Exam 9: The Exchange Rate and the Balance of Payments

Everything else being the same, if the interest rate in the United States increases, then in the foreign exchange market the

When a country has a negative current account, that country is

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

The largest part of the U.S. current account consists of

-In the above table, the government sector balance runs a ________ and net exports runs a ________.

If U.S. imports increase, the sum of the balance of payments accounts (the sum of the current account plus capital and financial account plus official settlements account)

In part, a country's current account measures

Given the U.S. price level P, the foreign country price level P*, and the nominal exchange rate E expressed in foreign currency per U.S. dollar, the real exchange rate RER is given by

If U.S. interest rates are rise relative to foreign interest rates, in the foreign exchange market the demand for U.S. dollars will decrease.

A net borrower country must also be a debtor nation.

Hyundai is a large South Korean company that produces finished steel products. Hyundai plans to buy raw steel from U.S. Steel. As a result, the demand curve for U.S. Dollars ________ and the demand curve for South Korean Won ________.

Which of the following is included in a nation's current account? I.the import of services II.a change of foreign currency holdings III.net transfers, such as foreign aid payments

Over a month in late 2008, the Federal Reserve Bank reduced the interest rate by 1 percentage point. Given that the United States operates under a ________ exchange rate regimes, the primary purpose of these changes was ________ exchange rate of each currency.

Suppose the exchange rate between the U.S. dollar and the Mexican peso was $1 = 5 pesos. A can of Pepsi sells for $2 in Boston and for 12 pesos in Mexico City.

Which of the following statements about the balance of payments accounts is CORRECT?

The account that records foreign investment in the United States minus U.S. investment abroad is the

The ________ the exchange rate, the ________ are foreign-produced goods and hence the greater the quantity of dollars supplied.

-The data in the table above are the U.S. balance of payments. What is the current account balance?

If imports are $1,200 billion and exports are $1,300 billion, while net interest income and net transfers are zero, what is the current account balance?

Which of the following statements is INCORRECT?