Question 1

In recent years the United States has run persistent deficits in its balance on the current account.

Accepted Answer

A) True 
 B)False

Question 2

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.

Accepted Answer

A) True 
 B)False

Question 3

All exports of U.S.goods are considered credit items in the U.S.balance of payments.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would be included in the capital account section of the balance of payments?

Accepted Answer

A)  government bond purchases by people in other countries 
B)  net investment income 
C)  imports and exports of goods 
D)  imports and exports of services 
A)  government bond purchases by people in other countries 
B)  net investment income 
C)  imports and exports of goods 
D)  imports and exports of services

Question 5

What factors will shift the supply and demand for currency?

Accepted Answer

Any changes in tastes,income l

Question 6

Economists sometimes say that the current exchange rate system is a dirty float system.What does this mean?

Accepted Answer

The dirty float system means that fluctu

Question 7

What would be the statistical discrepancy for a current account balance of -$85 billion and a capital account balance of $80 billion?

Accepted Answer

A)  -$165 billion 
B)  -$5 billion 
C)  $5 billion 
D)  $165 billion 
A)  -$165 billion 
B)  -$5 billion 
C)  $5 billion 
D)  $165 billion

Question 8

Differences among nations in real economic growth rates,real interest rates,and inflation rates will each affect the exchange rates among their currencies.

Accepted Answer

A) True 
 B)False

Question 9

If the rate of inflation overseas rises relative to the rate of inflation in the United States,U.S.net exports will tend to ____,causing the exchange value of the U.S.dollar to ____.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

Question 10

If the dollar appreciates relative to the yen,we would expect:

Accepted Answer

A)  that the Japanese trade surplus with the United States would increase. 
B)  that Japanese imports from the United States would decrease. 
C)  that Japanese exports to the United States would decrease. 
D)  both (a) and (b) 
A)  that the Japanese trade surplus with the United States would increase. 
B)  that Japanese imports from the United States would decrease. 
C)  that Japanese exports to the United States would decrease. 
D)  both (a) and (b)

Question 11

An increase in foreign demand for U.S.exports will ____ the demand for U.S.dollars and cause the U.S.dollar to ____ in value.

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

One of the disadvantages of a fixed exchange rate system is:

Accepted Answer

A)  too much stability in exchange rates. 
B)  import and export industries forego the benefits of highly variable exchange rates. 
C)  that to maintain fixed exchange rates, nations must give up control of their monetary policies. 
D)  None of the above are disadvantages of a fixed exchange rate system. 
A)  too much stability in exchange rates. 
B)  import and export industries forego the benefits of highly variable exchange rates. 
C)  that to maintain fixed exchange rates, nations must give up control of their monetary policies. 
D)  None of the above are disadvantages of a fixed exchange rate system.

Question 13

Which of the following would be a credit in the U.S.balance of payments?

Accepted Answer

A)  the purchase of a German car by an American 
B)  the purchase of insurance from Lloyds of London by a U.S. resident 
C)  a trip to Japan by an American student 
D)  a short-term loan extended to a South American country by the United States government 
A)  the purchase of a German car by an American 
B)  the purchase of insurance from Lloyds of London by a U.S. resident 
C)  a trip to Japan by an American student 
D)  a short-term loan extended to a South American country by the United States government

Question 14

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,the price of U.S.goods to Japanese importers will:

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 15

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. computer equipment to a Canadian buyer 
D)  the purchase of a Mexican shoe factory by a U.S. investor 
A)  the spending of U.S. tourists in France 
B)  the purchase of Japanese automobiles by American consumers 
C)  the sale of U.S. computer equipment to a Canadian buyer 
D)  the purchase of a Mexican shoe factory by a U.S. investor

Question 16

Exchange rates determined by the laws of supply and demand are called:

Accepted Answer

A)  equilibrium exchange rates. 
B)  fixed exchange rates. 
C)  dirty exchange rates. 
D)  floating exchange rates. 
A)  equilibrium exchange rates. 
B)  fixed exchange rates. 
C)  dirty exchange rates. 
D)  floating exchange rates.

Question 17

Suppose that the dollar value rises from 100 to 125 yen.As a result,

Accepted Answer

A)  exports to Japan will likely increase. 
B)  Japanese tourists will more likely visit the United States. 
C)  U.S. businesses will be less likely to use Japanese shipping lines to transport their products. 
D)  U.S. consumers will more likely buy Japanese-made automobiles. 
A)  exports to Japan will likely increase. 
B)  Japanese tourists will more likely visit the United States. 
C)  U.S. businesses will be less likely to use Japanese shipping lines to transport their products. 
D)  U.S. consumers will more likely buy Japanese-made automobiles.

Question 18

Margaret,who lives in Des Moines,has been saving for years in order to take a trip to England this summer.She would be happy if the dollar suddenly depreciates in value against the pound.

Accepted Answer

A) True 
 B)False

Question 19

Why is the demand for foreign currencies known as a derived demand?

Accepted Answer

The demand for foreign currenc

Question 20

Which of the following examples would lead to a demand for German marks?

Accepted Answer

A)  Judy Potter, an American, wants to purchase a German automobile. 
B)  Jim Potter, Judy's husband, wants to purchase German stocks. 
C)  IBM, Judy's employer, wants to buy a small computer firm in Germany. 
D)  All of the above. 
A)  Judy Potter, an American, wants to purchase a German automobile. 
B)  Jim Potter, Judy's husband, wants to purchase German stocks. 
C)  IBM, Judy's employer, wants to buy a small computer firm in Germany. 
D)  All of the above.

Exam 29: International Finance

In recent years the United States has run persistent deficits in its balance on the current account.

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.

All exports of U.S.goods are considered credit items in the U.S.balance of payments.

Which of the following would be included in the capital account section of the balance of payments?

What factors will shift the supply and demand for currency?

Economists sometimes say that the current exchange rate system is a dirty float system.What does this mean?

What would be the statistical discrepancy for a current account balance of -$85 billion and a capital account balance of $80 billion?

Differences among nations in real economic growth rates,real interest rates,and inflation rates will each affect the exchange rates among their currencies.

If the rate of inflation overseas rises relative to the rate of inflation in the United States,U.S.net exports will tend to ____,causing the exchange value of the U.S.dollar to ____.

If the dollar appreciates relative to the yen,we would expect:

An increase in foreign demand for U.S.exports will ____ the demand for U.S.dollars and cause the U.S.dollar to ____ in value.

One of the disadvantages of a fixed exchange rate system is:

Which of the following would be a credit in the U.S.balance of payments?

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,the price of U.S.goods to Japanese importers will:

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

Exchange rates determined by the laws of supply and demand are called:

Suppose that the dollar value rises from 100 to 125 yen.As a result,

Margaret,who lives in Des Moines,has been saving for years in order to take a trip to England this summer.She would be happy if the dollar suddenly depreciates in value against the pound.

Why is the demand for foreign currencies known as a derived demand?

Which of the following examples would lead to a demand for German marks?

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

If the rate of inflation overseas rises relative to the rate of inflation in the United States,U.S.net exports will tend to ,causing the exchange value of the U.S.dollar to .

An increase in foreign demand for U.S.exports will the demand for U.S.dollars and cause the U.S.dollar to in value.