Question 1

If there is ________ in prices overseas relative to Australia,the demand for ________ in the foreign exchange market.

Accepted Answer

A)  an increase; Australian dollars will increase 
B)  an increase; Australian dollars will decrease 
C)  a decrease; foreign currencies will decrease 
D)  None of these options is correct. 
A)  an increase; Australian dollars will increase 
B)  an increase; Australian dollars will decrease 
C)  a decrease; foreign currencies will decrease 
D)  None of these options is correct. A

Question 2

The International Monetary Fund was established during the Bretton Woods System to

Accepted Answer

A)  determine the rate of British pounds per ounce of gold. 
B)  determine which central banks were eligible to have a fixed exchange rate. 
C)  provide loans to central banks that did not have sufficient United States dollars. 
D)  try to move countries to floating exchange rates. 
A)  determine the rate of British pounds per ounce of gold. 
B)  determine which central banks were eligible to have a fixed exchange rate. 
C)  provide loans to central banks that did not have sufficient United States dollars. 
D)  try to move countries to floating exchange rates. C

Question 3

Suppose that the euro depreciates against the dollar.Assuming all other factors remain constant,the real exchange rate of euros to Australian dollars will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  increase and then decrease. 
D)  remain constant. 
A)  increase. 
B)  decrease. 
C)  increase and then decrease. 
D)  remain constant. B

Question 4

A current account deficit must be exactly offset by a capital and financial account surplus.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a capital inflow into Australia?

Accepted Answer

A)  An Australian investor buys a Japanese bond. 
B)  An Australian firm buys and builds a factory in Indonesia. 
C)  A Chinese investor buys an Australian government bond. 
D)  An Australian firm buys a German bond. 
A)  An Australian investor buys a Japanese bond. 
B)  An Australian firm buys and builds a factory in Indonesia. 
C)  A Chinese investor buys an Australian government bond. 
D)  An Australian firm buys a German bond.

Question 6

Net foreign investment is a measure of net capital outflows,equal to capital outflows minus capital inflows in a given period of accounting.

Accepted Answer

A) True 
 B)False

Question 7

An example of foreign direct investment is

Accepted Answer

A)  BMW building a factory in India. 
B)  an Australian investor buying shares in a British firm. 
C)  an Australian investor buying a Canadian bond. 
D)  an Australian firm buying a Japanese government bond. 
A)  BMW building a factory in India. 
B)  an Australian investor buying shares in a British firm. 
C)  an Australian investor buying a Canadian bond. 
D)  an Australian firm buying a Japanese government bond.

Question 8

If net primary income and net secondary income are $0,and a country's purchases of foreign goods and services are $25 billion while its sales of goods and services overseas are $26 billion,it has a

Accepted Answer

A)  $1 billion deficit in its current account. 
B)  surplus of $1 billion in its balance of payments. 
C)  surplus of $26 billion in its current account. 
D)  $1 billion surplus in its current account. 
A)  $1 billion deficit in its current account. 
B)  surplus of $1 billion in its balance of payments. 
C)  surplus of $26 billion in its current account. 
D)  $1 billion surplus in its current account.

Question 9

What is the savings and investment equation? If S > I,then what is true of net foreign investment? Explain,using the savings and investment equation.

Accepted Answer

The savings and investment equation is:

Question 10

When Australia sends money to the Philippines to help typhoon survivors,the transaction is recorded in the

Accepted Answer

A)  capital account. 
B)  current account. 
C)  financial account. 
D)  foreign exchange account. 
A)  capital account. 
B)  current account. 
C)  financial account. 
D)  foreign exchange account.

Question 11

An excess demand for dollars in exchange for yen will cause

Accepted Answer

A)  no change in the exchange rate of the yen to the dollar. 
B)  the dollar to appreciate relative to the yen. 
C)  the yen to appreciate against all major currencies. 
D)  the dollar to decline in value relative to the yen. 
A)  no change in the exchange rate of the yen to the dollar. 
B)  the dollar to appreciate relative to the yen. 
C)  the yen to appreciate against all major currencies. 
D)  the dollar to decline in value relative to the yen.

Question 12

Figure 19.1  
-Refer to Figure 19.1.Which of the following events causes the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Accepted Answer

A)  Interest rates rise in England. 
B)  Interest rates rise in Australia. 
C)  Real income rises in Australia. 
D)  Real income falls in England. 
A)  Interest rates rise in England. 
B)  Interest rates rise in Australia. 
C)  Real income rises in Australia. 
D)  Real income falls in England.

Question 13

Suppose an Xbox costs $150 in the United States of America (USA)and £75 in Great Britain.Suppose the exchange rate is $US1 = £1.Does purchasing power parity suggest that the dollar should appreciate or depreciate against the pound? What will happen if consumers in Great Britain like the Xbox less than United States (US)consumers?

Accepted Answer

Purchasing power parity states that,in t

Question 14

Which of the following is an item in Australia's financial account?

Accepted Answer

A)  Net secondary income 
B)  Net primary income 
C)  Net exports of goods and services 
D)  The change in private Australian assets abroad 
A)  Net secondary income 
B)  Net primary income 
C)  Net exports of goods and services 
D)  The change in private Australian assets abroad

Question 15

If the purchase by foreigners of Australian assets decreased,we would expect the demand for Australian dollars to ________ and 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 16

In international exchange markets,a rise in interest rates in Australia,ceteris paribus,will cause the demand for dollars to ________ and the supply of dollars to ________.

Accepted Answer

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

Question 17

If foreign holdings of Australian dollars decrease,holding all else constant,the

Accepted Answer

A)  balance on Australia's financial account will decrease. 
B)  balance on Australia's current account will decrease. 
C)  balance on Australia's capital account will decrease. 
D)  Australian balance of trade on goods and services will decrease. 
A)  balance on Australia's financial account will decrease. 
B)  balance on Australia's current account will decrease. 
C)  balance on Australia's capital account will decrease. 
D)  Australian balance of trade on goods and services will decrease.

Question 18

Why is the net primary income component in Australia's current account always negative?

Accepted Answer

As Australia's domestic saving is low,Au

Question 19

A country's balance of payments is best described as a system that records

Accepted Answer

A)  the physical flow of goods and services between countries. 
B)  international trading, borrowing and lending flows. 
C)  only official transactions between the government and governments of other countries. 
D)  the flow of investment between countries. 
A)  the physical flow of goods and services between countries. 
B)  international trading, borrowing and lending flows. 
C)  only official transactions between the government and governments of other countries. 
D)  the flow of investment between countries.

Question 20

If you know that a country's net foreign investment is positive,what does that tell you about the relationship between the country's national saving and private investment?

Accepted Answer

For any country,national saving must equ

If there is in prices overseas relative to Australia,the demand for in the foreign exchange market.

The International Monetary Fund was established during the Bretton Woods System to

Suppose that the euro depreciates against the dollar.Assuming all other factors remain constant,the real exchange rate of euros to Australian dollars will

A current account deficit must be exactly offset by a capital and financial account surplus.

Which of the following is a capital inflow into Australia?

Net foreign investment is a measure of net capital outflows,equal to capital outflows minus capital inflows in a given period of accounting.

An example of foreign direct investment is

If net primary income and net secondary income are $0,and a country's purchases of foreign goods and services are $25 billion while its sales of goods and services overseas are $26 billion,it has a

What is the savings and investment equation? If S > I,then what is true of net foreign investment? Explain,using the savings and investment equation.

When Australia sends money to the Philippines to help typhoon survivors,the transaction is recorded in the

An excess demand for dollars in exchange for yen will cause

Figure 19.1 -Refer to Figure 19.1.Which of the following events causes the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Which of the following is an item in Australia's financial account?

If the purchase by foreigners of Australian assets decreased,we would expect the demand for Australian dollars to and the dollar to .

In international exchange markets,a rise in interest rates in Australia,ceteris paribus,will cause the demand for dollars to and the supply of dollars to .

If foreign holdings of Australian dollars decrease,holding all else constant,the

Why is the net primary income component in Australia's current account always negative?

A country's balance of payments is best described as a system that records

If you know that a country's net foreign investment is positive,what does that tell you about the relationship between the country's national saving and private investment?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Exam 19: Comparative Advantage, international Trade, and Exchange Rates

If there is ________ in prices overseas relative to Australia,the demand for ________ in the foreign exchange market.

The International Monetary Fund was established during the Bretton Woods System to

Suppose that the euro depreciates against the dollar.Assuming all other factors remain constant,the real exchange rate of euros to Australian dollars will

A current account deficit must be exactly offset by a capital and financial account surplus.

Which of the following is a capital inflow into Australia?

Net foreign investment is a measure of net capital outflows,equal to capital outflows minus capital inflows in a given period of accounting.

An example of foreign direct investment is

If net primary income and net secondary income are $0,and a country's purchases of foreign goods and services are $25 billion while its sales of goods and services overseas are $26 billion,it has a

What is the savings and investment equation? If S > I,then what is true of net foreign investment? Explain,using the savings and investment equation.

When Australia sends money to the Philippines to help typhoon survivors,the transaction is recorded in the

An excess demand for dollars in exchange for yen will cause

Figure 19.1 -Refer to Figure 19.1.Which of the following events causes the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Which of the following is an item in Australia's financial account?

If the purchase by foreigners of Australian assets decreased,we would expect the demand for Australian dollars to ________ and the dollar to ________.

In international exchange markets,a rise in interest rates in Australia,ceteris paribus,will cause the demand for dollars to ________ and the supply of dollars to ________.

If foreign holdings of Australian dollars decrease,holding all else constant,the

Why is the net primary income component in Australia's current account always negative?

A country's balance of payments is best described as a system that records

If you know that a country's net foreign investment is positive,what does that tell you about the relationship between the country's national saving and private investment?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

If there is in prices overseas relative to Australia,the demand for in the foreign exchange market.

If the purchase by foreigners of Australian assets decreased,we would expect the demand for Australian dollars to and the dollar to .

In international exchange markets,a rise in interest rates in Australia,ceteris paribus,will cause the demand for dollars to and the supply of dollars to .