Question 1

If the interest rates available on investments in two countries were the same,you would be less likely to invest in assets of the country:

Accepted Answer

A)  whose currency was likely to appreciate. 
B)  whose currency was likely to depreciate. 
C)  whose currency had the greatest exchange value. 
D)  none of the above; it would not matter what was likely to happen to a country's currency exchange rate. 
A)  whose currency was likely to appreciate. 
B)  whose currency was likely to depreciate. 
C)  whose currency had the greatest exchange value. 
D)  none of the above; it would not matter what was likely to happen to a country's currency exchange rate.

Question 2

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Accepted Answer

A) True 
 B)False

Question 3

Under a system of fixed exchange rates,what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Accepted Answer

A nation whose currency is overvalued wi

Question 4

Which of the following will create a demand for or a supply of currencies?

Accepted Answer

A)  Trade in goods 
B)  Trade in services 
C)  Trade in financial instruments 
D)  Any of the above. 
A)  Trade in goods 
B)  Trade in services 
C)  Trade in financial instruments 
D)  Any of the above.

Question 5

Suppose a video craze in the United States makes a particular Japanese-produced video game very popular.This would tend to:

Accepted Answer

A)  affect the U.S. balance of payments but not the balance of trade. 
B)  reduce any existing balance of trade deficit in the United States. 
C)  increase the balance of trade deficit of the United States. 
D)  increase the balance of trade surplus of the United States. 
A)  affect the U.S. balance of payments but not the balance of trade. 
B)  reduce any existing balance of trade deficit in the United States. 
C)  increase the balance of trade deficit of the United States. 
D)  increase the balance of trade surplus of the United States.

Question 6

Explain how each of the following will affect the relative values of the dollar and the euro used in France:
· Income growth higher in the United States than in France.
· Inflation higher in France than in the United States.
· A real interest rate higher in the United States than in France.

Accepted Answer

Income growth higher in the United State

Question 7

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for euros.

Accepted Answer

A)  decrease; increase. 
B)  not change; increase. 
C)  increase; increase. 
D)  not change; decrease. 
A)  decrease; increase. 
B)  not change; increase. 
C)  increase; increase. 
D)  not change; decrease.

Question 8

Under a system of flexible exchange rates,an increase in the foreign demand for the U.S.dollar in the foreign exchange market will cause the:

Accepted Answer

A)  dollar to appreciate 
B)  dollar to depreciate. 
C)  U.S. trade deficit to decrease. 
D)  U.S. inflation rate to increase. 
A)  dollar to appreciate 
B)  dollar to depreciate. 
C)  U.S. trade deficit to decrease. 
D)  U.S. inflation rate to increase.

Question 9

The dollar appreciates when U.S.demands for foreign currencies decrease.

Accepted Answer

A) True 
 B)False

Question 10

If the exchange rate between yen and dollars were 120 yen per dollar,when an American purchases a good valued at 600 yen,its cost in dollars would be:

Accepted Answer

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

Question 11

Exhibit 29-1   Refer to Exhibit 29-1.For Nation Z,the statistical discrepancy for the year 2011 equals:

Accepted Answer

A)  -$7 billion. 
B)  -$8 billion. 
C)  $90 billion. 
D)  $7 billion. 
A)  -$7 billion. 
B)  -$8 billion. 
C)  $90 billion. 
D)  $7 billion.

Question 12

As the number of British pounds that exchange for a dollar rises on foreign currency markets:

Accepted Answer

A)  the British will have an incentive to import fewer U.S. goods. 
B)  the British will find it easier to export goods to the United States. 
C)  the British will find U.S. goods to be more expensive in their stores. 
D)  all of the above will be true. 
A)  the British will have an incentive to import fewer U.S. goods. 
B)  the British will find it easier to export goods to the United States. 
C)  the British will find U.S. goods to be more expensive in their stores. 
D)  all of the above will be true.

Question 13

It has become largely accepted since the end of the Bretton Woods agreement that:

Accepted Answer

A)  the gold standard was superior to anything that has come along since. 
B)  governments have no role whatsoever in determining exchange rates. 
C)  it is not necessary for governments to fix exchange rates for long periods of time. 
D)  floating rates simply have not worked. 
A)  the gold standard was superior to anything that has come along since. 
B)  governments have no role whatsoever in determining exchange rates. 
C)  it is not necessary for governments to fix exchange rates for long periods of time. 
D)  floating rates simply have not worked.

Question 14

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Accepted Answer

A)  organized 
B)  planned 
C)  dirty float 
D)  flexible 
A)  organized 
B)  planned 
C)  dirty float 
D)  flexible

Question 15

In foreign exchange markets,the effect of an increase in the supply of dollars on the value of the dollar is the same as that of:

Accepted Answer

A)  an increase in the supply of foreign currencies. 
B)  a decrease in the supply of foreign currencies. 
C)  a decrease in the demand for dollars. 
D)  either (b) or (c) 
A)  an increase in the supply of foreign currencies. 
B)  a decrease in the supply of foreign currencies. 
C)  a decrease in the demand for dollars. 
D)  either (b) or (c)

Question 16

If real interest rates in the United States fell and real interest rates in England rose,we would expect people to:

Accepted Answer

A)  increase their demand for British pounds. 
B)  borrow more from U.S. sources. 
C)  buy relatively more British assets. 
D)  all of the above 
A)  increase their demand for British pounds. 
B)  borrow more from U.S. sources. 
C)  buy relatively more British assets. 
D)  all of the above

Question 17

The recent flexible exchange rate system developed because of:

Accepted Answer

A)  the controversies generated by trade surplus nations wanting to devalue their currencies. 
B)  the huge debts owed to the IMF by less-developed countries. 
C)  governments were unable to agree on an alternative to a fixed-rate approach when the Bretton Woods system collapsed. 
D)  the controversies generated by trade deficit nations wanting to raise the value of their currencies. 
A)  the controversies generated by trade surplus nations wanting to devalue their currencies. 
B)  the huge debts owed to the IMF by less-developed countries. 
C)  governments were unable to agree on an alternative to a fixed-rate approach when the Bretton Woods system collapsed. 
D)  the controversies generated by trade deficit nations wanting to raise the value of their currencies.

Question 18

Stock in a German corporation can be purchased directly with currency from any other country.

Accepted Answer

A) True 
 B)False

Exam 29: International Finance

If the interest rates available on investments in two countries were the same,you would be less likely to invest in assets of the country:

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Under a system of fixed exchange rates,what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Which of the following will create a demand for or a supply of currencies?

Suppose a video craze in the United States makes a particular Japanese-produced video game very popular.This would tend to:

Explain how each of the following will affect the relative values of the dollar and the euro used in France: · Income growth higher in the United States than in France. · Inflation higher in France than in the United States. · A real interest rate higher in the United States than in France.

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for euros.

Under a system of flexible exchange rates,an increase in the foreign demand for the U.S.dollar in the foreign exchange market will cause the:

The dollar appreciates when U.S.demands for foreign currencies decrease.

If the exchange rate between yen and dollars were 120 yen per dollar,when an American purchases a good valued at 600 yen,its cost in dollars would be:

Exhibit 29-1 Refer to Exhibit 29-1.For Nation Z,the statistical discrepancy for the year 2011 equals:

As the number of British pounds that exchange for a dollar rises on foreign currency markets:

It has become largely accepted since the end of the Bretton Woods agreement that:

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

In foreign exchange markets,the effect of an increase in the supply of dollars on the value of the dollar is the same as that of:

If real interest rates in the United States fell and real interest rates in England rose,we would expect people to:

The recent flexible exchange rate system developed because of:

Stock in a German corporation can be purchased directly with currency from any other country.

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

Reduced U.S.tastes for European goods would the supply of euros and the demand for euros.