Question 1

The Japanese yen will appreciate against the dollar if

Accepted Answer

A) U.S. residents demand more Japanese goods. 
B) U.S. residents demand fewer Japanese goods. 
C) Japanese residents demand more U.S. goods. 
D) none of the above. 
A) U.S. residents demand more Japanese goods. 
B) U.S. residents demand fewer Japanese goods. 
C) Japanese residents demand more U.S. goods. 
D) none of the above.

Question 2

How are deficit and surplus items determined in the balance of payments?

Accepted Answer

Any transaction that leads to

Question 3

If there is unrest in the Middle East, and Saudi Arabian investors purchase German securities, 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

If the dollar used to buy 100 yen and now buys 360 yen, there has been

Accepted Answer

A) appreciation of the dollar. 
B) depreciation of the dollar. 
C) appreciation of the yen. 
D) an increase in special drawing rights. 
A) appreciation of the dollar. 
B) depreciation of the dollar. 
C) appreciation of the yen. 
D) an increase in special drawing rights.

Question 5

A nation's foreign exchange reserves consist mainly of

Accepted Answer

A) excess reserves held by its banks. 
B) government securities of that nation. 
C) the legal currency of that nation. 
D) currencies of other nations. 
A) excess reserves held by its banks. 
B) government securities of that nation. 
C) the legal currency of that nation. 
D) currencies of other nations.

Question 6

One source of the supply of dollars in the world is

Accepted Answer

A) the purchase of U.S. exports by foreign residents. 
B) the sale of U.S. domestic assets to foreigner residents. 
C) U.S. imports of foreign merchandise. 
D) U.S. sales of gold to foreigner residents. 
A) the purchase of U.S. exports by foreign residents. 
B) the sale of U.S. domestic assets to foreigner residents. 
C) U.S. imports of foreign merchandise. 
D) U.S. sales of gold to foreigner residents.

Question 7

The demand for dollars will increase when

Accepted Answer

A) real interest rates in the United States fall. 
B) U.S. labor productivity increases relative to the world. 
C) the world is perceived as more stable than it used to be. 
D) U.S. residents develop a taste for more imported products. 
A) real interest rates in the United States fall. 
B) U.S. labor productivity increases relative to the world. 
C) the world is perceived as more stable than it used to be. 
D) U.S. residents develop a taste for more imported products.

Question 8

Special drawing rights (SDRs)are

Accepted Answer

A) a reserve asset created by the International Monetary Fund that countries can use to settle international payment obligations. 
B) a liability payment from a branch bank to a nation's central bank. 
C) a country's surpluses in their fiscal budgets. 
D) exchanges of gold between nations. 
A) a reserve asset created by the International Monetary Fund that countries can use to settle international payment obligations. 
B) a liability payment from a branch bank to a nation's central bank. 
C) a country's surpluses in their fiscal budgets. 
D) exchanges of gold between nations.

Question 9

-Which of the following would NOT increase German exports to the United States?

Accepted Answer

A) an appreciation of the U.S. dollar 
B) a depreciation of the euro 
C) an appreciation of the euro 
D) an increase in German demand for U.S. exports 
A) an appreciation of the U.S. dollar 
B) a depreciation of the euro 
C) an appreciation of the euro 
D) an increase in German demand for U.S. exports

Question 10

The demand for Canadian cheese by a U.S. store is also a

Accepted Answer

A) demand for Canadian dollars. 
B) demand for SDRs. 
C) supply of U.S. dollars. 
D) supply of Canadian dollars. 
A) demand for Canadian dollars. 
B) demand for SDRs. 
C) supply of U.S. dollars. 
D) supply of Canadian dollars.

Question 11

Under a flexible exchange rate system, one factor that does NOT directly affect rates of exchange is

Accepted Answer

A) changes in the inflation rate in each country. 
B) changes in productivity in each country. 
C) changes in gold holdings in each country. 
D) changes in economic stability in each country. 
A) changes in the inflation rate in each country. 
B) changes in productivity in each country. 
C) changes in gold holdings in each country. 
D) changes in economic stability in each country.

Question 12

Every transaction concerning the exportation of U.S. goods constitutes a

Accepted Answer

A) demand for dollars, with no effect on markets for foreign currencies. 
B) supply of foreign currency, with no effect on the market for dollars. 
C) supply of foreign currency and demand for dollars. 
D) demand for foreign currency and a supply of dollars. 
A) demand for dollars, with no effect on markets for foreign currencies. 
B) supply of foreign currency, with no effect on the market for dollars. 
C) supply of foreign currency and demand for dollars. 
D) demand for foreign currency and a supply of dollars.

Question 13

Jane has just sent a gift that was made in the U.S. to her relatives in Italy. As far as the balance of payments is concerned this gift will

Accepted Answer

A) have no influence on the balance of payments since it was made in the U.S. 
B) be part of the capital account since the gift is a physical item. 
C) be considered an export since it has left the U.S. 
D) be part of the current account as a unilateral transfer. 
A) have no influence on the balance of payments since it was made in the U.S. 
B) be part of the capital account since the gift is a physical item. 
C) be considered an export since it has left the U.S. 
D) be part of the current account as a unilateral transfer.

Question 14

Unilateral transfers are

Accepted Answer

A) transactions that take place within the geographic boundaries of a country. 
B) gifts from residents of one country to foreign residents. 
C) transactions that take place across geographic boundaries but in which both participants are citizens of the same country. 
D) government transactions that involve reserves. 
A) transactions that take place within the geographic boundaries of a country. 
B) gifts from residents of one country to foreign residents. 
C) transactions that take place across geographic boundaries but in which both participants are citizens of the same country. 
D) government transactions that involve reserves.

Question 15

An increase in the inflation rate of one country relative to another country will probably cause

Accepted Answer

A) an increase in exports for the inflating country. 
B) a balance of trade deficit for the inflating country. 
C) a current account surplus for the inflating country. 
D) an increase in the amount of official reserves held by the inflating country's central bank. 
A) an increase in exports for the inflating country. 
B) a balance of trade deficit for the inflating country. 
C) a current account surplus for the inflating country. 
D) an increase in the amount of official reserves held by the inflating country's central bank.

Question 16

The official reserve account includes all of the following EXCEPT

Accepted Answer

A) gold. 
B) SDRs. 
C) foreign currencies. 
D) silver and other precious metals. 
A) gold. 
B) SDRs. 
C) foreign currencies. 
D) silver and other precious metals.

Question 17

If the price of the Brazilian real is 60 cents and a U.S. resident purchases a Brazilian-manufactured item for 60,000 real, there will be

Accepted Answer

A) a quantity demanded of 60,000 real and a quantity supplied of $60,000. 
B) a quantity demanded of 60,000 real and a quantity supplied of $36,000. 
C) a quantity demanded of 60,000 real, but we cannot determine the effect in the market for dollars. 
D) a quantity supplied of 60,000 real and a quantity demanded of 60,000 yen. 
A) a quantity demanded of 60,000 real and a quantity supplied of $60,000. 
B) a quantity demanded of 60,000 real and a quantity supplied of $36,000. 
C) a quantity demanded of 60,000 real, but we cannot determine the effect in the market for dollars. 
D) a quantity supplied of 60,000 real and a quantity demanded of 60,000 yen.

Question 18

The foreign exchange system that has the highest foreign exchange risk is

Accepted Answer

A) the dirty floating exchange rate. 
B) the fixed exchange rate. 
C) the floating exchange rate. 
D) the Bretton Woods system. 
A) the dirty floating exchange rate. 
B) the fixed exchange rate. 
C) the floating exchange rate. 
D) the Bretton Woods system.

Question 19

What does it mean when the dollar appreciates?
 What does it mean when the dollar depreciates?

Accepted Answer

If the dollar appreciates with respect t

Question 20

If the exchange rate is such that $1 equals 10 Mexican pesos, then the price of a peso is

Accepted Answer

A) $10. 
B) $1. 
C) $0.20. 
D) $0.10. 
A) $10. 
B) $1. 
C) $0.20. 
D) $0.10.

The Japanese yen will appreciate against the dollar if

How are deficit and surplus items determined in the balance of payments?

If there is unrest in the Middle East, and Saudi Arabian investors purchase German securities, the

If the dollar used to buy 100 yen and now buys 360 yen, there has been

A nation's foreign exchange reserves consist mainly of

One source of the supply of dollars in the world is

The demand for dollars will increase when

Special drawing rights (SDRs)are

-Which of the following would NOT increase German exports to the United States?

The demand for Canadian cheese by a U.S. store is also a

Under a flexible exchange rate system, one factor that does NOT directly affect rates of exchange is

Every transaction concerning the exportation of U.S. goods constitutes a

Jane has just sent a gift that was made in the U.S. to her relatives in Italy. As far as the balance of payments is concerned this gift will

Unilateral transfers are

An increase in the inflation rate of one country relative to another country will probably cause

The official reserve account includes all of the following EXCEPT

If the price of the Brazilian real is 60 cents and a U.S. resident purchases a Brazilian-manufactured item for 60,000 real, there will be

The foreign exchange system that has the highest foreign exchange risk is

What does it mean when the dollar appreciates? What does it mean when the dollar depreciates?

If the exchange rate is such that $1 equals 10 Mexican pesos, then the price of a peso is

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 Japanese yen will appreciate against the dollar if

How are deficit and surplus items determined in the balance of payments?

If there is unrest in the Middle East, and Saudi Arabian investors purchase German securities, the

If the dollar used to buy 100 yen and now buys 360 yen, there has been

A nation's foreign exchange reserves consist mainly of

One source of the supply of dollars in the world is

The demand for dollars will increase when

Special drawing rights (SDRs)are

-Which of the following would NOT increase German exports to the United States?

The demand for Canadian cheese by a U.S. store is also a

Under a flexible exchange rate system, one factor that does NOT directly affect rates of exchange is

Every transaction concerning the exportation of U.S. goods constitutes a

Jane has just sent a gift that was made in the U.S. to her relatives in Italy. As far as the balance of payments is concerned this gift will

Unilateral transfers are

An increase in the inflation rate of one country relative to another country will probably cause

The official reserve account includes all of the following EXCEPT

If the price of the Brazilian real is 60 cents and a U.S. resident purchases a Brazilian-manufactured item for 60,000 real, there will be

The foreign exchange system that has the highest foreign exchange risk is

What does it mean when the dollar appreciates? What does it mean when the dollar depreciates?

If the exchange rate is such that $1 equals 10 Mexican pesos, then the price of a peso is

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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