Question 1

A decrease in the value of a currency in terms of other currencies is known as

Accepted Answer

A)  an appreciation. 
B)  a depreciation. 
C)  a par value. 
D)  a gold point. 
A)  an appreciation. 
B)  a depreciation. 
C)  a par value. 
D)  a gold point.

Question 2

U.S.official reserves are the ________.

Accepted Answer

A)  reserves of U.S. dollars held by the World Bank 
B)  U.S. government's holdings of foreign currency 
C)  reserves of U.S. dollars held by foreign banks 
D)  holdings of foreign currency by the public and the banks 
A)  reserves of U.S. dollars held by the World Bank 
B)  U.S. government's holdings of foreign currency 
C)  reserves of U.S. dollars held by foreign banks 
D)  holdings of foreign currency by the public and the banks

Question 3

In the foreign exchange market,the higher the dollar's exchange rate,the

Accepted Answer

A)  larger the supply of dollars. 
B)  smaller the quantity supplied of dollars. 
C)  smaller the supply of dollars. 
D)  larger the quantity supplied of dollars. 
A)  larger the supply of dollars. 
B)  smaller the quantity supplied of dollars. 
C)  smaller the supply of dollars. 
D)  larger the quantity supplied of dollars.

Question 4

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

Accepted Answer

Changes in the expected future exchange

Question 5

The supply of dollars in the foreign exchange market decreases and that the supply curve shifts leftward if

Accepted Answer

A)  the U.S. interest rate differential decreases. 
B)  the expected future exchange rate rises. 
C)  the exchange rate for the dollar rises. 
D)  All of the above are correct. 
A)  the U.S. interest rate differential decreases. 
B)  the expected future exchange rate rises. 
C)  the exchange rate for the dollar rises. 
D)  All of the above are correct.

Question 6

An increase in the value of a domestic currency in terms of other currencies is known as

Accepted Answer

A)  an appreciation. 
B)  a depreciation. 
C)  a flexible exchange rate. 
D)  a term not given in the above answers. 
A)  an appreciation. 
B)  a depreciation. 
C)  a flexible exchange rate. 
D)  a term not given in the above answers.

Question 7

As the expected profit from holding dollars ________,the quantity of ________.

Accepted Answer

A)  increases; dollars demanded increases 
B)  increases; dollars demanded decreases 
C)  decrease; foreign currency demanded decreases 
D)  None of the above answers is correct. 
A)  increases; dollars demanded increases 
B)  increases; dollars demanded decreases 
C)  decrease; foreign currency demanded decreases 
D)  None of the above answers is correct.

Question 8

Today,the dollar is worth 1.15 euros.Due to changes in economic conditions,in one month people come to expect the dollar will be worth 1.20 euros.This belief

Accepted Answer

A)  increases the demand for dollars. 
B)  decreases the demand for dollars. 
C)  increases the demand for euros. 
D)  increases the value of exports to Europe. 
A)  increases the demand for dollars. 
B)  decreases the demand for dollars. 
C)  increases the demand for euros. 
D)  increases the value of exports to Europe.

Question 9

The current account records foreign investment in the United States minus U.S.investment abroad.

Accepted Answer

A) True 
 B)False

Question 10

All of the following are a current account transaction EXCEPT

Accepted Answer

A)  importing services. 
B)  exporting goods. 
C)  investing abroad. 
D)  importing goods. 
A)  importing services. 
B)  exporting goods. 
C)  investing abroad. 
D)  importing goods.

Question 11

An increase in the Japanese interest rate will ________ the demand for dollars and lead the dollar to ________.

Accepted Answer

A)  increase; appreciate 
B)  increase; depreciate 
C)  decrease; appreciate 
D)  decrease; depreciate 
A)  increase; appreciate 
B)  increase; depreciate 
C)  decrease; appreciate 
D)  decrease; depreciate

Question 12

When we export goods to foreign countries,we

Accepted Answer

A)  receive payments from the rest of the world. 
B)  make payments to the rest of the world. 
C)  increase our inflation rate. 
D)  decrease our inflation rate. 
A)  receive payments from the rest of the world. 
B)  make payments to the rest of the world. 
C)  increase our inflation rate. 
D)  decrease our inflation rate.

Question 13

If the current account balance is $30 billion,and the capital and financial account balance is $35 billion,then the official settlements account balance is ________ billion,and the official reserves ________.

Accepted Answer

A)  $5 billion; increase 
B)  -$5 billion; increase 
C)  $5 billion; decrease 
D)  -$5 billion; decrease 
A)  $5 billion; increase 
B)  -$5 billion; increase 
C)  $5 billion; decrease 
D)  -$5 billion; decrease

Question 14

To pay for a current account deficit,a country can

Accepted Answer

A)  borrow money from abroad 
B)  lend money abroad 
C)  increase official reserves to cover the shortfall 
D)  transfer money from the capital account to the official settlements account 
A)  borrow money from abroad 
B)  lend money abroad 
C)  increase official reserves to cover the shortfall 
D)  transfer money from the capital account to the official settlements account

Question 15

If the target exchange rate is 100 yen per dollar and the current exchange rate is 90 yen per dollar,the Fed will

Accepted Answer

A)  sell dollars and the demand for dollars will increase. 
B)  sell dollars and the demand for dollars will decrease. 
C)  buy dollars and the demand for dollars will increase. 
D)  buy dollars and the demand for dollars will decrease. 
A)  sell dollars and the demand for dollars will increase. 
B)  sell dollars and the demand for dollars will decrease. 
C)  buy dollars and the demand for dollars will increase. 
D)  buy dollars and the demand for dollars will decrease.

Question 16

The European Commission believes that 2012 exports of goods and services from Spain will be 22 larger than in 2009.Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant,

Accepted Answer

A)  the current account balance in both countries will become more positive. 
B)  the current account balance in both countries will become more negative. 
C)  there will be no change in the current account balance of both countries. 
D)  in both countries the capital and financial account balance will become more positive. 
A)  the current account balance in both countries will become more positive. 
B)  the current account balance in both countries will become more negative. 
C)  there will be no change in the current account balance of both countries. 
D)  in both countries the capital and financial account balance will become more positive.

Question 17

Other things remaining the same,if the expected future exchange rate rises,the demand curve for U.S.dollars shifts ________ and the supply curve of U.S.dollars shifts ________.

Accepted Answer

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

Question 18

The Federal Reserve can influence the exchange rate by

Accepted Answer

A)  changing interest rates. 
B)  buying or selling dollars. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct 
A)  changing interest rates. 
B)  buying or selling dollars. 
C)  Both answers A and B are correct. 
D)  None of the above answers is correct

Question 19

If a nation's central bank increased domestic interest rates,the nation's exchange rate would change if the country's exchange rate was a

Accepted Answer

A)  a flexible exchange rate. 
B)  a fixed exchange rate. 
C)  a crawling peg. 
D)  a nominally fixed exchange rate. 
A)  a flexible exchange rate. 
B)  a fixed exchange rate. 
C)  a crawling peg. 
D)  a nominally fixed exchange rate.

Question 20

The lower the exchange rate,the cheaper are foreign-produced goods and services.

Accepted Answer

A) True 
 B)False

A decrease in the value of a currency in terms of other currencies is known as

U.S.official reserves are the ________.

In the foreign exchange market,the higher the dollar's exchange rate,the

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

The supply of dollars in the foreign exchange market decreases and that the supply curve shifts leftward if

An increase in the value of a domestic currency in terms of other currencies is known as

As the expected profit from holding dollars ,the quantity of .

Today,the dollar is worth 1.15 euros.Due to changes in economic conditions,in one month people come to expect the dollar will be worth 1.20 euros.This belief

The current account records foreign investment in the United States minus U.S.investment abroad.

All of the following are a current account transaction EXCEPT

An increase in the Japanese interest rate will the demand for dollars and lead the dollar to .

When we export goods to foreign countries,we

If the current account balance is $30 billion,and the capital and financial account balance is $35 billion,then the official settlements account balance is billion,and the official reserves .

To pay for a current account deficit,a country can

If the target exchange rate is 100 yen per dollar and the current exchange rate is 90 yen per dollar,the Fed will

The European Commission believes that 2012 exports of goods and services from Spain will be 22 larger than in 2009.Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant,

Other things remaining the same,if the expected future exchange rate rises,the demand curve for U.S.dollars shifts and the supply curve of U.S.dollars shifts .

The Federal Reserve can influence the exchange rate by

If a nation's central bank increased domestic interest rates,the nation's exchange rate would change if the country's exchange rate was a

The lower the exchange rate,the cheaper are foreign-produced goods and services.

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

A decrease in the value of a currency in terms of other currencies is known as

U.S.official reserves are the ________.

In the foreign exchange market,the higher the dollar's exchange rate,the

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

The supply of dollars in the foreign exchange market decreases and that the supply curve shifts leftward if

An increase in the value of a domestic currency in terms of other currencies is known as

As the expected profit from holding dollars ________,the quantity of ________.

Today,the dollar is worth 1.15 euros.Due to changes in economic conditions,in one month people come to expect the dollar will be worth 1.20 euros.This belief

The current account records foreign investment in the United States minus U.S.investment abroad.

All of the following are a current account transaction EXCEPT

An increase in the Japanese interest rate will ________ the demand for dollars and lead the dollar to ________.

When we export goods to foreign countries,we

If the current account balance is $30 billion,and the capital and financial account balance is $35 billion,then the official settlements account balance is ________ billion,and the official reserves ________.

To pay for a current account deficit,a country can

If the target exchange rate is 100 yen per dollar and the current exchange rate is 90 yen per dollar,the Fed will

The European Commission believes that 2012 exports of goods and services from Spain will be 22 larger than in 2009.Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant,

Other things remaining the same,if the expected future exchange rate rises,the demand curve for U.S.dollars shifts ________ and the supply curve of U.S.dollars shifts ________.

The Federal Reserve can influence the exchange rate by

If a nation's central bank increased domestic interest rates,the nation's exchange rate would change if the country's exchange rate was a

The lower the exchange rate,the cheaper are foreign-produced goods and services.

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

As the expected profit from holding dollars ,the quantity of .

An increase in the Japanese interest rate will the demand for dollars and lead the dollar to .

If the current account balance is $30 billion,and the capital and financial account balance is $35 billion,then the official settlements account balance is billion,and the official reserves .

Other things remaining the same,if the expected future exchange rate rises,the demand curve for U.S.dollars shifts and the supply curve of U.S.dollars shifts .