Exam 9: The Exchange Rate and the Balance of Payments

Component Amount (billions of dollars) Government expenditure, G 700 Net taxes, T 600 Investment, I 350 Savings, S 500 -In the table above,what does the private sector surplus equal?

Suppose the United States initially has a trade deficit.Then U.S.firms increase their imports from Canada,financing that increase by borrowing from Canada.The current account deficit is now ________ and the capital and financial account surplus is now ________.

-In the above figure,suppose the economy is initially at point A.People come to expect the future U.S.exchange rate to be higher.As a result there is a change from point A to a point such as ________.

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 -Using the data in the above table,if the private sector runs a surplus of $250 billion,imports will equal $1,000 billion if

If the exchange rate is above equilibrium,there will be ________ in the foreign exchange market.

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 -Using the data in the above table,suppose imports equals $250 billion and investment equals $1,000 billion.Hence government expenditure equals

-In the figure above,suppose the demand for dollars temporarily decreases so that the demand curve shifts to D₂.To maintain the target exchange rate,the Fed

In the foreign exchange market,a decrease in the exchange rate increases the quantity of dollars supplied.

Which of the following examples definitely illustrates a depreciation of the U.S.dollar?

The current account balance is defined as

Which of the following examples definitely illustrates an appreciation of the U.S.dollar?

Other things remaining the same,the

If people expect the foreign exchange rate for dollars to rise in the future,

The ________ the exchange rate,the ________ are foreign-produced goods and hence the greater the quantity of dollars supplied.

If the government sector is running a deficit of $120 million and the private sector is running a surplus of $200 million,net exports equals a

The larger the value of U.S.imports,the greater the quantity of ________ causing the quantity supplied of dollars to ________.

A country that borrows more from the rest of the world than it lends to it in a year is called a ________,and a country that lends more to the rest of the world than it borrows from it in a year is called a ________.

Of the following,when would the U.S.exchange rate rise the most?

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 exports = $1,150 billion and the private sector runs a surplus of $300 billion,the government sector will run

Saving is S,investment is I,net taxes is NT,government expenditure is G,exports is X,and imports is M.Using these symbols,what is the relationship among the saving,investment,net taxes,government expenditure,exports,and imports?