Exam 9: The Exchange Rate and the Balance of Payments

What are the main components of the current account? What has been the recent U.S. experience with these items?

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

The quantity of dollars demanded by foreign nations increases as

Other things remaining the same, if the expected future exchange rate rises, the demand curve for U.S. dollars shifts ________ and the supply curve of U.S. dollars shifts ________.

The lower the exchange rate, the cheaper are foreign-produced goods and services.

By definition, currency depreciation occurs when the value of

-Using the table above, if the current market value of the dollar is 125 francs per dollar

-In the figure above, if the exchange rate is equal to 2 Canadian dollars per U.S. dollar, there is a ________ of ________currency and the exchange rate will________.

The exchange rate is the

If the U.S. government decreased its holdings of Mexican pesos, definitely

The idea that the value of money is equal across countries is known as

A country that during its entire history has borrowed more from the rest of the world than it has lent to it is a ________, and a country that during its entire history has invested more in the rest of the world than other countries have invested in it is a ________.

In the foreign exchange market, a decrease in the supply of dollars leads to an appreciation of the U.S. dollar.

If a country is currently lending more to the rest of the world than it is borrowing from the rest of the world, the country is a

If the interest rate on Japanese yen assets falls while interest rates in the United States remain constant, the

With everything else the same, which of the following would increase the demand for U.S. dollars in the foreign exchange market? I.a rise in the U.S. interest rate II.a fall in interest rates in foreign countries III.a rise in the expected future exchange rate

Which of the following transactions directly leads to a surplus on the U.S. capital and financial account?

-The above figure shows the demand curve for dollars in the yen/dollar exchange market. A movement from point A to point B means that the

Which of the following is NOT included in the U.S. current account?

If the demand for a country's currency increases, the currency