Question 1

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

Accepted Answer

A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation. 
A)  net borrower. 
B)  debtor nation. 
C)  net lender. 
D)  creditor nation.

Question 2

A decrease in the value of a currency in terms of other currencies is known as

Accepted Answer

A)  an appreciation. 
B)  a depreciation. 
C)  a par value. 
D)  a gold point. 
A)  an appreciation. 
B)  a depreciation. 
C)  a par value. 
D)  a gold point.

Question 3

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

Accepted Answer

The official settlements account is the

Question 4

-In the above table, net exports equal 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 5

A German publishing company buys an American publishing company based in New York. In the U.S. balance of payments accounts, this transaction directly appears in

Accepted Answer

A)  the official settlements account. 
B)  the imports part of the current account. 
C)  the net transfers part of the current account. 
D)  the capital and financial account. 
A)  the official settlements account. 
B)  the imports part of the current account. 
C)  the net transfers part of the current account. 
D)  the capital and financial account.

Question 6

An increase in the U.S. demand for imports will ________ the supply of dollars and lead the dollar to ________.

Accepted Answer

A)  increase; appreciate 
B)  decrease; appreciate 
C)  increase; depreciate 
D)  decrease; depreciate 
A)  increase; appreciate 
B)  decrease; appreciate 
C)  increase; depreciate 
D)  decrease; depreciate

Question 7

Suppose Mitsubishi Bank (a Japanese bank)expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

Accepted Answer

A)  buys U.S. dollars today because it expects profit from buying U.S. dollars and holding them. 
B)  sells U.S. dollars today because it expects losses from buying U.S. dollars and holding them. 
C)  does not buy or sell any U.S. dollars today because it expects zero profit from buying U.S. dollars and holding them. 
D)  None of the above answers is correct because a foreign commercial bank cannot buy or sell U.S. dollars. 
A)  buys U.S. dollars today because it expects profit from buying U.S. dollars and holding them. 
B)  sells U.S. dollars today because it expects losses from buying U.S. dollars and holding them. 
C)  does not buy or sell any U.S. dollars today because it expects zero profit from buying U.S. dollars and holding them. 
D)  None of the above answers is correct because a foreign commercial bank cannot buy or sell U.S. dollars.

Question 8

If net interest and net transfers are zero, and a country's exports exceed its imports, the country definitely has ________.

Accepted Answer

A)  a current account surplus 
B)  a current account deficit 
C)  a capital and financial account surplus 
D)  an official settlements account surplus 
A)  a current account surplus 
B)  a current account deficit 
C)  a capital and financial account surplus 
D)  an official settlements account surplus

Question 9

Suppose the exchange rate of the U.S. dollar was 1.00 euro = $0.50 on Thursday, and on Friday the exchange rate was $1.00 = 2.10 euros. Which of the following best explains what has happened between Thursday and Friday?

Accepted Answer

A)  The U.S. dollar appreciated against the euro. 
B)  The euro appreciated against the U.S. dollar. 
C)  The U.S. dollar depreciated against the euro. 
D)  Both answers B and C are correct. 
A)  The U.S. dollar appreciated against the euro. 
B)  The euro appreciated against the U.S. dollar. 
C)  The U.S. dollar depreciated against the euro. 
D)  Both answers B and C are correct.

Question 10

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. Which of the following equations represents the private sector balance?

Accepted Answer

A)  X - M 
B)  T - G 
C)  S - I 
D)  C + S + T 
A)  X - M 
B)  T - G 
C)  S - I 
D)  C + S + T

Question 11

Net exports equals

Accepted Answer

A)  exports of goods and services minus imports of goods and services. 
B)  imports of goods and services minus exports of goods and services. 
C)  the government sector balance plus the private sector balance. 
D)  Both answers A and C are correct. 
A)  exports of goods and services minus imports of goods and services. 
B)  imports of goods and services minus exports of goods and services. 
C)  the government sector balance plus the private sector balance. 
D)  Both answers A and C are correct.

Question 12

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

Accepted Answer

A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above 
A)  $2.00 Canadian. 
B)  $1.50 Canadian. 
C)  $0.50 Canadian. 
D)  none of the above

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

A decrease in the value of a currency in terms of other currencies is known as

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

-In the above table, net exports equal a

A German publishing company buys an American publishing company based in New York. In the U.S. balance of payments accounts, this transaction directly appears in

An increase in the U.S. demand for imports will the supply of dollars and lead the dollar to .

Suppose Mitsubishi Bank (a Japanese bank)expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

If net interest and net transfers are zero, and a country's exports exceed its imports, the country definitely has ________.

Suppose the exchange rate of the U.S. dollar was 1.00 euro = $0.50 on Thursday, and on Friday the exchange rate was $1.00 = 2.10 euros. Which of the following best explains what has happened between Thursday and Friday?

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. Which of the following equations represents the private sector balance?

Net exports equals

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

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

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

A decrease in the value of a currency in terms of other currencies is known as

Define official settlements account and U.S. official reserves. Discuss the differences between the two terms.

-In the above table, net exports equal a

A German publishing company buys an American publishing company based in New York. In the U.S. balance of payments accounts, this transaction directly appears in

An increase in the U.S. demand for imports will ________ the supply of dollars and lead the dollar to ________.

Suppose Mitsubishi Bank (a Japanese bank)expects the exchange rate to be 125 yen per U.S. dollar at the end of the year. If today's exchange rate is 120 yen per U.S. dollar, Mitsubishi bank

If net interest and net transfers are zero, and a country's exports exceed its imports, the country definitely has ________.

Suppose the exchange rate of the U.S. dollar was 1.00 euro = $0.50 on Thursday, and on Friday the exchange rate was $1.00 = 2.10 euros. Which of the following best explains what has happened between Thursday and Friday?

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. Which of the following equations represents the private sector balance?

Net exports equals

-In the figure above, the equilibrium exchange rate is expressed as $1 U.S. equals

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

An increase in the U.S. demand for imports will the supply of dollars and lead the dollar to .