Exam 9: The Exchange Rate and the Balance of Payments

A country has a government sector deficit and a private sector surplus. If the government sector deficit increases, and the private sector surplus decreases, then ________.

The U.S. dollar will depreciate in value if

During this year a country reports imports of $1,000 billion, exports of $1,100 billion, foreign investment in the country of $900 billion, investment abroad of $1,200 billion, net interest and net transfers of zero. What is the country's current account balance?

If the target exchange rate is 100 yen per dollar and the current exchange rate is 90 yen per dollar, the Fed will

On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment?

Which of the following will lead to a depreciation of the dollar against the British pound?

As the expected future exchange rate for dollars increases

-Which of the following is one of the balance of payments accounts?

If nothing else changes, the ________ the current exchange rate, the ________ is the expected profit from holding dollars, all other things remaining the same.

"The current account records foreign investment in a nation minus investment abroad." Is the previous statement correct or incorrect?

If the price level rises in the United States but not in foreign nations and the current exchange rate does not change, the expected future exchange rate

U.S. residents come to believe that the dollar will depreciate in the future, that is, the exchange rate in the future will be lower than the current exchange rate. As a result

Suppose the exchange rate of the U.S. dollar was 1.50 British pounds = $1.00 (U.S.)on Wednesday, and on the following Monday the exchange rate was $0.75 (U.S.)= 1.00 British pound. Which of the following best describes what happened between Wednesday and the following Monday?

When you arrive at the airport in Paris and go to the bank window to exchange dollars into euros, you are

Suppose the exchange rate for the U.S. dollar rises. This could be caused by

If there is an increase in the expected future U.S. exchange rate, there is

U.S. official reserves are the ________.

The demand curve for U.S. dollars slopes downward because as the dollar ________ U.S. goods become ________ expensive to foreign residents, so they purchase fewer U.S. goods, and the quantity of dollars demanded decreases.

Which of the following is included in a nation's capital and financial account? I.the purchase of foreign stocks and bonds II.the sale of foreign stocks and bonds III.importing a piece of capital equipment

Consider the market for euros. Suppose the exchange rate is ________ its equilibrium. This means that the quantity of euros ________ is greater than the quantity of euros ________ and the exchange rate will ________.