Question 1

-Use the above figure. A leftward shift in the demand curve, ceteris paribus, would result in

Accepted Answer

A) a dollar appreciation. 
B) a dollar depreciation. 
C) a euro appreciation. 
D) increasing the equilibrium quantity of the euro. 
A) a dollar appreciation. 
B) a dollar depreciation. 
C) a euro appreciation. 
D) increasing the equilibrium quantity of the euro.

Question 2

An appreciation of a nation's currency is

Accepted Answer

A) a situation in which exchange rates are allowed to fluctuate in the open market in response to changes in supply and demand. 
B) the increase in the exchange value of one nation's currency in terms of an other nation. 
C) a nation in which households, firms, and governments buy and sell national currencies. 
D) the decrease in the exchange value of one nation's currency in terms of another nation. 
A) a situation in which exchange rates are allowed to fluctuate in the open market in response to changes in supply and demand. 
B) the increase in the exchange value of one nation's currency in terms of an other nation. 
C) a nation in which households, firms, and governments buy and sell national currencies. 
D) the decrease in the exchange value of one nation's currency in terms of another nation.

Question 3

A country's balance of payments shows a

Accepted Answer

A) detailed record of the import and export of services for the country. 
B) detailed record of the country's imports. 
C) summary record of international financial assistance received by the country. 
D) summary record of a country's economic transactions with foreign residents and governments over a year. 
A) detailed record of the import and export of services for the country. 
B) detailed record of the country's imports. 
C) summary record of international financial assistance received by the country. 
D) summary record of a country's economic transactions with foreign residents and governments over a year.

Question 4

As the dollar price of the euro increases

Accepted Answer

A) the demand for euros will increase. 
B) the price of French goods will fall for U.S. residents. 
C) French residents will purchase more U.S. goods. 
D) U. S. residents will increase their travel to France. 
A) the demand for euros will increase. 
B) the price of French goods will fall for U.S. residents. 
C) French residents will purchase more U.S. goods. 
D) U. S. residents will increase their travel to France.

Question 5

If residents of the United States give more gifts to relatives abroad than they receive, unilateral transfers will be

Accepted Answer

A) positive. 
B) unaffected. 
C) negative. 
D) zeroed out. 
A) positive. 
B) unaffected. 
C) negative. 
D) zeroed out.

Question 6

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

Question 7

Demand for the Brazilian real is

Accepted Answer

A) determined by how well the real maintains its value. 
B) a function of the Brazilian banking system. 
C) derived from the supply of U.S. dollars. 
D) derived from the demand for Brazilian goods. 
A) determined by how well the real maintains its value. 
B) a function of the Brazilian banking system. 
C) derived from the supply of U.S. dollars. 
D) derived from the demand for Brazilian goods.

Question 8

The supply of dollars in foreign exchange markets is

Accepted Answer

A) determined by the Federal Reserve's Board of Governors. 
B) determined by the demand for U.S. goods. 
C) determined by the U.S. demand for foreign goods. 
D) a function of the international banking system. 
A) determined by the Federal Reserve's Board of Governors. 
B) determined by the demand for U.S. goods. 
C) determined by the U.S. demand for foreign goods. 
D) a function of the international banking system.

Question 9

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

Accepted Answer

A) purchases of foreign assets. 
B) imports of merchandise. 
C) foreign tourist expenditures. 
D) purchases of foreign currency. 
A) purchases of foreign assets. 
B) imports of merchandise. 
C) foreign tourist expenditures. 
D) purchases of foreign currency.

Question 10

-In the diagram above, which of the following could cause a movement from point E' to point E?

Accepted Answer

A) Japanese residents' incomes rise, so they increase their purchases of U.S. goods. 
B) The dollar depreciates, inducing Japanese residents to buy more U.S. goods. 
C) U.S. residents' incomes rise, so they increase their purchases of Japanese goods. 
D) The dollar depreciates, inducing U.S. residents to buy more Japanese goods. 
A) Japanese residents' incomes rise, so they increase their purchases of U.S. goods. 
B) The dollar depreciates, inducing Japanese residents to buy more U.S. goods. 
C) U.S. residents' incomes rise, so they increase their purchases of Japanese goods. 
D) The dollar depreciates, inducing U.S. residents to buy more Japanese goods.

Question 11

-Use the above figure. A leftward shift of the supply curve, ceteris paribus, would result in

Accepted Answer

A) euro depreciation. 
B) dollar appreciation. 
C) dollar depreciation. 
D) increasing the equilibrium quantity of euros. 
A) euro depreciation. 
B) dollar appreciation. 
C) dollar depreciation. 
D) increasing the equilibrium quantity of euros.

Question 12

-Based on the transactions in the above table, what is the change in the U.S. capital account?

Accepted Answer

A) $9,800 
B) $10,000 
C) -$20,000 
D) -$20,200 
A) $9,800 
B) $10,000 
C) -$20,000 
D) -$20,200

Question 13

-Refer to the above table. The balance of trade is

Accepted Answer

A) $1000. 
B) -$665. 
C) +$335. 
D) -$155. 
A) $1000. 
B) -$665. 
C) +$335. 
D) -$155.

Question 14

Under flexible exchange rates, the exchange rate is set by

Accepted Answer

A) the International Monetary Fund. 
B) the U.S. Federal Reserve's Board of Governors. 
C) the intersection of demand and supply curves in the currency markets. 
D) negotiations among central banks of the major industrial powers. 
A) the International Monetary Fund. 
B) the U.S. Federal Reserve's Board of Governors. 
C) the intersection of demand and supply curves in the currency markets. 
D) negotiations among central banks of the major industrial powers.

Question 15

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

Accepted Answer

A) +100 
B) -150 
C) +150 
D) -100 
A) +100 
B) -150 
C) +150 
D) -100

Question 16

Why does the demand curve for Japanese yen slope down?

Accepted Answer

The demand for Japanese yen is derived f

Question 17

Which of the following best describes exchanges rates that are determined by the demand and supply foreign exchange in the absence of official intervention?

Accepted Answer

A) floating exchange rates 
B) the gold standard 
C) target zones 
D) the Bretton Woods system 
A) floating exchange rates 
B) the gold standard 
C) target zones 
D) the Bretton Woods system

Question 18

Flexible exchange rates exist when

Accepted Answer

A) no one knows what the true value of a currency is. 
B) governments and central banks spend foreign reserves to prop up an exchange rate at a certain level. 
C) exchange rates are determined by forces of supply and demand. 
D) speculators bet that a currency will soon be depreciated. 
A) no one knows what the true value of a currency is. 
B) governments and central banks spend foreign reserves to prop up an exchange rate at a certain level. 
C) exchange rates are determined by forces of supply and demand. 
D) speculators bet that a currency will soon be depreciated.

Question 19

Explain the three categories of balance of payments transactions.

Accepted Answer

Current account transactions relate to s

Question 20

Which of the following transactions leads to an inflow of funds on the U.S. capital account?

Accepted Answer

A) A U.S. resident purchases a share of stock on the Hong Kong exchange. 
B) A U.S. resident sells wheat to an African nation. 
C) A resident of China purchases U.S. government bonds. 
D) A resident of Mexico visits the United States. 
A) A U.S. resident purchases a share of stock on the Hong Kong exchange. 
B) A U.S. resident sells wheat to an African nation. 
C) A resident of China purchases U.S. government bonds. 
D) A resident of Mexico visits the United States.

-Use the above figure. A leftward shift in the demand curve, ceteris paribus, would result in

An appreciation of a nation's currency is

A country's balance of payments shows a

As the dollar price of the euro increases

If residents of the United States give more gifts to relatives abroad than they receive, unilateral transfers will be

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

Demand for the Brazilian real is

The supply of dollars in foreign exchange markets is

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

-In the diagram above, which of the following could cause a movement from point E' to point E?

-Use the above figure. A leftward shift of the supply curve, ceteris paribus, would result in

-Based on the transactions in the above table, what is the change in the U.S. capital account?

-Refer to the above table. The balance of trade is

Under flexible exchange rates, the exchange rate is set by

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

Why does the demand curve for Japanese yen slope down?

Which of the following best describes exchanges rates that are determined by the demand and supply foreign exchange in the absence of official intervention?

Flexible exchange rates exist when

Explain the three categories of balance of payments transactions.

Which of the following transactions leads to an inflow of funds on the U.S. capital account?

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

-Use the above figure. A leftward shift in the demand curve, ceteris paribus, would result in

An appreciation of a nation's currency is

A country's balance of payments shows a

As the dollar price of the euro increases

If residents of the United States give more gifts to relatives abroad than they receive, unilateral transfers will be

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

Demand for the Brazilian real is

The supply of dollars in foreign exchange markets is

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

-In the diagram above, which of the following could cause a movement from point E' to point E?

-Use the above figure. A leftward shift of the supply curve, ceteris paribus, would result in

-Based on the transactions in the above table, what is the change in the U.S. capital account?

-Refer to the above table. The balance of trade is

Under flexible exchange rates, the exchange rate is set by

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

Why does the demand curve for Japanese yen slope down?

Which of the following best describes exchanges rates that are determined by the demand and supply foreign exchange in the absence of official intervention?

Flexible exchange rates exist when

Explain the three categories of balance of payments transactions.

Which of the following transactions leads to an inflow of funds on the U.S. capital account?

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