Question 1

The current international monetary system is best described as a:

Accepted Answer

A)  fixed exchange rate system. 
B)  gold standard. 
C)  dirty float system. 
D)  free float system. 
A)  fixed exchange rate system. 
B)  gold standard. 
C)  dirty float system. 
D)  free float system.

Question 2

Which of the following would cause an increase 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)  Increased demand by foreigners to buy U.S. government securities 
D)  all of the above 
A)  A decrease in the amount of foreign debt purchased by U.S. citizens 
B)  An increase in U.S. exports 
C)  Increased demand by foreigners to buy U.S. government securities 
D)  all of the above

Question 3

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

Accepted Answer

A)  the purchase of a Japanese car by an American 
B)  the purchase of air service from a U.S. airline by a Japanese traveler 
C)  a short-term loan extended to a Japanese manufacturer by a U.S. bank 
D)  the purchase of U.S. grain by a Japanese bakery 
A)  the purchase of a Japanese car by an American 
B)  the purchase of air service from a U.S. airline by a Japanese traveler 
C)  a short-term loan extended to a Japanese manufacturer by a U.S. bank 
D)  the purchase of U.S. grain by a Japanese bakery

Question 4

An appreciation of the exchange value of the U.S.dollar would:

Accepted Answer

A)  increase the dollar prices of U.S. imports and the foreign cost of exports from the U.S. 
B)  decrease the dollar prices of U.S. imports and the foreign cost of exports from the U.S. 
C)  increase the dollar prices of U.S. imports, but decrease the foreign cost of exports from the U.S. 
D)  decrease the dollar prices of U.S. imports, but increase the foreign cost of exports from the U.S. 
A)  increase the dollar prices of U.S. imports and the foreign cost of exports from the U.S. 
B)  decrease the dollar prices of U.S. imports and the foreign cost of exports from the U.S. 
C)  increase the dollar prices of U.S. imports, but decrease the foreign cost of exports from the U.S. 
D)  decrease the dollar prices of U.S. imports, but increase the foreign cost of exports from the U.S.

Question 5

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

Accepted Answer

A)  the profitability of investments within the country increases relative to the rest of the world. 
B)  people in the foreign currency markets expect the value of the currency to rise in the near future. 
C)  the foreign demand for its exports increases. 
D)  all of the above 
A)  the profitability of investments within the country increases relative to the rest of the world. 
B)  people in the foreign currency markets expect the value of the currency to rise in the near future. 
C)  the foreign demand for its exports increases. 
D)  all of the above

Question 6

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)  decrease U.S. exports to Mexico. 
B)  increase U.S. exports to Mexico. 
C)  increase Mexican exports to the United States. 
D)  both (a) and (c) 
A)  decrease U.S. exports to Mexico. 
B)  increase U.S. exports to Mexico. 
C)  increase Mexican exports to the United States. 
D)  both (a) and (c)

Question 7

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

Accepted Answer

A)  -$87 billion. 
B)  -$96 billion. 
C)  $90 billion. 
D)  $97 billion. 
A)  -$87 billion. 
B)  -$96 billion. 
C)  $90 billion. 
D)  $97 billion.

Question 8

The U.S.balance of trade:

Accepted Answer

A)  typically is positive since the United States exports far more goods than it imports. 
B)  is the difference between merchandise exports and merchandise imports. 
C)  includes net military transactions. 
D)  Both b. and c. are correct. 
A)  typically is positive since the United States exports far more goods than it imports. 
B)  is the difference between merchandise exports and merchandise imports. 
C)  includes net military transactions. 
D)  Both b. and c. are correct.

Question 9

In a pure flexible exchange rate system,deficits and surpluses in the balance of payments:

Accepted Answer

A)  are accommodated by financial borrowings. 
B)  are accommodated by reserve movements. 
C)  tend to disappear automatically. 
D)  either b. or c. 
A)  are accommodated by financial borrowings. 
B)  are accommodated by reserve movements. 
C)  tend to disappear automatically. 
D)  either b. or c.

Question 10

Which of the following is true of price changes in currencies under the fixed-rate system?

Accepted Answer

A)  Frequent occurrence 
B)  Low magnitude 
C)  Infrequent, but high magnitude 
D)  Frequent, but low magnitude 
A)  Frequent occurrence 
B)  Low magnitude 
C)  Infrequent, but high magnitude 
D)  Frequent, but low magnitude

Question 11

If interest rates rise in the United States relative to those in the rest of the world,the exchange value of the dollar will tend to appreciate.

Accepted Answer

A) True 
 B)False

Question 12

If the dollar price of euros is lower than the equilibrium price,there will be an excess quantity of euros ____ at that price,and competition among euro ____ will push the price of Euros toward equilibrium.

Accepted Answer

A)  supplied, sellers. 
B)  supplied; buyers. 
C)  demanded; sellers. 
D)  demanded; buyers. 
A)  supplied, sellers. 
B)  supplied; buyers. 
C)  demanded; sellers. 
D)  demanded; buyers.

Question 13

The term "dirty float" is used to describe a:

Accepted Answer

A)  currency that is allowed to float only in prosperous times. 
B)  nation that switches from free to fixed rates of exchange. 
C)  black market in foreign currencies. 
D)  floating currency that is sometimes changed by government central bank authorities. 
A)  currency that is allowed to float only in prosperous times. 
B)  nation that switches from free to fixed rates of exchange. 
C)  black market in foreign currencies. 
D)  floating currency that is sometimes changed by government central bank authorities.

Question 14

Prior to 1973,the world operated on a system of fixed exchange rates called the Bretton Woods system.

Accepted Answer

A) True 
 B)False

Question 15

A decrease 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 16

The record of all transactions with foreign nations that involve the exchange of merchandise goods and services or unilateral gifts is called the:

Accepted Answer

A)  capital account. 
B)  current account. 
C)  balance of trade. 
D)  balance of payments. 
A)  capital account. 
B)  current account. 
C)  balance of trade. 
D)  balance of payments.

Question 17

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would ____ the U.S.price of German goods,____ the number of German goods that would be demanded in the U.S.

Accepted Answer

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

Question 18

A decrease in U.S.interest rates will,other things equal,tend to:

Accepted Answer

A)  lower the foreign exchange value of the dollar. 
B)  help U.S. exporters. 
C)  cause a net outflow of capital from the U.S. 
D)  do all of the above. 
A)  lower the foreign exchange value of the dollar. 
B)  help U.S. exporters. 
C)  cause a net outflow of capital from the U.S. 
D)  do all of the above.

Question 19

The agreement that established a system of fixed exchange rates immediately following World War II is known as the:

Accepted Answer

A)  IMF agreement. 
B)  World Bank agreement. 
C)  Bretton Woods agreement. 
D)  none of the above. 
A)  IMF agreement. 
B)  World Bank agreement. 
C)  Bretton Woods agreement. 
D)  none of the above.

Question 20

The record of all international financial transactions in which a nation has engaged over a year is known as the:

Accepted Answer

A)  current account. 
B)  capital account. 
C)  balance of payments. 
D)  the unilateral transfers balance. 
A)  current account. 
B)  capital account. 
C)  balance of payments. 
D)  the unilateral transfers balance.

Exam 29: International Finance

The current international monetary system is best described as a:

Which of the following would cause an increase in the exchange value of the U.S.dollar?

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

An appreciation of the exchange value of the U.S.dollar would:

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

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:

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

The U.S.balance of trade:

In a pure flexible exchange rate system,deficits and surpluses in the balance of payments:

Which of the following is true of price changes in currencies under the fixed-rate system?

If interest rates rise in the United States relative to those in the rest of the world,the exchange value of the dollar will tend to appreciate.

If the dollar price of euros is lower than the equilibrium price,there will be an excess quantity of euros ____ at that price,and competition among euro ____ will push the price of Euros toward equilibrium.

The term "dirty float" is used to describe a:

Prior to 1973,the world operated on a system of fixed exchange rates called the Bretton Woods system.

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

The record of all transactions with foreign nations that involve the exchange of merchandise goods and services or unilateral gifts is called the:

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would ____ the U.S.price of German goods,____ the number of German goods that would be demanded in the U.S.

A decrease in U.S.interest rates will,other things equal,tend to:

The agreement that established a system of fixed exchange rates immediately following World War II is known as the:

The record of all international financial transactions in which a nation has engaged over a year is known as the:

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 dollar price of euros is lower than the equilibrium price,there will be an excess quantity of euros at that price,and competition among euro will push the price of Euros toward equilibrium.

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

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would the U.S.price of German goods, the number of German goods that would be demanded in the U.S.