Question 1

The current account is

Accepted Answer

A)  the difference between exports and imports, also taking into account interest payments to and from the rest of the world. 
B)  the amount of money the government keeps on hand to pay its bills taking account of the interest payments on its debt. 
C)  is the amount of tax revenue that the government expects to collect. 
D)  is the total amount of interest payments that the U.S. owes to foreign countries. 
A)  the difference between exports and imports, also taking into account interest payments to and from the rest of the world. 
B)  the amount of money the government keeps on hand to pay its bills taking account of the interest payments on its debt. 
C)  is the amount of tax revenue that the government expects to collect. 
D)  is the total amount of interest payments that the U.S. owes to foreign countries.

Question 2

If the U.S.interest rate differential increases,then in the foreign exchange market the

Accepted Answer

A)  quantity of U.S. dollars supplied increases. 
B)  supply of U.S. dollars decreases. 
C)  demand for U.S. dollars does not change. 
D)  supply of U.S. dollars increases. 
A)  quantity of U.S. dollars supplied increases. 
B)  supply of U.S. dollars decreases. 
C)  demand for U.S. dollars does not change. 
D)  supply of U.S. dollars increases.

Question 3

-In the figure above,the equilibrium exchange rate is: $1 U.S.equals

Accepted Answer

A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above 
A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above

Question 4

"Although the United States is running a large current account deficit,it is still ranked as a major international net lender." Is the previous statement correct or incorrect?
Briefly explain your answer.

Accepted Answer

The statement is incorrect.Aside from ch

Question 5

The largest part of the U.S.current account consists of

Accepted Answer

A)  Fed transfers of U.S. dollars to other central banks. 
B)  net transfer payments between the United States and Mexico. 
C)  receipts from exports and payments for imports. 
D)  net borrowing between the United States and other countries. 
A)  Fed transfers of U.S. dollars to other central banks. 
B)  net transfer payments between the United States and Mexico. 
C)  receipts from exports and payments for imports. 
D)  net borrowing between the United States and other countries.

Question 6

Americans demand Japanese yen in order to

Accepted Answer

A)  buy Japanese products. 
B)  supply American goods in Japanese markets. 
C)  allow the Japanese to buy U.S. products. 
D)  balance the current account. 
A)  buy Japanese products. 
B)  supply American goods in Japanese markets. 
C)  allow the Japanese to buy U.S. products. 
D)  balance the current account.

Question 7

The supply curve of U.S.dollars shifts leftward.This could have been influenced by ________.

Accepted Answer

A)  a rise in the U.S. interest rate differential 
B)  a fall in the expected future exchange rate 
C)  an increase in the U.S. exchange rate 
D)  a decrease in the U.S. exchange rate 
A)  a rise in the U.S. interest rate differential 
B)  a fall in the expected future exchange rate 
C)  an increase in the U.S. exchange rate 
D)  a decrease in the U.S. exchange rate

Question 8

$$\begin{array} { | c | c | } 
\hline \text { Investor } & \begin{array} { c } 
\text { Expected future value of a } \
\text { dollar (francs per dollar) }
\end{array} \
\hline \text { Investor A } & 120 \
\hline \text { Investor B } & 100 \
\hline \text { Investor C } & 85 \
\hline
\end{array}$$
-Using the table above,if the current market value of the dollar is 125 francs,

Accepted Answer

A)  investor A holds dollars, but B and C hold francs. 
B)  investor A holds francs, but B and C hold dollars. 
C)  all three investors hold francs. 
D)  all three investors hold dollars. 
A)  investor A holds dollars, but B and C hold francs. 
B)  investor A holds francs, but B and C hold dollars. 
C)  all three investors hold francs. 
D)  all three investors hold dollars.

Question 9

Define net borrower,net lender,creditor nation,and debtor nation.Discuss the difference between a net borrower and a debtor nation.

Accepted Answer

A country that is borrowing more from th

Question 10

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

Accepted Answer

A)  increase the U.S. interest rate differential. 
B)  increase the demand for pounds. 
C)  shift the demand curve for dollars rightward. 
D)  Both answers A and C are correct. 
A)  increase the U.S. interest rate differential. 
B)  increase the demand for pounds. 
C)  shift the demand curve for dollars rightward. 
D)  Both answers A and C are correct.

Question 11

Which of the following will lead to a depreciation of the dollar against the British pound?

Accepted Answer

A)  an increase in British demand for U.S. imports 
B)  an increase in U.S. interest rates 
C)  a decrease in British demand for U.S. assets 
D)  a decrease in U.S. demand for British goods 
A)  an increase in British demand for U.S. imports 
B)  an increase in U.S. interest rates 
C)  a decrease in British demand for U.S. assets 
D)  a decrease in U.S. demand for British goods

Question 12

If the U.S.current account balance is -$500 billion and the capital and financial account balance is +$510 billion,

Accepted Answer

A)  the U.S. official settlements account balance is $10 billion. 
B)  the U.S. government's holdings of foreign currency increases by $10 billion. 
C)  foreign investment in the United States is smaller than the U.S. investment abroad. 
D)  U.S. exports are greater than U.S. imports. 
A)  the U.S. official settlements account balance is $10 billion. 
B)  the U.S. government's holdings of foreign currency increases by $10 billion. 
C)  foreign investment in the United States is smaller than the U.S. investment abroad. 
D)  U.S. exports are greater than U.S. imports.

Question 13

A net borrower is a country that ________,while a net lender is a country that ________.

Accepted Answer

A)  borrows more than it lends; owes more to foreigners than foreigners owe to it 
B)  decreases its stock of outstanding foreign debt; lends more than it borrows 
C)  borrows more than it lends; lends more than it borrows 
D)  lends more than it borrows; borrows more than it lends 
A)  borrows more than it lends; owes more to foreigners than foreigners owe to it 
B)  decreases its stock of outstanding foreign debt; lends more than it borrows 
C)  borrows more than it lends; lends more than it borrows 
D)  lends more than it borrows; borrows more than it lends

Question 14

In the foreign exchange market,a change in which of the following will result in a movement along the demand curve for U.S.dollars?

Accepted Answer

A)  the exchange rate 
B)  the U.S. interest rate 
C)  the interest rate in the foreign country 
D)  the expected future exchange rate 
A)  the exchange rate 
B)  the U.S. interest rate 
C)  the interest rate in the foreign country 
D)  the expected future exchange rate

Question 15

The law of demand in the foreign exchange market refers to the relationship between the

Accepted Answer

A)  exchange rate and the quantity of U.S. dollars demanded 
B)  interest rate and the exchange rate 
C)  interest rate and the quantity of U.S. dollars demanded 
D)  U.S. price level and the exchange rate 
A)  exchange rate and the quantity of U.S. dollars demanded 
B)  interest rate and the exchange rate 
C)  interest rate and the quantity of U.S. dollars demanded 
D)  U.S. price level and the exchange rate

Question 16

Hong Kong has imports of $1,130 billion and exports of $1,255 billion.Hong Kong definitely has ________.

Accepted Answer

A)  negative net exports of $125 billion 
B)  positive net exports of $125 billion 
C)  a government budget surplus 
D)  Both answers B and C are correct. 
A)  negative net exports of $125 billion 
B)  positive net exports of $125 billion 
C)  a government budget surplus 
D)  Both answers B and C are correct.

Question 17

If the current account has a negative balance of $100 and the capital and financial account has a positive balance of $80,there will be ________ in official reserves of ________.

Accepted Answer

A)  a decrease; $20 
B)  an increase; $20 
C)  an increase; $180 
D)  a decrease; $180 
A)  a decrease; $20 
B)  an increase; $20 
C)  an increase; $180 
D)  a decrease; $180

Question 18

When a good is imported into the United States,there is created a

Accepted Answer

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

Question 19

How does the Fed intervene in the foreign exchange market and what the effects are of the Fed's actions?

Accepted Answer

The Fed intervenes in the foreign exchan

Question 20

Suppose that the price of an identical sport-utility vehicle is $32,000 in U.S.dollars in the United States and $32,000 in Canadian dollars in Canada.Suppose in addition that the exchange rate between Canada and the United States is one Canadian dollar equals $0.75 U.S.dollar.Based on this information what will happen to the exchange rate between the United States and Canada?

Accepted Answer

A)  The value of the U.S. dollar will fall as U.S. residents purchase SUVs in Canada. 
B)  The value of the Canadian dollar will fall as Canadians purchase SUVs in the United States. 
C)  The exchange rate will stay the same because purchasing power parity already holds. 
D)  The value of the Canadian dollar will fall because Canadian prices are lower than U.S. prices. 
A)  The value of the U.S. dollar will fall as U.S. residents purchase SUVs in Canada. 
B)  The value of the Canadian dollar will fall as Canadians purchase SUVs in the United States. 
C)  The exchange rate will stay the same because purchasing power parity already holds. 
D)  The value of the Canadian dollar will fall because Canadian prices are lower than U.S. prices.

The current account is

If the U.S.interest rate differential increases,then in the foreign exchange market the

-In the figure above,the equilibrium exchange rate is: $1 U.S.equals

"Although the United States is running a large current account deficit,it is still ranked as a major international net lender." Is the previous statement correct or incorrect? Briefly explain your answer.

The largest part of the U.S.current account consists of

Americans demand Japanese yen in order to

The supply curve of U.S.dollars shifts leftward.This could have been influenced by ________.

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 125 francs,

Define net borrower,net lender,creditor nation,and debtor nation.Discuss the difference between a net borrower and a debtor nation.

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

Which of the following will lead to a depreciation of the dollar against the British pound?

If the U.S.current account balance is -$500 billion and the capital and financial account balance is +$510 billion,

A net borrower is a country that ,while a net lender is a country that .

In the foreign exchange market,a change in which of the following will result in a movement along the demand curve for U.S.dollars?

The law of demand in the foreign exchange market refers to the relationship between the

Hong Kong has imports of $1,130 billion and exports of $1,255 billion.Hong Kong definitely has ________.

If the current account has a negative balance of $100 and the capital and financial account has a positive balance of $80,there will be in official reserves of .

When a good is imported into the United States,there is created a

How does the Fed intervene in the foreign exchange market and what the effects are of the Fed's actions?

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 current account is

If the U.S.interest rate differential increases,then in the foreign exchange market the

-In the figure above,the equilibrium exchange rate is: $1 U.S.equals

"Although the United States is running a large current account deficit,it is still ranked as a major international net lender." Is the previous statement correct or incorrect? Briefly explain your answer.

The largest part of the U.S.current account consists of

Americans demand Japanese yen in order to

The supply curve of U.S.dollars shifts leftward.This could have been influenced by ________.

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 125 francs,

Define net borrower,net lender,creditor nation,and debtor nation.Discuss the difference between a net borrower and a debtor nation.

An increase in the interest rate in the United States compared to the interest rate in Great Britain will

Which of the following will lead to a depreciation of the dollar against the British pound?

If the U.S.current account balance is -$500 billion and the capital and financial account balance is +$510 billion,

A net borrower is a country that ________,while a net lender is a country that ________.

In the foreign exchange market,a change in which of the following will result in a movement along the demand curve for U.S.dollars?

The law of demand in the foreign exchange market refers to the relationship between the

Hong Kong has imports of $1,130 billion and exports of $1,255 billion.Hong Kong definitely has ________.

If the current account has a negative balance of $100 and the capital and financial account has a positive balance of $80,there will be ________ in official reserves of ________.

When a good is imported into the United States,there is created a

How does the Fed intervene in the foreign exchange market and what the effects are of the Fed's actions?

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 net borrower is a country that ,while a net lender is a country that .

If the current account has a negative balance of $100 and the capital and financial account has a positive balance of $80,there will be in official reserves of .