Question 1

Ceteris paribus,if the U.S.dollar depreciated in relation to the Canadian dollar,which of the following would be true?

Accepted Answer

A)  U.S. goods would become less expensive to Canadian consumers. 
B)  Canadian goods would become more expensive to Canadian consumers. 
C)  U.S. goods would become less expensive to European consumers. 
D)  all of the above 
A)  U.S. goods would become less expensive to Canadian consumers. 
B)  Canadian goods would become more expensive to Canadian consumers. 
C)  U.S. goods would become less expensive to European consumers. 
D)  all of the above

Question 2

If Americans decide to buy more South African diamonds,what is the effect in the exchange market?

Accepted Answer

A)  It will increase the supply of U.S. dollars. 
B)  It will decrease the supply of U.S. dollars. 
C)  It will increase the demand for U.S. dollars. 
D)  It will decrease the demand for U.S. dollars. 
A)  It will increase the supply of U.S. dollars. 
B)  It will decrease the supply of U.S. dollars. 
C)  It will increase the demand for U.S. dollars. 
D)  It will decrease the demand for U.S. dollars.

Question 3

If the United States purchases oil from Kuwait,what is the effect in the exchange market?

Accepted Answer

A)  It will increase the supply of U.S. dollars. 
B)  It will decrease the supply of U.S. dollars. 
C)  It will increase the demand for U.S. dollars. 
D)  It will decrease the demand for U.S. dollars. 
A)  It will increase the supply of U.S. dollars. 
B)  It will decrease the supply of U.S. dollars. 
C)  It will increase the demand for U.S. dollars. 
D)  It will decrease the demand for U.S. dollars.

Question 4

A country would tend to experience currency depreciation relative to other countries if:

Accepted Answer

A)  the profitability of investments in other countries increases relative to that country. 
B)  people in the foreign currency markets expect the value of the currency to fall in the near future. 
C)  the foreign demand for its exports decreases. 
D)  any of the above occurs. 
A)  the profitability of investments in other countries increases relative to that country. 
B)  people in the foreign currency markets expect the value of the currency to fall in the near future. 
C)  the foreign demand for its exports decreases. 
D)  any of the above occurs.

Question 5

Which of the following is true?

Accepted Answer

A)  Items that supply the nation's currency to the foreign exchange market are recorded as credits in the nation's balance of payments accounts. 
B)  Items that create a demand for the nation's currency in the foreign exchange market are recorded as debits in the nation's balance of payments accounts. 
C)  The purchase of a BMW from a German automaker by a U.S. college professor would be recorded as a debit in the U.S. balance of payments accounts. 
D)  Both a. and b. are correct. 
A)  Items that supply the nation's currency to the foreign exchange market are recorded as credits in the nation's balance of payments accounts. 
B)  Items that create a demand for the nation's currency in the foreign exchange market are recorded as debits in the nation's balance of payments accounts. 
C)  The purchase of a BMW from a German automaker by a U.S. college professor would be recorded as a debit in the U.S. balance of payments accounts. 
D)  Both a. and b. are correct.

Question 6

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,exports of U.S.goods to Britain will tend to:

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  change in an indeterminate direction. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  change in an indeterminate direction.

Question 7

Deficits and surpluses in the balance of payments are eliminated by ____ in a pure flexible exchange rate system.

Accepted Answer

A)  the market mechanism 
B)  financial borrowings 
C)  reserve movements 
D)  changes in fiscal and monetary policies 
A)  the market mechanism 
B)  financial borrowings 
C)  reserve movements 
D)  changes in fiscal and monetary policies

Question 8

A decrease in tastes for European goods in the U.S.would ____ the demand for Euros,____ the equilibrium price (exchange value)of Euros.

Accepted Answer

A)  increase; increasing. 
B)  increase; decreasing. 
C)  decrease; increasing. 
D)  decrease; decreasing. 
A)  increase; increasing. 
B)  increase; decreasing. 
C)  decrease; increasing. 
D)  decrease; decreasing.

Question 9

Suppose that the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,it would tend to:

Accepted Answer

A)  increase U.S. exports to Canada. 
B)  decrease U.S. exports to Canada. 
C)  increase Canadian exports to the United States. 
D)  both (b) and (c) 
A)  increase U.S. exports to Canada. 
B)  decrease U.S. exports to Canada. 
C)  increase Canadian exports to the United States. 
D)  both (b) and (c)

Question 10

Suppose that the exchange rate between Japanese yen and U.S.dollars is originally 130 yen to the dollar.If it then changes to 150 yen to the dollar,imports of Japanese goods into the United States will tend to:

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  change in an indeterminate direction. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  change in an indeterminate direction.

Question 11

Which of the following would increase the demand for U.S.dollars in the foreign exchange market?

Accepted Answer

A)  the spending of U.S. tourists in France 
B)  the purchase of Japanese automobiles by American consumers 
C)  the sale of U.S. automobiles to French consumers 
D)  provision of bilateral trade agreements 
A)  the spending of U.S. tourists in France 
B)  the purchase of Japanese automobiles by American consumers 
C)  the sale of U.S. automobiles to French consumers 
D)  provision of bilateral trade agreements

Question 12

If the dollar depreciates relative to other currencies,which of the following is true?

Accepted Answer

A)  It takes more of the other currency to buy a dollar. 
B)  It takes less of the other currency to buy a dollar. 
C)  There is no change in the amount of the currency needed to buy a dollar. 
D)  Not enough information to determine. 
A)  It takes more of the other currency to buy a dollar. 
B)  It takes less of the other currency to buy a dollar. 
C)  There is no change in the amount of the currency needed to buy a dollar. 
D)  Not enough information to determine.

Question 13

Critics of flexible exchange rates argue that flexible rates:

Accepted Answer

A)  reduce uncertainty in international trade. 
B)  automatically create an equilibrium price for each currency in the foreign exchange market. 
C)  make nations more constrained in carrying out internal macroeconomic policies. 
D)  increase uncertainty in international trade. 
A)  reduce uncertainty in international trade. 
B)  automatically create an equilibrium price for each currency in the foreign exchange market. 
C)  make nations more constrained in carrying out internal macroeconomic policies. 
D)  increase uncertainty in international trade.

Question 14

At any given moment there is one exchange rate:

Accepted Answer

A)  for all the world's currencies. 
B)  for currencies in the free world. 
C)  between every pair of currencies. 
D)  established by the Federal Reserve System. 
A)  for all the world's currencies. 
B)  for currencies in the free world. 
C)  between every pair of currencies. 
D)  established by the Federal Reserve System.

Question 15

With fixed exchange rates,the imbalance between debits and credits arising from shifts in currency demand and/or supply:

Accepted Answer

A)  is accommodated by the market mechanism. 
B)  is accommodated by financial borrowings. 
C)  is accommodated by reserve movements. 
D)  either (b) or (c) 
A)  is accommodated by the market mechanism. 
B)  is accommodated by financial borrowings. 
C)  is accommodated by reserve movements. 
D)  either (b) or (c)

Question 16

If the Federal Reserve was to buy U.S.dollars on the foreign exchange market,a likely result will be:

Accepted Answer

A)  a rightward shift in the dollar supply curve. 
B)  at least a temporary decline in the exchange value of the U.S. dollar. 
C)  at least a temporary increase in the exchange value of the U.S. dollar. 
D)  both (a) and (b) 
A)  a rightward shift in the dollar supply curve. 
B)  at least a temporary decline in the exchange value of the U.S. dollar. 
C)  at least a temporary increase in the exchange value of the U.S. dollar. 
D)  both (a) and (b)

Question 17

On January 12,2011,the U.S.dollar was worth 76.89 Japanese yen.Roughly how many U.S.dollars did it take to buy 50 yen?

Accepted Answer

A)  0.01 
B)  0.65 
C)  1.86 
D)  3845 
A)  0.01 
B)  0.65 
C)  1.86 
D)  3845

Question 18

Critics of fixed exchange rates argue that fixed rates:

Accepted Answer

A)  reduce uncertainty in international trade. 
B)  result in currency shortages just as wage and price controls lead to shortages in markets for goods and services. 
C)  make nations less constrained in carrying out in internal macroeconomic policies. 
D)  lead to constant, day-to-day changes in the exchange values of currencies. 
A)  reduce uncertainty in international trade. 
B)  result in currency shortages just as wage and price controls lead to shortages in markets for goods and services. 
C)  make nations less constrained in carrying out in internal macroeconomic policies. 
D)  lead to constant, day-to-day changes in the exchange values of currencies.

Question 19

Which of the following is true?

Accepted Answer

A)  U.S. imports are considered a credit item in the balance of payment, because the dollars sold to buy the necessary foreign currency add to foreign claims against U.S. buyers. 
B)  When the U.S. runs a trade deficit in goods and services with the rest of the world, the rest of the world must be running a trade surplus in goods and services with the U.S. 
C)  When the U.S. runs a trade deficit in goods, it must run a trade surplus in services. 
D)  None of the above is true. 
A)  U.S. imports are considered a credit item in the balance of payment, because the dollars sold to buy the necessary foreign currency add to foreign claims against U.S. buyers. 
B)  When the U.S. runs a trade deficit in goods and services with the rest of the world, the rest of the world must be running a trade surplus in goods and services with the U.S. 
C)  When the U.S. runs a trade deficit in goods, it must run a trade surplus in services. 
D)  None of the above is true.

Question 20

Ceteris paribus,if the dollar appreciated in relation to a foreign currency,would the U.S.sell more goods or fewer goods to consumers in that foreign country? Why?

Accepted Answer

If the dollar appreciated we would expec

Exam 29: International Finance

Ceteris paribus,if the U.S.dollar depreciated in relation to the Canadian dollar,which of the following would be true?

If Americans decide to buy more South African diamonds,what is the effect in the exchange market?

If the United States purchases oil from Kuwait,what is the effect in the exchange market?

A country would tend to experience currency depreciation relative to other countries if:

Which of the following is true?

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,exports of U.S.goods to Britain will tend to:

Deficits and surpluses in the balance of payments are eliminated by ____ in a pure flexible exchange rate system.

A decrease in tastes for European goods in the U.S.would ____ the demand for Euros,____ the equilibrium price (exchange value)of Euros.

Suppose that the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,it would tend to:

Suppose that the exchange rate between Japanese yen and U.S.dollars is originally 130 yen to the dollar.If it then changes to 150 yen to the dollar,imports of Japanese goods into the United States will tend to:

Which of the following would increase the demand for U.S.dollars in the foreign exchange market?

If the dollar depreciates relative to other currencies,which of the following is true?

Critics of flexible exchange rates argue that flexible rates:

At any given moment there is one exchange rate:

With fixed exchange rates,the imbalance between debits and credits arising from shifts in currency demand and/or supply:

If the Federal Reserve was to buy U.S.dollars on the foreign exchange market,a likely result will be:

On January 12,2011,the U.S.dollar was worth 76.89 Japanese yen.Roughly how many U.S.dollars did it take to buy 50 yen?

Critics of fixed exchange rates argue that fixed rates:

Which of the following is true?

Ceteris paribus,if the dollar appreciated in relation to a foreign currency,would the U.S.sell more goods or fewer goods to consumers in that foreign country? Why?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

Filters

A decrease in tastes for European goods in the U.S.would the demand for Euros, the equilibrium price (exchange value)of Euros.