Question 1

A depreciation of the U.S. dollar relative to the euro would tend to

Accepted Answer

A) increase U.S. imports from Germany. 
B) increase U.S. exports to Germany. 
C) decrease U.S. exports to Germany. 
D) increase both U.S. imports from Germany and U.S. exports to Germany. 
A) increase U.S. imports from Germany. 
B) increase U.S. exports to Germany. 
C) decrease U.S. exports to Germany. 
D) increase both U.S. imports from Germany and U.S. exports to Germany.

Question 2

If the foreign exchange rate is 70 cents for one Swiss franc, then

Accepted Answer

A) a car that costs 40,000 francs will cost $7,143.00. 
B) a wine that costs 200 francs will cost $14.00. 
C) a clock that costs 500 francs will cost $350.00. 
D) a house that costs 100,000 francs will cost $700,000.00. 
A) a car that costs 40,000 francs will cost $7,143.00. 
B) a wine that costs 200 francs will cost $14.00. 
C) a clock that costs 500 francs will cost $350.00. 
D) a house that costs 100,000 francs will cost $700,000.00.

Question 3

The price of one currency in terms off another currency is called

Accepted Answer

A) foreign reserves. 
B) the foreign exchange rate. 
C) the foreign trade deficit. 
D) the balance of payments. 
A) foreign reserves. 
B) the foreign exchange rate. 
C) the foreign trade deficit. 
D) the balance of payments.

Question 4

Changes in which of the following will cause a change in exchange rates?

Accepted Answer

A) real interest rates 
B) consumer preferences 
C) perceptions of economic and political stability 
D) all of the above 
A) real interest rates 
B) consumer preferences 
C) perceptions of economic and political stability 
D) all of the above

Question 5

The largest portion of any nation's balance of payments current account is the

Accepted Answer

A) importing and exporting of merchandise goods. 
B) importing and exporting of services. 
C) importing and exporting of gold. 
D) importing and exporting of capital goods. 
A) importing and exporting of merchandise goods. 
B) importing and exporting of services. 
C) importing and exporting of gold. 
D) importing and exporting of capital goods.

Question 6

The balance of payments is

Accepted Answer

A) the value of goods and services bought and sold in the world market. 
B) a summary record of a country's economic transactions with foreign residents and governments. 
C) a summary record of a country's purchases and sales of goods and services in the world market. 
D) the value of merchandise goods bought and sold in the world market. 
A) the value of goods and services bought and sold in the world market. 
B) a summary record of a country's economic transactions with foreign residents and governments. 
C) a summary record of a country's purchases and sales of goods and services in the world market. 
D) the value of merchandise goods bought and sold in the world market.

Question 7

Current account transactions are all payments that are related to the purchase or sale of

Accepted Answer

A) goods only. 
B) services only. 
C) goods and services only. 
D) goods and services excluding government purchases. 
A) goods only. 
B) services only. 
C) goods and services only. 
D) goods and services excluding government purchases.

Question 8

Assume the following exchange rates for today: $1=140 yen and 1 Danish krone = $0.10. We can conclude

Accepted Answer

A) 1 yen = 280 kr. 
B) 1 yen = 14 kr. 
C) 1 kr. = 28 yen. 
D) 1 kr. = 14 yen. 
A) 1 yen = 280 kr. 
B) 1 yen = 14 kr. 
C) 1 kr. = 28 yen. 
D) 1 kr. = 14 yen.

Question 9

All of the following would be considered a current account transaction EXCEPT the

Accepted Answer

A) importing of services. 
B) exporting of goods. 
C) importing of capital. 
D) importing of goods. 
A) importing of services. 
B) exporting of goods. 
C) importing of capital. 
D) importing of goods.

Question 10

In the market for euros, the demand for euros (€)is

Accepted Answer

A) downward sloping, because at lower dollar prices for the euro, U.S. residents will buy more European goods and services. 
B) upward sloping, because at higher dollar prices for the euro, U.S. residents will buy more European goods and services. 
C) upward sloping, because at higher dollar prices for the euro, Europeans will buy more U.S. goods and services. 
D) horizontal, because dollar prices of euros and euro prices of dollars are directly related. 
A) downward sloping, because at lower dollar prices for the euro, U.S. residents will buy more European goods and services. 
B) upward sloping, because at higher dollar prices for the euro, U.S. residents will buy more European goods and services. 
C) upward sloping, because at higher dollar prices for the euro, Europeans will buy more U.S. goods and services. 
D) horizontal, because dollar prices of euros and euro prices of dollars are directly related.

Question 11

If the Japanese yen depreciates against the U.S. dollar

Accepted Answer

A) the price of Japanese imports to the United States decreases. 
B) the price of United States exports to Japan decreases. 
C) the price of Japanese imports from the United States will decrease. 
D) there is no change in the price of Japanese exports to the United States. 
A) the price of Japanese imports to the United States decreases. 
B) the price of United States exports to Japan decreases. 
C) the price of Japanese imports from the United States will decrease. 
D) there is no change in the price of Japanese exports to the United States.

Question 12

Caitlin has just decided to order a computer that is made in Japan. She needs to convert U.S. dollars for Japanese yen. This conversion takes place in the

Accepted Answer

A) International Monetary Fund. 
B) target zone. 
C) foreign exchange markets. 
D) SDRs. 
A) International Monetary Fund. 
B) target zone. 
C) foreign exchange markets. 
D) SDRs.

Question 13

The balance of payments is

Accepted Answer

A) a summary record of the financial transactions of a country's government with foreign governments. 
B) a summary record of a country's imports and exports of goods with foreign residents and governments. 
C) a summary record of a country's economic transactions with foreign residents and governments. 
D) a summary record of a country's purchases and sales of goods and services in the world market. 
A) a summary record of the financial transactions of a country's government with foreign governments. 
B) a summary record of a country's imports and exports of goods with foreign residents and governments. 
C) a summary record of a country's economic transactions with foreign residents and governments. 
D) a summary record of a country's purchases and sales of goods and services in the world market.

Question 14

If there is an increase in the demand for U.S. automobiles, the

Accepted Answer

A) demand for dollars will fall. 
B) demand for dollars will rise. 
C) supply of dollars will fall. 
D) supply of dollars will rise. 
A) demand for dollars will fall. 
B) demand for dollars will rise. 
C) supply of dollars will fall. 
D) supply of dollars will rise.

Question 15

Hypothetical Data for Nation "A" in Billions of Local Currency
  
-Refer to the above table. The overall balance of payments of Nation "A" is

Accepted Answer

A) +85. 
B) - 85. 
C) 0. 
D) +25. 
A) +85. 
B) - 85. 
C) 0. 
D) +25.

Question 16

Country X-2015 Transactions (billions of dollars)
  
-In the above table, the fact that there is a minus sign before the number for unilateral transfers means that

Accepted Answer

A) Country X has significant inflation. 
B) Country X imported more goods than it exported. 
C) Country X received more in foreign aid than it gave in foreign aid. 
D) Country X gave more to foreign residents than foreign residents gave to Country X. 
A) Country X has significant inflation. 
B) Country X imported more goods than it exported. 
C) Country X received more in foreign aid than it gave in foreign aid. 
D) Country X gave more to foreign residents than foreign residents gave to Country X.

Question 17

The United States was taken off the gold standard by

Accepted Answer

A) President Lyndon Johnson. 
B) President Richard Nixon. 
C) the Federal Reserve Chairman. 
D) President Jimmy Carter. 
A) President Lyndon Johnson. 
B) President Richard Nixon. 
C) the Federal Reserve Chairman. 
D) President Jimmy Carter.

Question 18

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

Accepted Answer

A) $30,000 
B) $31,000 
C) -$32,500 
D) -$32,700 
A) $30,000 
B) $31,000 
C) -$32,500 
D) -$32,700

Question 19

Checking exchange rates, you find $1 equals 0.75 euros. Then the price of 1 euro is

Accepted Answer

A) $0.25. 
B) $0.75. 
C) $1.33. 
D) $4.30. 
A) $0.25. 
B) $0.75. 
C) $1.33. 
D) $4.30.

Question 20

All of the following are market determinants of exchange rates EXCEPT

Accepted Answer

A) changes in productivity in one country relative to another. 
B) changes in real interest rates in one country relative to another. 
C) changes in product preferences between countries. 
D) changes in the relative prices of goods and services within a country. 
A) changes in productivity in one country relative to another. 
B) changes in real interest rates in one country relative to another. 
C) changes in product preferences between countries. 
D) changes in the relative prices of goods and services within a country.

A depreciation of the U.S. dollar relative to the euro would tend to

If the foreign exchange rate is 70 cents for one Swiss franc, then

The price of one currency in terms off another currency is called

Changes in which of the following will cause a change in exchange rates?

The largest portion of any nation's balance of payments current account is the

The balance of payments is

Current account transactions are all payments that are related to the purchase or sale of

Assume the following exchange rates for today: $1=140 yen and 1 Danish krone = $0.10. We can conclude

All of the following would be considered a current account transaction EXCEPT the

In the market for euros, the demand for euros (€)is

If the Japanese yen depreciates against the U.S. dollar

Caitlin has just decided to order a computer that is made in Japan. She needs to convert U.S. dollars for Japanese yen. This conversion takes place in the

The balance of payments is

If there is an increase in the demand for U.S. automobiles, the

Hypothetical Data for Nation "A" in Billions of Local Currency -Refer to the above table. The overall balance of payments of Nation "A" is

Country X-2015 Transactions (billions of dollars) -In the above table, the fact that there is a minus sign before the number for unilateral transfers means that

The United States was taken off the gold standard by

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

Checking exchange rates, you find $1 equals 0.75 euros. Then the price of 1 euro is

All of the following are market determinants of exchange rates EXCEPT

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

Exam 19: Exchange Rates and the Balance of Payments

A depreciation of the U.S. dollar relative to the euro would tend to

If the foreign exchange rate is 70 cents for one Swiss franc, then

The price of one currency in terms off another currency is called

Changes in which of the following will cause a change in exchange rates?

The largest portion of any nation's balance of payments current account is the

The balance of payments is

Current account transactions are all payments that are related to the purchase or sale of

Assume the following exchange rates for today: $1=140 yen and 1 Danish krone = $0.10. We can conclude

All of the following would be considered a current account transaction EXCEPT the

In the market for euros, the demand for euros (€)is

If the Japanese yen depreciates against the U.S. dollar

Caitlin has just decided to order a computer that is made in Japan. She needs to convert U.S. dollars for Japanese yen. This conversion takes place in the

The balance of payments is

If there is an increase in the demand for U.S. automobiles, the

Hypothetical Data for Nation "A" in Billions of Local Currency -Refer to the above table. The overall balance of payments of Nation "A" is

Country X-2015 Transactions (billions of dollars) -In the above table, the fact that there is a minus sign before the number for unilateral transfers means that

The United States was taken off the gold standard by

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

Checking exchange rates, you find $1 equals 0.75 euros. Then the price of 1 euro is

All of the following are market determinants of exchange rates EXCEPT

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