Exam 9: The Exchange Rate and the Balance of Payments

"In the foreign exchange market, if the demand for the U.S. dollar increases, the U.S. dollar appreciates in value." Briefly explain whether the previous statement is correct or incorrect.

-In the figure above, the shift in the demand curve for U.S. dollars from D? to D? could occur when

-In the figure above, the shift in the supply curve for U.S. dollars from S? to S? could occur when

A decrease in the demand for U.S. exports ________ the demand for U.S. dollars and shifts the demand curve for U.S. dollars ________.

Suppose that the U.S. government gives foreign aid to Turkey. This transaction would directly

What role can the Fed play in the foreign exchange market?

Other things remaining the same, the ________ the exchange rate for dollars, the greater the ________ in the foreign exchange market.

The government sector balance is equal to ________.

-Using the data in the above table, if the government sector runs a deficit of $250 billion and net exports equal -$500 billion, then saving must equal

-The table above shows some data for Wiland, a country whose currency is the bont. The official settlement balance, net interest income, and net transfers from abroad are zero. a)What is Wiland's imports of goods and services? b)What is Wiland's current account balance? c)What is Wiland's capital account balance? d)What is Wiland's net taxes? e)What is Wiland's private sector balance?

If growth in the United States speeds up so that investors believe they can make a bigger profit from U.S. assets, the ________ U.S. dollars will ________.

"The Big Mac index is The Economist's burger-based measure of whether currencies are over- or undervalued.... [E]xchange rates should eventually adjust to make the price of a basket of goods the same in each country. Our basket contains just one item: the Big Mac hamburger, which is pretty much the same around the world." The Economist, July 28, 2012 Which principle is The Economist relying on when using the Big Mac to value exchange rates?

If a country has a capital and financial account surplus, that country's stock of international indebtedness is

-The citizens of Exland, whose currency is the bun, conduct the transactions outlined in the table above. a)What is Exland's current account balance? b)What is Exland's capital account balance? c)What is Exland's official settlement balance? d)What is Exland's net foreign borrowing?

If net exports is a negative number, the government sector must ________ if the private sector is in a ________.

If the current account balance is -$100 billion and the capital and financial account balance is $80 billion, then the official settlement account balance is

In the foreign exchange market, an increase in the world demand for U.S. exports shifts the

The supply curve of U.S. dollars shifts leftward. This could have been influenced by ________.

The demand for dollars in the foreign exchange market will increase (so that the demand curve shifts rightward)if

-Using the table above, if the current market value of the dollar is 70 francs