Question 1

The law of demand for dollars in the foreign exchange market means that the

Accepted Answer

A)  lower the exchange rate, the greater the quantity of dollars demanded. 
B)  higher the exchange rate, the smaller the quantity of dollars demanded. 
C)  lower the exchange rate, the smaller the quantity of U.S. exports demanded. 
D)  Both answers A and B are correct. 
A)  lower the exchange rate, the greater the quantity of dollars demanded. 
B)  higher the exchange rate, the smaller the quantity of dollars demanded. 
C)  lower the exchange rate, the smaller the quantity of U.S. exports demanded. 
D)  Both answers A and B are correct.

Question 2

If imports are $1,200 billion and exports are $1,300 billion,while net interest income and net transfers are zero,what is the current account balance?

Accepted Answer

The current account balance eq

Question 3

When the U.S.government buys aircraft from BAe,a British corporation,it pays for them using

Accepted Answer

A)  euros. 
B)  pounds. 
C)  dollars. 
D)  foreign exchange rates. 
A)  euros. 
B)  pounds. 
C)  dollars. 
D)  foreign exchange rates.

Question 4

A decrease in the expected future exchange rate ________ the demand for U.S.dollars and shifts the demand curve for U.S.dollars ________.

Accepted Answer

A)  increases; rightward 
B)  decreases; rightward 
C)  decreases; leftward 
D)  increases; leftward 
A)  increases; rightward 
B)  decreases; rightward 
C)  decreases; leftward 
D)  increases; leftward

Question 5

Net exports equals

Accepted Answer

A)  exports of goods and services minus imports of goods and services. 
B)  imports of goods and services minus exports of goods and services. 
C)  the government sector balance plus the private sector balance. 
D)  Both answers A and C are correct. 
A)  exports of goods and services minus imports of goods and services. 
B)  imports of goods and services minus exports of goods and services. 
C)  the government sector balance plus the private sector balance. 
D)  Both answers A and C are correct.

Question 6

When there is a current account deficit and the official settlements account equals 0,then

Accepted Answer

A)  exports exceed imports for the country. 
B)  the country is an exporter of capital. 
C)  the capital and financial account has a surplus. 
D)  the country has a budget surplus. 
A)  exports exceed imports for the country. 
B)  the country is an exporter of capital. 
C)  the capital and financial account has a surplus. 
D)  the country has a budget surplus.

Question 7

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar,the dollar has depreciated.

Accepted Answer

A) True 
 B)False

Question 8

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

Accepted Answer

A)  the supply of Mexican pesos will increase. 
B)  the supply of Mexican pesos will decrease. 
C)  the supply of U.S. dollars will increase. 
D)  None of the above answers is correct. 
A)  the supply of Mexican pesos will increase. 
B)  the supply of Mexican pesos will decrease. 
C)  the supply of U.S. dollars will increase. 
D)  None of the above answers is correct.

Question 9

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 1.20 Brazilian reals per dollar,

Accepted Answer

A)  there will be a shortage of dollars. 
B)  $120 billion dollars will be supplied. 
C)  $40 billion dollars will be demanded. 
D)  there will be a surplus of dollars. 
A)  there will be a shortage of dollars. 
B)  $120 billion dollars will be supplied. 
C)  $40 billion dollars will be demanded. 
D)  there will be a surplus of dollars.

Question 10

$$\begin{array} { | l | c | } 
\hline { \text { Item } } & \text { Billions of dollars } \
\hline \text { Exports } & 234 \
\hline \text { Imports } & 277 \
\hline \text { Government } & \
\text { expenditure } & 887 \
\hline \text { Net taxes } & 855 \
\hline \text { Investment } & 760 \
\hline \text { Saving } & 749 \
\hline
\end{array}$$
-The above table gives data for the nation of Sueland.What is the private sector balance?

Accepted Answer

A)  $11 billion 
B)  -$11 billion 
C)  -$43 billion 
D)  $43 billion 
A)  $11 billion 
B)  -$11 billion 
C)  -$43 billion 
D)  $43 billion

Question 11

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 9 yuan,the price of this airplane to China Airlines is

Accepted Answer

A)  855 million yuan. 
B)  85.5 million yuan. 
C)  83.6 million yuan. 
D)  10.6 million yuan. 
A)  855 million yuan. 
B)  85.5 million yuan. 
C)  83.6 million yuan. 
D)  10.6 million yuan.

Question 12

By fixing its exchange rate,China is most likely

Accepted Answer

A)  achieving a low inflation rate by anchoring to the U.S. inflation rate. 
B)  keeping its export prices low. 
C)  making it easier to compete in world markets. 
D)  Both B and C. 
A)  achieving a low inflation rate by anchoring to the U.S. inflation rate. 
B)  keeping its export prices low. 
C)  making it easier to compete in world markets. 
D)  Both B and C.

Question 13

$$\begin{array} { | c | c | } 
\hline{ \text { Item } } & \text { Billions of dollars } \
\hline \text { Exports of goods } & 1000 \
\hline \text { Imports of goods } & - 665 \
\hline \text { Exports of services } & 410 \
\hline \text { Imports of services } & - 590 \
\hline \text { Net interest income } & 0 \
\hline \text { Net transfers } & - 15 \
\hline \text { U.S. investment abroad } & - 600 \
\hline \text { Foreign investment in } \
\text { the United States } & 400 \
\hline \begin{array} { l } 
\text { Official settlements } \
\text { account }
\end{array} & 60 \
\hline
\end{array}$$
-The data in the table above are the U.S.balance of payments.The data show that

Accepted Answer

A)  the United States has a current account surplus. 
B)  the United States has a capital and financial account surplus. 
C)  The United States loaned $400 billion to the rest of the world. 
D)  Both answers A and B are correct. 
A)  the United States has a current account surplus. 
B)  the United States has a capital and financial account surplus. 
C)  The United States loaned $400 billion to the rest of the world. 
D)  Both answers A and B are correct.

Question 14

If people expect the dollar to depreciate,then the

Accepted Answer

A)  demand for dollars will decrease, the supply of dollars will increase, and the exchange rate will fall. 
B)  demand for dollars will decrease, the supply of dollars will not change, and the exchange rate will fall. 
C)  supply of dollars will increase, the demand for dollars will not change, and the exchange rate will fall. 
D)  demand for dollars will increase, the supply of dollars will decrease, and the exchange rate will rise. 
A)  demand for dollars will decrease, the supply of dollars will increase, and the exchange rate will fall. 
B)  demand for dollars will decrease, the supply of dollars will not change, and the exchange rate will fall. 
C)  supply of dollars will increase, the demand for dollars will not change, and the exchange rate will fall. 
D)  demand for dollars will increase, the supply of dollars will decrease, and the exchange rate will rise.

Question 15

As the expected future exchange rate for dollars increases,

Accepted Answer

A)  the demand for U.S. dollars increases. 
B)  the supply of U.S. dollars decreases. 
C)  the U.S. interest rate will fall. 
D)  Both answers A and B are correct. 
A)  the demand for U.S. dollars increases. 
B)  the supply of U.S. dollars decreases. 
C)  the U.S. interest rate will fall. 
D)  Both answers A and B are correct.

Question 16

-In the figure above,the shift in the demand curve for U.S.dollars from D₀ to D₂ could occur when

Accepted Answer

A)  the U.S. interest rate falls. 
B)  the U.S. interest rate rises. 
C)  people expect that the dollar will appreciate. 
D)  foreign interest rates fall. 
A)  the U.S. interest rate falls. 
B)  the U.S. interest rate rises. 
C)  people expect that the dollar will appreciate. 
D)  foreign interest rates fall.

Question 17

"Fluctuations in exchange rates,other things remaining the same,creates a situation in which money buys the same amount of goods and services in different currencies." What does the previous statement describe?
Will these fluctuations occur in the short run or the long run?

Accepted Answer

The statement describes purchasing power

Question 18

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world,the country is a

Accepted Answer

A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation. 
A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation.

Question 19

On www.yodobashi.com,you can buy a Canon EOS camera for 298,000 yen.The same camera costs $2700 on www.calumetphoto.com. If the exchange rate is ________ yen per dollar,we can determine ________ for this camera.

Accepted Answer

A)  92; interest rate parity doesn't occur 
B)  92; purchasing power parity occurs 
C)  110; interest rate parity occurs 
D)  110; purchasing power parity occurs 
A)  92; interest rate parity doesn't occur 
B)  92; purchasing power parity occurs 
C)  110; interest rate parity occurs 
D)  110; purchasing power parity occurs

Question 20

The capital and financial account measures ________.

Accepted Answer

A)  foreign investment in the United States minus U.S. investment abroad 
B)  capital produced outside of the United States minus capital produced inside the United States 
C)  capital used inside the United States but manufactured outside the United States 
D)  capital used outside the United States but manufactured inside the United States 
A)  foreign investment in the United States minus U.S. investment abroad 
B)  capital produced outside of the United States minus capital produced inside the United States 
C)  capital used inside the United States but manufactured outside the United States 
D)  capital used outside the United States but manufactured inside the United States

The law of demand for dollars in the foreign exchange market means that the

If imports are $1,200 billion and exports are $1,300 billion,while net interest income and net transfers are zero,what is the current account balance?

When the U.S.government buys aircraft from BAe,a British corporation,it pays for them using

A decrease in the expected future exchange rate the demand for U.S.dollars and shifts the demand curve for U.S.dollars .

Net exports equals

When there is a current account deficit and the official settlements account equals 0,then

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar,the dollar has depreciated.

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 1.20 Brazilian reals per dollar,

Item Billions of dollars Exports 234 Imports 277 Government expenditure 887 Net taxes 855 Investment 760 Saving 749 -The above table gives data for the nation of Sueland.What is the private sector balance?

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 9 yuan,the price of this airplane to China Airlines is

By fixing its exchange rate,China is most likely

If people expect the dollar to depreciate,then the

As the expected future exchange rate for dollars increases,

-In the figure above,the shift in the demand curve for U.S.dollars from D₀ to D₂ could occur when

"Fluctuations in exchange rates,other things remaining the same,creates a situation in which money buys the same amount of goods and services in different currencies." What does the previous statement describe? Will these fluctuations occur in the short run or the long run?

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world,the country is a

On www.yodobashi.com,you can buy a Canon EOS camera for 298,000 yen.The same camera costs $2700 on www.calumetphoto.com. If the exchange rate is yen per dollar,we can determine for this camera.

The capital and financial account measures ________.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 9: The Exchange Rate and the Balance of Payments

The law of demand for dollars in the foreign exchange market means that the

If imports are $1,200 billion and exports are $1,300 billion,while net interest income and net transfers are zero,what is the current account balance?

When the U.S.government buys aircraft from BAe,a British corporation,it pays for them using

A decrease in the expected future exchange rate ________ the demand for U.S.dollars and shifts the demand curve for U.S.dollars ________.

Net exports equals

When there is a current account deficit and the official settlements account equals 0,then

If the exchange rate falls from 120 yen per dollar to 110 yen per dollar,the dollar has depreciated.

If interest rates in Mexico decrease while the interest rates in the United States remain unchanged then

-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 1.20 Brazilian reals per dollar,

Item Billions of dollars Exports 234 Imports 277 Government expenditure 887 Net taxes 855 Investment 760 Saving 749 -The above table gives data for the nation of Sueland.What is the private sector balance?

Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 9 yuan,the price of this airplane to China Airlines is

By fixing its exchange rate,China is most likely

If people expect the dollar to depreciate,then the

As the expected future exchange rate for dollars increases,

-In the figure above,the shift in the demand curve for U.S.dollars from D₀ to D₂ could occur when

"Fluctuations in exchange rates,other things remaining the same,creates a situation in which money buys the same amount of goods and services in different currencies." What does the previous statement describe? Will these fluctuations occur in the short run or the long run?

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world,the country is a

On www.yodobashi.com,you can buy a Canon EOS camera for 298,000 yen.The same camera costs $2700 on www.calumetphoto.com. If the exchange rate is ________ yen per dollar,we can determine ________ for this camera.

The capital and financial account measures ________.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

A decrease in the expected future exchange rate the demand for U.S.dollars and shifts the demand curve for U.S.dollars .

On www.yodobashi.com,you can buy a Canon EOS camera for 298,000 yen.The same camera costs $2700 on www.calumetphoto.com. If the exchange rate is yen per dollar,we can determine for this camera.