Question 1

If real incomes in foreign nations were growing less rapidly than U.S.real incomes,one would expect that as a result,

Accepted Answer

A)  the exchange value of the dollar would decline relative to other currencies. 
B)  the exchange value of the dollar would increase relative to other currencies. 
C)  there would likely be no effect on the exchange value of the dollar relative to other currencies. 
D)  there would be an indeterminate effect on the exchange value of the dollar relative to other currencies. 
A)  the exchange value of the dollar would decline relative to other currencies. 
B)  the exchange value of the dollar would increase relative to other currencies. 
C)  there would likely be no effect on the exchange value of the dollar relative to other currencies. 
D)  there would be an indeterminate effect on the exchange value of the dollar relative to other currencies.

Question 2

If the exchange rate between yen and dollars were 120 yen per dollar,when a Japanese tourist buys a good valued at $600,its cost in yen would be:

Accepted Answer

A)  5 yen. 
B)  600 yen. 
C)  72,000 yen. 
D)  120 yen 
A)  5 yen. 
B)  600 yen. 
C)  72,000 yen. 
D)  120 yen

Question 3

If the United States exports military hardware,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

Under a system of flexible exchange rates,a decrease in the demand for a country's currency on the foreign exchange market will:

Accepted Answer

A)  cause the country's currency to depreciate in value. 
B)  cause the country's currency to appreciate in value. 
C)  make the country's goods more expensive to foreigners. 
D)  make foreign goods less expensive to the country's citizens. 
A)  cause the country's currency to depreciate in value. 
B)  cause the country's currency to appreciate in value. 
C)  make the country's goods more expensive to foreigners. 
D)  make foreign goods less expensive to the country's citizens.

Question 5

Explain how an increase in the American demand for Chinese goods leads to a change in the Chinese yuan relative to the U.S.dollar.

Accepted Answer

Americans who wish to buy more Chinese g

Question 6

Which of the following would most likely cause a nation's currency to depreciate?

Accepted Answer

A)  an increase in domestic real interest rates 
B)  an increase in exports coupled with a decline in imports 
C)  an increase in the nation's inflation rate 
D)  a balance of trade surplus 
A)  an increase in domestic real interest rates 
B)  an increase in exports coupled with a decline in imports 
C)  an increase in the nation's inflation rate 
D)  a balance of trade surplus

Question 7

If as a result of NAFTA the demand for American exports rises,it would tend to increase the exchange value of the U.S.dollar as a result.

Accepted Answer

A) True 
 B)False

Question 8

If the exchange rate between euros and dollars were 2 euros per dollar,when a French tourist buys a good valued at $80,its cost in euros would be:

Accepted Answer

A)  160 euros. 
B)  80 euros. 
C)  78 euros. 
D)  40 euros. 
A)  160 euros. 
B)  80 euros. 
C)  78 euros. 
D)  40 euros.

Question 9

Exhibit 29-1   Refer to Exhibit 29-1.For Nation Z,the balance of trade for the year 2011 equals:

Accepted Answer

A)  -$97 billion. 
B)  -$96 billion. 
C)  $97 billion. 
D)  -$87 billion. 
A)  -$97 billion. 
B)  -$96 billion. 
C)  $97 billion. 
D)  -$87 billion.

Question 10

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,the price of U.S.goods to British 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 11

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,it would tend to:

Accepted Answer

A)  increase U.S. exports to Mexico. 
B)  decrease U.S. exports to Mexico. 
C)  increase Mexican exports to the rest of the world. 
D)  decrease Mexican exports to the rest of the world. 
A)  increase U.S. exports to Mexico. 
B)  decrease U.S. exports to Mexico. 
C)  increase Mexican exports to the rest of the world. 
D)  decrease Mexican exports to the rest of the world.

Question 12

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,imports of British goods into the U.S.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 13

The balance on current account records information about:

Accepted Answer

A)  purchases of U.S. financial assets by foreigners. 
B)  purchases of foreign financial assets by Americans. 
C)  the levels of imports and exports of goods and services for a country. 
D)  foreign investments in U.S. bonds, stocks, and other items. 
A)  purchases of U.S. financial assets by foreigners. 
B)  purchases of foreign financial assets by Americans. 
C)  the levels of imports and exports of goods and services for a country. 
D)  foreign investments in U.S. bonds, stocks, and other items.

Question 14

What are the three categories of transactions in the balance of payments? Give an example of each.

Accepted Answer

The current account includes records of

Question 15

What will happen to a country that fixes the price of foreign exchange below equilibrium?

Accepted Answer

If foreign exchange is priced below equi

Question 16

If incomes decrease in the United States,Americans will buy more goods,including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for euros.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a credit in the U.S.current account?

Accepted Answer

A)  A U.S. consumer buys a TV made in Malaysia. 
B)  Singapore Airlines buys a jumbo jet made in the United States. 
C)  British investors purchase U.S. government bonds. 
D)  An American citizen flies to Lithuania on the Lithuanian Airlines. 
A)  A U.S. consumer buys a TV made in Malaysia. 
B)  Singapore Airlines buys a jumbo jet made in the United States. 
C)  British investors purchase U.S. government bonds. 
D)  An American citizen flies to Lithuania on the Lithuanian Airlines.

Question 18

If the rate of inflation in the United States rises relative to the rate of inflation in foreign nations,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 19

Under a system of flexible exchange rates,an increase in demand for a nation's currency in the foreign exchange market will:

Accepted Answer

A)  cause the nation's currency to appreciate. 
B)  make it more expensive for the nation to import goods. 
C)  cause the nation's balance on current account to shift toward a deficit. 
D)  make it less expensive for foreigners to buy the nation's goods. 
A)  cause the nation's currency to appreciate. 
B)  make it more expensive for the nation to import goods. 
C)  cause the nation's balance on current account to shift toward a deficit. 
D)  make it less expensive for foreigners to buy the nation's goods.

Question 20

Which of the following would cause a decrease in the exchange value of the U.S.dollar?

Accepted Answer

A)  A decrease in the amount of foreign debt purchased by U.S. citizens 
B)  An increase in U.S. exports 
C)  An increase in U.S. imports 
D)  Increased demand by foreigners to buy U.S. government securities 
A)  A decrease in the amount of foreign debt purchased by U.S. citizens 
B)  An increase in U.S. exports 
C)  An increase in U.S. imports 
D)  Increased demand by foreigners to buy U.S. government securities

Exam 29: International Finance

If real incomes in foreign nations were growing less rapidly than U.S.real incomes,one would expect that as a result,

If the exchange rate between yen and dollars were 120 yen per dollar,when a Japanese tourist buys a good valued at $600,its cost in yen would be:

If the United States exports military hardware,what is the effect in the exchange market?

Under a system of flexible exchange rates,a decrease in the demand for a country's currency on the foreign exchange market will:

Explain how an increase in the American demand for Chinese goods leads to a change in the Chinese yuan relative to the U.S.dollar.

Which of the following would most likely cause a nation's currency to depreciate?

If as a result of NAFTA the demand for American exports rises,it would tend to increase the exchange value of the U.S.dollar as a result.

If the exchange rate between euros and dollars were 2 euros per dollar,when a French tourist buys a good valued at $80,its cost in euros would be:

Exhibit 29-1 Refer to Exhibit 29-1.For Nation Z,the balance of trade for the year 2011 equals:

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

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,it would tend to:

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,imports of British goods into the U.S.tend to:

The balance on current account records information about:

What are the three categories of transactions in the balance of payments? Give an example of each.

What will happen to a country that fixes the price of foreign exchange below equilibrium?

If incomes decrease in the United States,Americans will buy more goods,including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for euros.

Which of the following is a credit in the U.S.current account?

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

Under a system of flexible exchange rates,an increase in demand for a nation's currency in the foreign exchange market will:

Which of the following would cause a decrease in the exchange value of the U.S.dollar?

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

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