Question 1

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

Accepted Answer

A)  investor A holds dollars, but B and C hold francs. 
B)  investor A holds francs, but B and C hold dollars. 
C)  all three investors hold francs. 
D)  all three investors hold dollars. 
A)  investor A holds dollars, but B and C hold francs. 
B)  investor A holds francs, but B and C hold dollars. 
C)  all three investors hold francs. 
D)  all three investors hold dollars.

Question 2

In 2007, Japan reported that its overseas assets totaled more than $4.6 trillion. This implies that Japan

Accepted Answer

A)  is debtor nation. 
B)  has a current account deficit. 
C)  has a capital account deficit. 
D)  is a creditor nation. 
A)  is debtor nation. 
B)  has a current account deficit. 
C)  has a capital account deficit. 
D)  is a creditor nation.

Question 3

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

Accepted Answer

A)  the expected future exchange rate falls. 
B)  the U.S. interest rate differential increases. 
C)  the expected future exchange rate rises. 
D)  the current exchange rate falls. 
A)  the expected future exchange rate falls. 
B)  the U.S. interest rate differential increases. 
C)  the expected future exchange rate rises. 
D)  the current exchange rate falls.

Question 4

If the exchange rate rises from 100 yen per dollar to 120 yen per dollar, the dollar has appreciated.

Accepted Answer

A) True 
 B)False

Question 5

-In the table above, what do net exports equal?

Accepted Answer

A)  a deficit of $700 billion 
B)  a deficit of $350 billion 
C)  a surplus of $50 billion 
D)  a surplus of $1,750 billion 
A)  a deficit of $700 billion 
B)  a deficit of $350 billion 
C)  a surplus of $50 billion 
D)  a surplus of $1,750 billion

Question 6

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

Accepted Answer

A)  -$500 billion. 
B)  $1,000 billion. 
C)  $500 billion. 
D)  $0. 
A)  -$500 billion. 
B)  $1,000 billion. 
C)  $500 billion. 
D)  $0.

Question 7

The exchange rate can be influenced by a nation's central bank.

Accepted Answer

A) True 
 B)False

Question 8

-The data in the table above are the U.S. balance of payments. The capital and financial account balance is

Accepted Answer

A)  $0. 
B)  -$80 billion. 
C)  -$200 billion. 
D)  +$200 billion. 
A)  $0. 
B)  -$80 billion. 
C)  -$200 billion. 
D)  +$200 billion.

Question 9

-In the above table, the government sector balance is a

Accepted Answer

A)  surplus of $200 billion. 
B)  deficit of $200 billion. 
C)  surplus of $100 billion. 
D)  deficit of $100 billion. 
A)  surplus of $200 billion. 
B)  deficit of $200 billion. 
C)  surplus of $100 billion. 
D)  deficit of $100 billion.

Question 10

The official settlements account records the change in official U.S. reserves.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is CORRECT?

Accepted Answer

A)  Net exports equals the government sector balance plus the private sector balance. 
B)  The government sector balance equals net exports plus the private sector balance. 
C)  The private sector balance equals net exports plus the government sector balance. 
D)  Net exports equals the current account plus the capital account plus the official settlements account. 
A)  Net exports equals the government sector balance plus the private sector balance. 
B)  The government sector balance equals net exports plus the private sector balance. 
C)  The private sector balance equals net exports plus the government sector balance. 
D)  Net exports equals the current account plus the capital account plus the official settlements account.

Question 12

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has ________.

Accepted Answer

A)  negative net exports of $125 billion 
B)  positive net exports of $125 billion 
C)  a government budget surplus 
D)  Both answers B and C are correct. 
A)  negative net exports of $125 billion 
B)  positive net exports of $125 billion 
C)  a government budget surplus 
D)  Both answers B and C are correct.

Question 13

Other things remaining the same, if the U.S. interest rate differential increases, the demand curve for U.S. dollars shifts ________ and the supply curve of U.S. dollars shifts ________.

Accepted Answer

A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward 
A)  rightward; rightward 
B)  rightward; leftward 
C)  leftward; rightward 
D)  leftward; leftward

Question 14

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely during that year

Accepted Answer

A)  it has a current account deficit. 
B)  it is a creditor nation. 
C)  it is a debtor nation. 
D)  it is a net lender. 
A)  it has a current account deficit. 
B)  it is a creditor nation. 
C)  it is a debtor nation. 
D)  it is a net lender.

Question 15

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Euro ________ against the U.S. dollar, the Japanese yen ________ against the U.S. dollar and the Canadian dollar ________ against the U.S. dollar

Accepted Answer

A)  depreciated, depreciated, depreciated 
B)  appreciated, depreciated, appreciated 
C)  appreciated, appreciated, appreciated 
D)  depreciated, depreciated, appreciated 
A)  depreciated, depreciated, depreciated 
B)  appreciated, depreciated, appreciated 
C)  appreciated, appreciated, appreciated 
D)  depreciated, depreciated, appreciated

Question 16

-Using the table above, if the current market value of the dollar is 110 francs

Accepted Answer

A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  investor C expects dollar depreciation, but A and B expect appreciation. 
C)  all three investors expect the dollar to appreciate. 
D)  all three investors expect the dollar to depreciate. 
A)  investor A expects dollar appreciation, but B and C expect depreciation. 
B)  investor C expects dollar depreciation, but A and B expect appreciation. 
C)  all three investors expect the dollar to appreciate. 
D)  all three investors expect the dollar to depreciate.

Question 17

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

Accepted Answer

A)  U.S. dollar appreciates by 2 percent a year. 
B)  U.S. dollar depreciates by 2 percent a year. 
C)  U.K. pound depreciates by 2 percent a year. 
D)  None of the above answers is correct because interest rate parity requires that the interest rates be the same in both countries. 
A)  U.S. dollar appreciates by 2 percent a year. 
B)  U.S. dollar depreciates by 2 percent a year. 
C)  U.K. pound depreciates by 2 percent a year. 
D)  None of the above answers is correct because interest rate parity requires that the interest rates be the same in both countries.

Question 18

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Japanese yen ________ against the U.S dollar and the Euro ________ against the U.S. dollar.

Accepted Answer

A)  appreciated; appreciated 
B)  depreciated; appreciated 
C)  depreciated; depreciated 
D)  appreciated; depreciated 
A)  appreciated; appreciated 
B)  depreciated; appreciated 
C)  depreciated; depreciated 
D)  appreciated; depreciated

Question 19

If the People's Bank of China adopted a flexible exchange rate policy

Accepted Answer

A)  the U.S. dollar would depreciate. 
B)  the U.S. dollar would appreciate. 
C)  the yuan would depreciate. 
D)  the yuan-U.S. dollar exchange rate would rise. 
A)  the U.S. dollar would depreciate. 
B)  the U.S. dollar would appreciate. 
C)  the yuan would depreciate. 
D)  the yuan-U.S. dollar exchange rate would rise.

Question 20

If net exports increases, but neither government expenditure nor net taxes change, saving must increase.

Accepted Answer

A) True 
 B)False

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

In 2007, Japan reported that its overseas assets totaled more than $4.6 trillion. This implies that Japan

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

If the exchange rate rises from 100 yen per dollar to 120 yen per dollar, the dollar has appreciated.

-In the table above, what do net exports equal?

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

The exchange rate can be influenced by a nation's central bank.

-The data in the table above are the U.S. balance of payments. The capital and financial account balance is

-In the above table, the government sector balance is a

The official settlements account records the change in official U.S. reserves.

Which of the following is CORRECT?

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has ________.

Other things remaining the same, if the U.S. interest rate differential increases, the demand curve for U.S. dollars shifts and the supply curve of U.S. dollars shifts .

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely during that year

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Euro against the U.S. dollar, the Japanese yen against the U.S. dollar and the Canadian dollar against the U.S. dollar

-Using the table above, if the current market value of the dollar is 110 francs

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Japanese yen against the U.S dollar and the Euro against the U.S. dollar.

If the People's Bank of China adopted a flexible exchange rate policy

If net exports increases, but neither government expenditure nor net taxes change, saving must increase.

What Is Economics?

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 9: The Exchange Rate and the Balance of Payments

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

In 2007, Japan reported that its overseas assets totaled more than $4.6 trillion. This implies that Japan

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

If the exchange rate rises from 100 yen per dollar to 120 yen per dollar, the dollar has appreciated.

-In the table above, what do net exports equal?

-In the above table, suppose imports = $750 billion and government expenditures = $1,000 billion. Hence investment equals

The exchange rate can be influenced by a nation's central bank.

-The data in the table above are the U.S. balance of payments. The capital and financial account balance is

-In the above table, the government sector balance is a

The official settlements account records the change in official U.S. reserves.

Which of the following is CORRECT?

Hong Kong has imports of $1,130 billion and exports of $1,255 billion. Hong Kong definitely has ________.

Other things remaining the same, if the U.S. interest rate differential increases, the demand curve for U.S. dollars shifts ________ and the supply curve of U.S. dollars shifts ________.

If a country lends more to foreign countries than it borrows from foreign countries in a year, then definitely during that year

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Euro ________ against the U.S. dollar, the Japanese yen ________ against the U.S. dollar and the Canadian dollar ________ against the U.S. dollar

-Using the table above, if the current market value of the dollar is 110 francs

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Japanese yen ________ against the U.S dollar and the Euro ________ against the U.S. dollar.

If the People's Bank of China adopted a flexible exchange rate policy

If net exports increases, but neither government expenditure nor net taxes change, saving must increase.

What Is Economics?

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Other things remaining the same, if the U.S. interest rate differential increases, the demand curve for U.S. dollars shifts and the supply curve of U.S. dollars shifts .

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Euro against the U.S. dollar, the Japanese yen against the U.S. dollar and the Canadian dollar against the U.S. dollar

-The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2015 and 2016, the Japanese yen against the U.S dollar and the Euro against the U.S. dollar.