Middle East that threatens the economic stability of Saudi Arabia, the

Country X-2015 Transactions (billions of dollars) -In the above table, the trade balance on goods and services for Country X is ________ billion dollars.

Which of the following is NOT a category in the U.S. balance of payments account?

The market in which households, firms and governments buy and sell national currencies is known as

To know whether a particular situation for a family, business, or government involves an equilibrium or not, one must

-Refer to the above table. The capital account balance is

Unilateral transfers represent

If the exchange rate measured in euros per dollar increases, then

All of the following are surplus items in the balance of payments EXCEPT

An increase in the market clearing exchange value of the home nation's currency in terms of the currency of another nation is a home currency

Flexible exchange rates are determined by

A market in which businesses, households, and governments buy and sell national currencies is

Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as

Which agreement was signed in 1944 with the purpose of creating a new international payment system?

Assets that the IMF created to be used by countries to settle international payment obligations are called

What happens if the Brazilian real appreciates relative to the U.S. dollar?

The sum of the current account, the capital account, and the official reserve transaction account is

Someone in Germany has just ordered a U.S. car to be exported to Germany. In the U.S. balance of payments, this purchase is a(n)

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

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Exam 19: Exchange Rates and the Balance of Payments

The financing of U.S. import transactions, ceteris paribus

Suppose the U.S. dollar price of the Japanese yen decreases. Given this information, which of the following is correct?

If there is unrest in the Middle East that threatens the economic stability of Saudi Arabia, the

Country X-2015 Transactions (billions of dollars) -In the above table, the trade balance on goods and services for Country X is ________ billion dollars.

Which of the following is NOT a category in the U.S. balance of payments account?

The market in which households, firms and governments buy and sell national currencies is known as

To know whether a particular situation for a family, business, or government involves an equilibrium or not, one must

-Refer to the above table. The capital account balance is

Unilateral transfers represent

If the exchange rate measured in euros per dollar increases, then

All of the following are surplus items in the balance of payments EXCEPT

An increase in the market clearing exchange value of the home nation's currency in terms of the currency of another nation is a home currency

Flexible exchange rates are determined by

A market in which businesses, households, and governments buy and sell national currencies is

Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as

Which agreement was signed in 1944 with the purpose of creating a new international payment system?

Assets that the IMF created to be used by countries to settle international payment obligations are called

What happens if the Brazilian real appreciates relative to the U.S. dollar?

The sum of the current account, the capital account, and the official reserve transaction account is

Someone in Germany has just ordered a U.S. car to be exported to Germany. In the U.S. balance of payments, this purchase is a(n)

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Filters