Question 1

If the interest rate on Swiss franc assets increases while interest rates in the United States remain constant,the

Accepted Answer

A)  quantity of dollars demanded will decrease. 
B)  demand for dollars will increase. 
C)  demand for dollars will decrease. 
D)  quantity of dollars demanded will increase. 
A)  quantity of dollars demanded will decrease. 
B)  demand for dollars will increase. 
C)  demand for dollars will decrease. 
D)  quantity of dollars demanded will increase.

Question 2

Suppose $1 buys 1.20 euros in January and 1.10 euros in the following December.As a result,

Accepted Answer

A)  the dollar has appreciated. 
B)  the euro has appreciated. 
C)  the euro has depreciated. 
D)  U.S. exports have increased. 
A)  the dollar has appreciated. 
B)  the euro has appreciated. 
C)  the euro has depreciated. 
D)  U.S. exports have increased.

Question 3

Which of the following creates a demand for U.S.dollars?

Accepted Answer

A)  Toyota, a Japanese firm, purchasing land in Texas 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  a U.S. tourist catching a show in London 
D)  a Japanese tourist catching a show in London 
A)  Toyota, a Japanese firm, purchasing land in Texas 
B)  a U.S. restaurant purchasing Mexican tomatoes 
C)  a U.S. tourist catching a show in London 
D)  a Japanese tourist catching a show in London

Question 4

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

Accepted Answer

A)  $43 billion 
B)  $234 billion 
C)  -$43 billion 
D)  $511 billion 
A)  $43 billion 
B)  $234 billion 
C)  -$43 billion 
D)  $511 billion

Question 5

Suppose the current exchange rate between the Chinese yuan and the United States dollar is 7 yuan per dollar.If the Fed sought to drive up the exchange rate to 8 yuan per dollar then it would

Accepted Answer

A)  buy dollars. 
B)  sell dollars. 
C)  buy yuan. 
D)  sell dollars and buy yuan. 
A)  buy dollars. 
B)  sell dollars. 
C)  buy yuan. 
D)  sell dollars and buy yuan.

Question 6

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.Does purchasing power parity hold for SUVs between the United States and Canada?

Accepted Answer

A)  Yes, because SUVs have the same price in each local currency. 
B)  No, because SUVs are more expensive in Canada than the United States. 
C)  No, because SUVs are more expensive in the United States than in Canada. 
D)  Without knowing interest rates, we can't say. 
A)  Yes, because SUVs have the same price in each local currency. 
B)  No, because SUVs are more expensive in Canada than the United States. 
C)  No, because SUVs are more expensive in the United States than in Canada. 
D)  Without knowing interest rates, we can't say.

Question 7

What factors can change expectations about the exchange rate?

Accepted Answer

A)  interest rate parity 
B)  purchasing power parity 
C)  real GDP parity 
D)  Both answers A and B are correct. 
A)  interest rate parity 
B)  purchasing power parity 
C)  real GDP parity 
D)  Both answers A and B are correct.

Question 8

The account that records changes in the U.S.government's holdings of foreign currency is the

Accepted Answer

A)  capital and financial account. 
B)  official settlements account. 
C)  current account. 
D)  U.S. official reserves account. 
A)  capital and financial account. 
B)  official settlements account. 
C)  current account. 
D)  U.S. official reserves account.

Question 9

-In the figure above,suppose the economy is initially at point B.If people come to believe that the exchange rate will fall in the future,the supply of dollars ________ and the market moves to point such as ________.

Accepted Answer

A)  decreases; A 
B)  decreases; E 
C)  increases; D 
D)  increases; C 
A)  decreases; A 
B)  decreases; E 
C)  increases; D 
D)  increases; C

Question 10

$$\begin{array} { | l | c | } 
\hline { \text { Item } } & \text { Billions of bonts } \
\hline \text { GDP } & 320 \
\hline \text { Consumption expenditure } & 200 \
\hline \text { Government expenditure on } & 60 \
\text { goods and services } & \
\hline \text { Investment } &80  \
\hline \text { Exports of goods and services } &  40 \
\hline \text { Government budget deficit } &25 \
\hline
\end{array}$$

-The table above shows some data for Wiland,a country whose currency is the bont.The official settlement balance,net interest income,and net transfers from abroad are zero.
a) What is Wiland's imports of goods and services?
b) What is Wiland's current account balance?
c) What is Wiland's capital account balance?
d) What is Wiland's net taxes?
e) What is Wiland's private sector balance?

Accepted Answer

a)The country's net exports are GDP minu

Question 11

The U.S.dollar will depreciate in value if

Accepted Answer

A)  the demand for the dollar increases. 
B)  the demand for the dollar decreases. 
C)  the supply of foreign exchange decreases. 
D)  U.S. citizens choose to buy fewer foreign goods. 
A)  the demand for the dollar increases. 
B)  the demand for the dollar decreases. 
C)  the supply of foreign exchange decreases. 
D)  U.S. citizens choose to buy fewer foreign goods.

Question 12

If the demand for a country's currency increases,the currency

Accepted Answer

A)  appreciates. 
B)  depreciates. 
C)  stays the same. 
D)  could either appreciate, depreciate, or stay the same. 
A)  appreciates. 
B)  depreciates. 
C)  stays the same. 
D)  could either appreciate, depreciate, or stay the same.

Question 13

U.S.residents come to believe that the dollar will depreciate in the future,that is,the exchange rate in the future will be lower than the current exchange rate.As a result,

Accepted Answer

A)  the demand curve for dollars shifts rightward. 
B)  the demand curve for dollars shifts leftward. 
C)  there is a movement upward along the demand curve for dollars. 
D)  None of the above answers are correct. 
A)  the demand curve for dollars shifts rightward. 
B)  the demand curve for dollars shifts leftward. 
C)  there is a movement upward along the demand curve for dollars. 
D)  None of the above answers are correct.

Question 14

What is a "debtor nation?
" Is the United States a debtor nation?

Accepted Answer

A debtor nation is a country that during

Question 15

7 Numeric and Graphing Questions
  
-In the figure above,illustrate the effect of an increase in the U.S.interest rate.What is the effect on the exchange rate?

Accepted Answer

@#IMG-DLM& The figure above shows the effect of th

Question 16

If a country is importing more than they are exporting,the current account will have a ________ balance and the capital and financial account will have a ________ balance.

Accepted Answer

A)  negative; positive 
B)  negative; negative 
C)  positive; negative 
D)  positive; positive 
A)  negative; positive 
B)  negative; negative 
C)  positive; negative 
D)  positive; positive

Question 17

The higher the exchange rate today,the

Accepted Answer

A)  smaller is the expected profit from buying U.S. dollars today and holding them. 
B)  greater is the expected profit from buying U.S. dollars today and holding them. 
C)  smaller is the expected profit from buying foreign currency today and holding it. 
D)  greater the quantity of U.S. dollars demanded in the foreign exchange market today. 
A)  smaller is the expected profit from buying U.S. dollars today and holding them. 
B)  greater is the expected profit from buying U.S. dollars today and holding them. 
C)  smaller is the expected profit from buying foreign currency today and holding it. 
D)  greater the quantity of U.S. dollars demanded in the foreign exchange market today.

Question 18

The idea that the value of money is equal across countries is known as

Accepted Answer

A)  interest rate parity. 
B)  the expected profit parity effect. 
C)  purchasing power parity. 
D)  exchange rate parity. 
A)  interest rate parity. 
B)  the expected profit parity effect. 
C)  purchasing power parity. 
D)  exchange rate parity.

Question 19

A net exports deficit or surplus equals

Accepted Answer

A)  taxes minus savings plus public and private investment. 
B)  the government sector balance plus the private sector balance. 
C)  net lending by both the private and public sector plus savings minus investment. 
D)  net worth plus the government sector balance minus the private sector balance. 
A)  taxes minus savings plus public and private investment. 
B)  the government sector balance plus the private sector balance. 
C)  net lending by both the private and public sector plus savings minus investment. 
D)  net worth plus the government sector balance minus the private sector balance.

Question 20

China has used a fixed yuan exchange rate and a crawling peg exchange rate.In both cases,China pegs its currency to the

Accepted Answer

A)  U.S. dollar 
B)  Japanese yen 
C)  euro 
D)  Mexican peso 
A)  U.S. dollar 
B)  Japanese yen 
C)  euro 
D)  Mexican peso

If the interest rate on Swiss franc assets increases while interest rates in the United States remain constant,the

Suppose $1 buys 1.20 euros in January and 1.10 euros in the following December.As a result,

Which of the following creates a demand for U.S.dollars?

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 value of net exports?

Suppose the current exchange rate between the Chinese yuan and the United States dollar is 7 yuan per dollar.If the Fed sought to drive up the exchange rate to 8 yuan per dollar then it would

What factors can change expectations about the exchange rate?

The account that records changes in the U.S.government's holdings of foreign currency is the

-In the figure above,suppose the economy is initially at point B.If people come to believe that the exchange rate will fall in the future,the supply of dollars and the market moves to point such as .

The U.S.dollar will depreciate in value if

If the demand for a country's currency increases,the currency

U.S.residents come to believe that the dollar will depreciate in the future,that is,the exchange rate in the future will be lower than the current exchange rate.As a result,

What is a "debtor nation? " Is the United States a debtor nation?

7 Numeric and Graphing Questions -In the figure above,illustrate the effect of an increase in the U.S.interest rate.What is the effect on the exchange rate?

If a country is importing more than they are exporting,the current account will have a balance and the capital and financial account will have a balance.

The higher the exchange rate today,the

The idea that the value of money is equal across countries is known as

A net exports deficit or surplus equals

China has used a fixed yuan exchange rate and a crawling peg exchange rate.In both cases,China pegs its currency to the

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

If the interest rate on Swiss franc assets increases while interest rates in the United States remain constant,the

Suppose $1 buys 1.20 euros in January and 1.10 euros in the following December.As a result,

Which of the following creates a demand for U.S.dollars?

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 value of net exports?

Suppose the current exchange rate between the Chinese yuan and the United States dollar is 7 yuan per dollar.If the Fed sought to drive up the exchange rate to 8 yuan per dollar then it would

What factors can change expectations about the exchange rate?

The account that records changes in the U.S.government's holdings of foreign currency is the

-In the figure above,suppose the economy is initially at point B.If people come to believe that the exchange rate will fall in the future,the supply of dollars ________ and the market moves to point such as ________.

The U.S.dollar will depreciate in value if

If the demand for a country's currency increases,the currency

U.S.residents come to believe that the dollar will depreciate in the future,that is,the exchange rate in the future will be lower than the current exchange rate.As a result,

What is a "debtor nation? " Is the United States a debtor nation?

7 Numeric and Graphing Questions -In the figure above,illustrate the effect of an increase in the U.S.interest rate.What is the effect on the exchange rate?

If a country is importing more than they are exporting,the current account will have a ________ balance and the capital and financial account will have a ________ balance.

The higher the exchange rate today,the

The idea that the value of money is equal across countries is known as

A net exports deficit or surplus equals

China has used a fixed yuan exchange rate and a crawling peg exchange rate.In both cases,China pegs its currency to the

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

-In the figure above,suppose the economy is initially at point B.If people come to believe that the exchange rate will fall in the future,the supply of dollars and the market moves to point such as .

If a country is importing more than they are exporting,the current account will have a balance and the capital and financial account will have a balance.