Question 1

The exchange rate is $1 = 110 yen.If the price of a Japanese good is 37,500 yen,what is the approximate price of the good in dollars?

Accepted Answer

A) $29.45 
B) $4,125,000 
C) $294.49 
D) $340.91 
E) none of the above 
A) $29.45 
B) $4,125,000 
C) $294.49 
D) $340.91 
E) none of the above

Question 2

The higher the U.S.dollar price per Mexican peso,the __________ Mexican goods are for Americans and the __________ Mexican goods Americans will buy;thus __________ pesos will be demanded.

Accepted Answer

A) more expensive;fewer,more 
B) less expensive;more,fewer 
C) more expensive;fewer,fewer 
D) less expensive;fewer,more 
E) none of the above 
A) more expensive;fewer,more 
B) less expensive;more,fewer 
C) more expensive;fewer,fewer 
D) less expensive;fewer,more 
E) none of the above

Question 3

Suppose there is a decrease in U.S.income and Mexican income does not change.We would expect to see

Accepted Answer

A) both the dollar and the peso depreciate. 
B) both the dollar and the peso appreciate. 
C) the dollar depreciate and the peso appreciate. 
D) the dollar appreciate and the peso depreciate. 
A) both the dollar and the peso depreciate. 
B) both the dollar and the peso appreciate. 
C) the dollar depreciate and the peso appreciate. 
D) the dollar appreciate and the peso depreciate.

Question 4

Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.12 per peso,and then changes to $0.09 per peso.The result will be that Americans will buy __________ pesos because Mexican goods become relatively __________ expensive.

Accepted Answer

A) fewer;more 
B) fewer;less 
C) more;more 
D) more;less 
A) fewer;more 
B) fewer;less 
C) more;more 
D) more;less

Question 5

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen,then a __________ exists.

Accepted Answer

A) shortage of dollars 
B) surplus of dollars 
C) surplus of yen 
D) shortage of yen 
E) b and d 
A) shortage of dollars 
B) surplus of dollars 
C) surplus of yen 
D) shortage of yen 
E) b and d

Question 6

You go on vacation to Mexico and take $1,000 with you.During your time in Mexico,the peso appreciates in value relative to the dollar.It follows that

Accepted Answer

A) you will be able to buy more goods and services in Mexico after the peso appreciates. 
B) you will be able to buy fewer goods and services in Mexico after the peso appreciates. 
C) the purchasing power parity theory is incorrect. 
D) Mexican workers,paid in pesos,will be able to buy fewer goods and services in Mexico after the peso appreciates. 
A) you will be able to buy more goods and services in Mexico after the peso appreciates. 
B) you will be able to buy fewer goods and services in Mexico after the peso appreciates. 
C) the purchasing power parity theory is incorrect. 
D) Mexican workers,paid in pesos,will be able to buy fewer goods and services in Mexico after the peso appreciates.

Question 7

If,as a result of market forces,the exchange rate changes from $1 equals 11 pesos to $1 equals 9 pesos,then the dollar has

Accepted Answer

A) appreciated. 
B) been revalued. 
C) been devalued. 
D) depreciated. 
E) There is not enough information to answer the question. 
A) appreciated. 
B) been revalued. 
C) been devalued. 
D) depreciated. 
E) There is not enough information to answer the question.

Question 8

The foreign exchange market is the market where

Accepted Answer

A) goods and services of different countries are exchanged. 
B) currencies of different countries are exchanged. 
C) transportation services for foreign goods are contracted. 
D) either a or c 
E) none of the above 
A) goods and services of different countries are exchanged. 
B) currencies of different countries are exchanged. 
C) transportation services for foreign goods are contracted. 
D) either a or c 
E) none of the above

Question 9

A currency has depreciated in value if it takes more of a foreign currency to buy it.

Accepted Answer

A) True 
 B)False

Question 10

Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,

Accepted Answer

A) there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate. 
B) nations that experience persistent trade deficits might be tempted to impose trade barriers. 
C) nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate. 
D) b and c 
E) a,b,and c 
A) there is too great a chance that the exchange rate will diverge from the equilibrium exchange rate. 
B) nations that experience persistent trade deficits might be tempted to impose trade barriers. 
C) nations might sacrifice their domestic economic policy goals for the sake of maintaining the exchange rate. 
D) b and c 
E) a,b,and c

Question 11

Suppose the current exchange rate between the U.S.dollar and the Mexican peso is $0.10 = 1 peso.Furthermore,suppose the price level in Mexico rises 15 percent while the U.S.price level remains constant.According to the purchasing power parity theory,which of the following exchange rates comes closest to being the equilibrium exchange rate?

Accepted Answer

A) $0.087 = 1 peso 
B) $0.085 = 1 peso 
C) $0.115 = 1 peso 
D) $0.13 = 1 peso 
A) $0.087 = 1 peso 
B) $0.085 = 1 peso 
C) $0.115 = 1 peso 
D) $0.13 = 1 peso

Question 12

Under a fixed exchange rate system,if the dollar price of Mexican pesos is above its equilibrium level,the peso is referred to as overvalued and the dollar is necessarily undervalued.

Accepted Answer

A) True 
 B)False

Question 13

If,under a fixed exchange rate system,the dollar price of Mexican pesos is below its equilibrium level,then the

Accepted Answer

A) dollar is undervalued. 
B) peso is undervalued. 
C) dollar has depreciated. 
D) peso has appreciated. 
E) a and c 
A) dollar is undervalued. 
B) peso is undervalued. 
C) dollar has depreciated. 
D) peso has appreciated. 
E) a and c

Question 14

Those economists who argue that the European Union is not a true optimal currency area cite _______________ and __________________ as justifications for this position.

Accepted Answer

A) differences in culture;decreased labor mobility 
B) differences in language;culture 
C) decreased labor mobility;language differences 
D) none of the above 
A) differences in culture;decreased labor mobility 
B) differences in language;culture 
C) decreased labor mobility;language differences 
D) none of the above

Question 15

In a foreign exchange market diagram with pesos per dollar on the vertical axis,the quantity of __________ would be on the horizontal axis,and the U.S.demand for Mexican goods would help to determine the __________ curve.

Accepted Answer

A) dollars;demand 
B) dollars;supply 
C) pesos;demand 
D) pesos;supply 
A) dollars;demand 
B) dollars;supply 
C) pesos;demand 
D) pesos;supply

Question 16

If the average income per U.S.worker decreases while that of Japanese workers remains unchanged,then the demand curve for Japanese yen will shift __________,which will cause the equilibrium exchange rate of the dollar price per yen to __________,which is the same thing as saying that the dollar will __________.

Accepted Answer

A) rightward;rise;appreciate 
B) leftward;fall;appreciate 
C) rightward;rise;depreciate 
D) leftward;fall;depreciate 
E) rightward;fall;depreciate 
A) rightward;rise;appreciate 
B) leftward;fall;appreciate 
C) rightward;rise;depreciate 
D) leftward;fall;depreciate 
E) rightward;fall;depreciate

Question 17

An American computer is priced at $1,200.If the exchange rate between the U.S.dollar and the Mexican peso is $0.09 = 1 peso,approximately how many pesos would a Mexican buyer pay for the computer?

Accepted Answer

A) 13,333 pesos 
B) 108 pesos 
C) 133.50 pesos 
D) 15,075 pesos 
A) 13,333 pesos 
B) 108 pesos 
C) 133.50 pesos 
D) 15,075 pesos

Question 18

An American computer is priced at $1,200.If the exchange rate between the U.S.dollar and the Japanese yen is $0.01 per yen,the equivalent price of the computer in yen is approximately __________ yen.

Accepted Answer

A) 12,000 
B) 12 
C) 1,200,000 
D) 120,000 
A) 12,000 
B) 12 
C) 1,200,000 
D) 120,000

Question 19

Some economists have found that U.S.imports of Chinese goods and resources

Accepted Answer

A) lower the price of goods for U.S.consumers. 
B) lower the cost of inputs for U.S.firms. 
C) increase the variety of products in U.S.markets. 
D) may enhance productivity of U.S.firms. 
E) all of the above 
A) lower the price of goods for U.S.consumers. 
B) lower the cost of inputs for U.S.firms. 
C) increase the variety of products in U.S.markets. 
D) may enhance productivity of U.S.firms. 
E) all of the above

Question 20

When exports of American goods increase,this __________ the demand for U.S.dollars and at the same time __________ foreign currencies.

Accepted Answer

A) increases;increases the supply of 
B) decreases;increases the supply of 
C) increases;decreases the supply of 
D) increases;increases the demand for 
E) none of the above 
A) increases;increases the supply of 
B) decreases;increases the supply of 
C) increases;decreases the supply of 
D) increases;increases the demand for 
E) none of the above

Exam 22: International Trade

The exchange rate is $1 = 110 yen.If the price of a Japanese good is 37,500 yen,what is the approximate price of the good in dollars?

The higher the U.S.dollar price per Mexican peso,the __________ Mexican goods are for Americans and the __________ Mexican goods Americans will buy;thus __________ pesos will be demanded.

Suppose there is a decrease in U.S.income and Mexican income does not change.We would expect to see

Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.12 per peso,and then changes to $0.09 per peso.The result will be that Americans will buy __________ pesos because Mexican goods become relatively __________ expensive.

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen,then a __________ exists.

You go on vacation to Mexico and take $1,000 with you.During your time in Mexico,the peso appreciates in value relative to the dollar.It follows that

If,as a result of market forces,the exchange rate changes from $1 equals 11 pesos to $1 equals 9 pesos,then the dollar has

The foreign exchange market is the market where

A currency has depreciated in value if it takes more of a foreign currency to buy it.

Proponents of the flexible exchange rate system argue that under a fixed exchange rate system,

Under a fixed exchange rate system,if the dollar price of Mexican pesos is above its equilibrium level,the peso is referred to as overvalued and the dollar is necessarily undervalued.

If,under a fixed exchange rate system,the dollar price of Mexican pesos is below its equilibrium level,then the

Those economists who argue that the European Union is not a true optimal currency area cite _______________ and __________________ as justifications for this position.

In a foreign exchange market diagram with pesos per dollar on the vertical axis,the quantity of __________ would be on the horizontal axis,and the U.S.demand for Mexican goods would help to determine the __________ curve.

An American computer is priced at $1,200.If the exchange rate between the U.S.dollar and the Mexican peso is $0.09 = 1 peso,approximately how many pesos would a Mexican buyer pay for the computer?

An American computer is priced at $1,200.If the exchange rate between the U.S.dollar and the Japanese yen is $0.01 per yen,the equivalent price of the computer in yen is approximately __________ yen.

Some economists have found that U.S.imports of Chinese goods and resources

When exports of American goods increase,this __________ the demand for U.S.dollars and at the same time __________ foreign currencies.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

The higher the U.S.dollar price per Mexican peso,the Mexican goods are for Americans and the Mexican goods Americans will buy;thus __ pesos will be demanded.

Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.12 per peso,and then changes to $0.09 per peso.The result will be that Americans will buy pesos because Mexican goods become relatively expensive.

Those economists who argue that the European Union is not a true optimal currency area cite _ and ____ as justifications for this position.

In a foreign exchange market diagram with pesos per dollar on the vertical axis,the quantity of would be on the horizontal axis,and the U.S.demand for Mexican goods would help to determine the curve.

When exports of American goods increase,this the demand for U.S.dollars and at the same time foreign currencies.