Question 1

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

Accepted Answer

A)  $350 billion 
B)  $300 billion 
C)  -$25 billion 
D)  $25 billion 
A)  $350 billion 
B)  $300 billion 
C)  -$25 billion 
D)  $25 billion

Question 2

If the U.S. exchange rate rises, the price to foreigners of U.S.-produced goods and services ________ and the quantity of U.S. dollars demanded ________.

Accepted Answer

A)  rises; decreases 
B)  rises; increases 
C)  falls; decreases 
D)  falls; increases 
A)  rises; decreases 
B)  rises; increases 
C)  falls; decreases 
D)  falls; increases

Question 3

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

Accepted Answer

A)  it has a $1 billion surplus in its balance of payments. 
B)  it has a $1 billion deficit in its current account. 
C)  it has a $1 billion surplus in its current account. 
D)  its capital and financial account shows a surplus. 
A)  it has a $1 billion surplus in its balance of payments. 
B)  it has a $1 billion deficit in its current account. 
C)  it has a $1 billion surplus in its current account. 
D)  its capital and financial account shows a surplus.

Question 4

-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 U.S. interest rate rises. 
B)  foreign interest rates rise. 
C)  the expected future exchange rate falls. 
D)  the current exchange rate rises. 
A)  the U.S. interest rate rises. 
B)  foreign interest rates rise. 
C)  the expected future exchange rate falls. 
D)  the current exchange rate rises.

Question 5

If the Fed wants to lower the U.S. exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?

Accepted Answer

To lower the exchange rate, th

Question 6

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

Accepted Answer

A)  is the same as before. 
B)  is greater than before. 
C)  is less than before. 
D)  More information is needed to answer the question. 
A)  is the same as before. 
B)  is greater than before. 
C)  is less than before. 
D)  More information is needed to answer the question.

Question 7

-The data in the table above are the U.S. balance of payments. The sum of the current account plus capital and financial account plus official settlements account is equal to

Accepted Answer

A)  $0. 
B)  -$335 billion. 
C)  $140 billion. 
D)  -$60 billion. 
A)  $0. 
B)  -$335 billion. 
C)  $140 billion. 
D)  -$60 billion.

Question 8

What is purchasing power parity?

Accepted Answer

Purchasing power parity means

Question 9

Which of the following statements is TRUE?

Accepted Answer

A)  If private saving is greater than private investment, then the private sector has a surplus. 
B)  If private investment is greater than private saving, then the private sector has a deficit. 
C)  If private investment is greater than private saving, then either the government or net export sector must have a surplus. 
D)  All of the above answers are correct. 
A)  If private saving is greater than private investment, then the private sector has a surplus. 
B)  If private investment is greater than private saving, then the private sector has a deficit. 
C)  If private investment is greater than private saving, then either the government or net export sector must have a surplus. 
D)  All of the above answers are correct.

Question 10

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

Accepted Answer

A)  supply curve of U.S. dollars shifts rightward. 
B)  dollar will depreciate. 
C)  dollar will appreciate. 
D)  demand curve for U.S. dollars shifts rightward. 
A)  supply curve of U.S. dollars shifts rightward. 
B)  dollar will depreciate. 
C)  dollar will appreciate. 
D)  demand curve for U.S. dollars shifts rightward.

Question 11

If the value of a dollar rises in terms of yen, the dollar has ________ and the yen has ________.

Accepted Answer

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

Question 12

Which of the following statements is CORRECT?
I.The exchange rate is a price.
II.The exchange rate is different from other prices because it is NOT determined by supply and demand.

Accepted Answer

A)  only I 
B)  only II 
C)  I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  I and II 
D)  neither I nor II

Question 13

The European Commission believes that in 2016 exports of goods and services from Spain will be 22 times larger than in 2013. Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant

Accepted Answer

A)  the current account balance in both countries will become more positive. 
B)  the current account balance in both countries will become more negative. 
C)  there will be no change in the current account balance of both countries. 
D)  in both countries the capital and financial account balance will become more positive. 
A)  the current account balance in both countries will become more positive. 
B)  the current account balance in both countries will become more negative. 
C)  there will be no change in the current account balance of both countries. 
D)  in both countries the capital and financial account balance will become more positive.

Question 14

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

Accepted Answer

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

Question 15

When the U.S. dollar depreciates against the yen, the yen ________ and the exchange rate ________.

Accepted Answer

A)  appreciates; rises 
B)  depreciates; rises 
C)  appreciates; falls 
D)  depreciates; falls 
A)  appreciates; rises 
B)  depreciates; rises 
C)  appreciates; falls 
D)  depreciates; falls

Question 16

If the world real interest rate falls, then a country that is an international lender

Accepted Answer

A)  increases the amount of its lending. 
B)  does not change the amount of its lending. 
C)  decreases the amount of its lending. 
D)  None of the above answers is correct because lending might increase, decrease, or not change. 
A)  increases the amount of its lending. 
B)  does not change the amount of its lending. 
C)  decreases the amount of its lending. 
D)  None of the above answers is correct because lending might increase, decrease, or not change.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a ________ and also a ________.

Accepted Answer

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

Question 19

Define net borrower, net lender, creditor nation, and debtor nation. Discuss the difference between a net borrower and a debtor nation.

Accepted Answer

A country that is borrowing more from th

Question 20

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as ________.

Accepted Answer

A)  point B 
B)  point C 
C)  point D 
D)  point E 
A)  point B 
B)  point C 
C)  point D 
D)  point E

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

If the U.S. exchange rate rises, the price to foreigners of U.S.-produced goods and services and the quantity of U.S. dollars demanded .

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

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

If the Fed wants to lower the U.S. exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

-The data in the table above are the U.S. balance of payments. The sum of the current account plus capital and financial account plus official settlements account is equal to

What is purchasing power parity?

Which of the following statements is TRUE?

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

If the value of a dollar rises in terms of yen, the dollar has and the yen has .

Which of the following statements is CORRECT? I.The exchange rate is a price. II.The exchange rate is different from other prices because it is NOT determined by supply and demand.

The European Commission believes that in 2016 exports of goods and services from Spain will be 22 times larger than in 2013. Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

When the U.S. dollar depreciates against the yen, the yen and the exchange rate .

If the world real interest rate falls, then a country that is an international lender

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

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a and also a .

Define net borrower, net lender, creditor nation, and debtor nation. Discuss the difference between a net borrower and a debtor nation.

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as ________.

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

-The table above gives some of the entries in the national income and product accounts. What is the value of exports?

If the U.S. exchange rate rises, the price to foreigners of U.S.-produced goods and services ________ and the quantity of U.S. dollars demanded ________.

If net interest and net transfers are $0, and a nation's purchases of foreign goods and services are $3.5 billion while its sales of goods and services to foreigners are $4.5 billion

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

If the Fed wants to lower the U.S. exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?

Initially the nominal exchange rate between the South Korean won and the U.S. dollar is 950 won per dollar. If the nominal exchange rate increases to 1000 won per dollar and the U.S and Korean price levels do not change, the real exchange rate

-The data in the table above are the U.S. balance of payments. The sum of the current account plus capital and financial account plus official settlements account is equal to

What is purchasing power parity?

Which of the following statements is TRUE?

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

If the value of a dollar rises in terms of yen, the dollar has ________ and the yen has ________.

Which of the following statements is CORRECT? I.The exchange rate is a price. II.The exchange rate is different from other prices because it is NOT determined by supply and demand.

The European Commission believes that in 2016 exports of goods and services from Spain will be 22 times larger than in 2013. Irish exports are expected to have grown by 15 percent over the same period. If imports remain constant

Over its history, Spain has loaned more money abroad than foreigners have lent to it. Spain is a

When the U.S. dollar depreciates against the yen, the yen ________ and the exchange rate ________.

If the world real interest rate falls, then a country that is an international lender

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

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a ________ and also a ________.

Define net borrower, net lender, creditor nation, and debtor nation. Discuss the difference between a net borrower and a debtor nation.

-In the above figure, suppose the economy is initially at point A. The interest rate in Japan rises relative to the interest rate in the United States. As a result, there will be a change from point A to a point such as ________.

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

If the U.S. exchange rate rises, the price to foreigners of U.S.-produced goods and services and the quantity of U.S. dollars demanded .

If the value of a dollar rises in terms of yen, the dollar has and the yen has .

When the U.S. dollar depreciates against the yen, the yen and the exchange rate .

This year a country loaned more to the rest of the world than it borrowed from the rest of the world. In addition, the country has invested more in the rest of the world than other countries have invested in it. The country is currently a and also a .