Exam 9: The Exchange Rate and the Balance of Payments

-Using the above figure,an increase in the demand for Dutch goods by U.S.consumers will lead to

With everything else the same,which of the following would increase the demand for U.S.dollars in the foreign exchange market? I. a rise in the U.S.interest rate II. a fall in interest rates in foreign countries III. a rise in the expected future exchange rate

Item Billions of dollars Exports of goods and services, X 500 Imports of goods and services, M Net taxes, T 750 Government expenditure, G Saving, S 1,000 Investment, I -In the above table,suppose imports = $750 billion and government expenditures = $1,000 billion.Hence investment equals

If the pound-dollar exchange rate changes from £0.60 per dollar to £0.65 per dollar,then the pound has ________ against the dollar and the dollar has ________ against the pound.

"If the official settlements balance is zero,a current account surplus must equal the capital account deficit." Is the previous statement correct or incorrect? Briefly explain your answer.

Item Billions of dollars Exports of goods and services, X Imports of goods and services, M 1,000 Net taxes, T Government expenditure, G 1,300 Saving, S Investment, I 650 -Using the data in the above table,if saving equals $650 billion and exports are greater than imports,

Suppose the exchange rate between the U.S.dollar and the French franc is 0.25 francs per dollar.If a television sells for 100 francs in France,what is the dollar price of the television set?

In the foreign exchange market,how does a change in the expected future U.S.exchange rate affect the demand for dollars?

The demand for dollars in the foreign exchange market will increase (so that the demand curve shifts rightward) if

In the foreign exchange market,if the demand for dollars permanently decreases,the Fed can maintain the exchange rate at its old equilibrium level indefinitely by buying dollars.

If the value of a dollar rises in terms of yen,the dollar has ________ and the yen has ________.

-Using the above figure,which of the following is correct?

Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar.Then the yen has

Suppose that a dollar buys 120 yen.If a VCR sells for 18,600 yen in Japan,the price of the VCR in dollars is ________.

Investor Expected future value of a dollar (francs per dollar) Investor A 120 Investor B 100 Investor C 85 -Using the table above,if the current market value of the dollar is 70 francs,

Currency 2007 exchange rate (per U.S. dollar) 2008 exchange rate (per U.S. dollar) Euro 0.9954 1.0747 Tapanese yen 102.20 114.90 Canadian dollar 1.44 1.50 -The table above shows the exchange rates between various currencies and the U.S.dollar.Between 2007 and 2008,the Japanese yen ________ against the U.S dollar and the euro ________ against the U.S.dollar.

Consider the market for dollars.The higher the exchange rate,the ________ is the expected profit from holding foreign currency and the greater is the ________.

Which of the following exchange rate policies uses a target exchange rate,but allows the target to change?

In late 2010 the National Bank of Australia offered a 4 percent interest rate on a savings account while Bank of America offered 2 percent. This difference means that

As the exchange rate ________,the ________ is the value of U.S.________.