Question 1

If the Irish pound declines in value against other major currencies,which of the following happens?

Accepted Answer

A) The Irish trade deficit will increase. 
B) The Irish trade deficit will be unaffected. 
C) The Irish trade deficit will decrease. 
D) Irish products will become more expensive to foreigners. 
E) Foreign goods will become cheaper in Ireland. 
A) The Irish trade deficit will increase. 
B) The Irish trade deficit will be unaffected. 
C) The Irish trade deficit will decrease. 
D) Irish products will become more expensive to foreigners. 
E) Foreign goods will become cheaper in Ireland. C

Question 2

If the current account shows a deficit,the capital account must show a surplus of the same amount.

Accepted Answer

A) True 
 B)False  False

Question 3

Managed float means

Accepted Answer

A) a fixed exchange rate system with regularly scheduled periodic devaluations 
B) a freely floating exchange rate system 
C) a hybrid of freely floating exchange rates with occasional intervention by central banks 
D) a fixed exchange rate system managed by the European Community 
E) a flexible exchange rate system managed entirely by the IMF 
A) a fixed exchange rate system with regularly scheduled periodic devaluations 
B) a freely floating exchange rate system 
C) a hybrid of freely floating exchange rates with occasional intervention by central banks 
D) a fixed exchange rate system managed by the European Community 
E) a flexible exchange rate system managed entirely by the IMF C

Question 4

An increase in the U.S.demand for foreign exchange will cause a(n)

Accepted Answer

A) increase in the price of foreign exchange,which is a depreciation of the U.S.dollar,making foreign goods cheaper to U.S.residents 
B) increase in the price of foreign exchange,which is a depreciation of the U.S.dollar,making foreign goods more expensive to U.S.residents 
C) decrease in the price of the U.S.dollar,which is an appreciation of the U.S.dollar 
D) increase in the price of foreign exchange,which is an appreciation of the U.S.dollar 
E) decrease in the price of foreign exchange,which is an appreciation of the U.S.dollar 
A) increase in the price of foreign exchange,which is a depreciation of the U.S.dollar,making foreign goods cheaper to U.S.residents 
B) increase in the price of foreign exchange,which is a depreciation of the U.S.dollar,making foreign goods more expensive to U.S.residents 
C) decrease in the price of the U.S.dollar,which is an appreciation of the U.S.dollar 
D) increase in the price of foreign exchange,which is an appreciation of the U.S.dollar 
E) decrease in the price of foreign exchange,which is an appreciation of the U.S.dollar

Question 5

The Bretton Woods system

Accepted Answer

A) established a worldwide gold standard 
B) established a worldwide system of fixed exchange rates 
C) established a worldwide system of flexible exchange rates 
D) harmonized tariff systems 
E) was restricted to industrialized nations 
A) established a worldwide gold standard 
B) established a worldwide system of fixed exchange rates 
C) established a worldwide system of flexible exchange rates 
D) harmonized tariff systems 
E) was restricted to industrialized nations

Question 6

All of the following are true concerning the flexible exchange rate system except one.Which is the exception?

Accepted Answer

A) It is the same as a floating exchange rate system. 
B) It is a system in which supply and demand determine the exchange rate. 
C) Government officials have little direct role in the foreign exchange market. 
D) Exchange rates may fluctuate considerably from time to time. 
E) Exchange rates are fixed by the central banks of the various countries. 
A) It is the same as a floating exchange rate system. 
B) It is a system in which supply and demand determine the exchange rate. 
C) Government officials have little direct role in the foreign exchange market. 
D) Exchange rates may fluctuate considerably from time to time. 
E) Exchange rates are fixed by the central banks of the various countries.

Question 7

Under the Bretton Woods agreement,

Accepted Answer

A) nations could not adjust their exchange rates relative to the dollar for any reason 
B) currency values were based on a market basket of European currencies plus the dollar 
C) the world monetary system operated exactly like the gold standard of pre-World War II years 
D) the dollar was selected as the key reserve currency 
E) gold played no role 
A) nations could not adjust their exchange rates relative to the dollar for any reason 
B) currency values were based on a market basket of European currencies plus the dollar 
C) the world monetary system operated exactly like the gold standard of pre-World War II years 
D) the dollar was selected as the key reserve currency 
E) gold played no role

Question 8

A wealthy Japanese executive decides to buy a large amount of U.S.assets.This would contribute to

Accepted Answer

A) a deficit in the U.S.current account 
B) a deficit in the U.S.capital account 
C) a surplus in the U.S.current account 
D) a surplus in the U.S.capital account 
E) a deficit in the total balance of payments 
A) a deficit in the U.S.current account 
B) a deficit in the U.S.capital account 
C) a surplus in the U.S.current account 
D) a surplus in the U.S.capital account 
E) a deficit in the total balance of payments

Question 9

Under a gold standard,

Accepted Answer

A) a nation's currency can be traded for gold at a fixed rate 
B) a nation's central bank or monetary authority has absolute control over its money supply 
C) new discoveries of gold have no effect on money supply or prices 
D) prices are constant (there is no inflation and no deflation) 
E) all international transactions are financed with gold 
A) a nation's currency can be traded for gold at a fixed rate 
B) a nation's central bank or monetary authority has absolute control over its money supply 
C) new discoveries of gold have no effect on money supply or prices 
D) prices are constant (there is no inflation and no deflation) 
E) all international transactions are financed with gold

Question 10

Which one of the following is not true?

Accepted Answer

A) An exchange rate is the price of one currency in terms of another. 
B) An exchange rate is the means by which the price of a good in one country is translated into the price to the buyer in another country. 
C) The cost of a foreign good in dollars will depend on the current exchange rate. 
D) The exchange rate will affect the willingness of foreign buyers and sellers to trade with each other. 
E) The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions. 
A) An exchange rate is the price of one currency in terms of another. 
B) An exchange rate is the means by which the price of a good in one country is translated into the price to the buyer in another country. 
C) The cost of a foreign good in dollars will depend on the current exchange rate. 
D) The exchange rate will affect the willingness of foreign buyers and sellers to trade with each other. 
E) The exchange rate is the price of a currency in terms of another currency for exchanges of goods and services but not for financial transactions.

Question 11

The value of a country's exports is listed in its balance of payments account as a(n)

Accepted Answer

A) credit 
B) debit 
C) payment 
D) investment 
E) unilateral transfer 
A) credit 
B) debit 
C) payment 
D) investment 
E) unilateral transfer

Question 12

A leftward shift of the Japanese demand curve for foreign exchange will

Accepted Answer

A) increase the price of foreign exchange in Japan 
B) decrease the value of the yen 
C) make foreign goods more expensive in terms of yen 
D) make foreign goods less expensive in terms of yen 
E) make Japanese goods less expensive in terms of foreign exchange 
A) increase the price of foreign exchange in Japan 
B) decrease the value of the yen 
C) make foreign goods more expensive in terms of yen 
D) make foreign goods less expensive in terms of yen 
E) make Japanese goods less expensive in terms of foreign exchange

Question 13

If on Monday $1 = 146 Japanese yen and on Friday $1 = 147 yen,the dollar appreciated and the yen depreciated.

Accepted Answer

A) True 
 B)False

Question 14

If $1 equals 2 euros,then 1 euro equals

Accepted Answer

A) $4.00 
B) $2.00 
C) $0.50 
D) $1.00 
E) $0.25 
A) $4.00 
B) $2.00 
C) $0.50 
D) $1.00 
E) $0.25

Question 15

If a foreign currency becomes more expensive in United States dollars,we would expect

Accepted Answer

A) U.S.exports to increase 
B) U.S.imports to increase 
C) U.S.exports to remain constant 
D) U.S.exports to decrease 
E) the quantity of foreign currency demanded in the United States to rise 
A) U.S.exports to increase 
B) U.S.imports to increase 
C) U.S.exports to remain constant 
D) U.S.exports to decrease 
E) the quantity of foreign currency demanded in the United States to rise

Question 16

The balance of goods and services is

Accepted Answer

A) the same as the merchandise trade balance,since services cannot be traded 
B) equivalent to the trade balance 
C) the value of all goods and services exported minus the value of all goods and services imported 
D) the value of all tangible products exported minus the value of all tangible products imported 
E) the value of all tangible products exported minus the value of all tangible products imported,and transactions to finance the difference 
A) the same as the merchandise trade balance,since services cannot be traded 
B) equivalent to the trade balance 
C) the value of all goods and services exported minus the value of all goods and services imported 
D) the value of all tangible products exported minus the value of all tangible products imported 
E) the value of all tangible products exported minus the value of all tangible products imported,and transactions to finance the difference

Question 17

The demand curve for foreign exchange

Accepted Answer

A) slopes downward 
B) slopes upward 
C) is horizontal,because no individual country can influence the price of foreign exchange 
D) is vertical,because no individual country can influence the price of foreign exchange 
E) may slope downward or upward 
A) slopes downward 
B) slopes upward 
C) is horizontal,because no individual country can influence the price of foreign exchange 
D) is vertical,because no individual country can influence the price of foreign exchange 
E) may slope downward or upward

Question 18

If on Tuesday you can buy 125 yen per U.S.dollar and on Wednesday you can buy 120 yen per U.S.dollar,

Accepted Answer

A) both the U.S.dollar and the yen have appreciated 
B) both the U.S.dollar and the yen have depreciated 
C) the U.S.dollar has appreciated and the yen has depreciated 
D) the U.S.dollar has depreciated and the yen has appreciated 
E) the yen has appreciated and the U.S.dollar has remained constant 
A) both the U.S.dollar and the yen have appreciated 
B) both the U.S.dollar and the yen have depreciated 
C) the U.S.dollar has appreciated and the yen has depreciated 
D) the U.S.dollar has depreciated and the yen has appreciated 
E) the yen has appreciated and the U.S.dollar has remained constant

Question 19

An exchange rate is

Accepted Answer

A) the rate at which goods are traded between countries 
B) the rate of the net difference between exports and imports 
C) the denomination of currency used to purchase imports 
D) the price of one currency in terms of another 
E) the price at which one good trades for another 
A) the rate at which goods are traded between countries 
B) the rate of the net difference between exports and imports 
C) the denomination of currency used to purchase imports 
D) the price of one currency in terms of another 
E) the price at which one good trades for another

Question 20

Since 1983,the US has typically run a financial account surplus.

Accepted Answer

A) True 
 B)False

Exam 20: International Finance

If the Irish pound declines in value against other major currencies,which of the following happens?

If the current account shows a deficit,the capital account must show a surplus of the same amount.

Managed float means

An increase in the U.S.demand for foreign exchange will cause a(n)

The Bretton Woods system

All of the following are true concerning the flexible exchange rate system except one.Which is the exception?

Under the Bretton Woods agreement,

A wealthy Japanese executive decides to buy a large amount of U.S.assets.This would contribute to

Under a gold standard,

Which one of the following is not true?

The value of a country's exports is listed in its balance of payments account as a(n)

A leftward shift of the Japanese demand curve for foreign exchange will

If on Monday $1 = 146 Japanese yen and on Friday $1 = 147 yen,the dollar appreciated and the yen depreciated.

If $1 equals 2 euros,then 1 euro equals

If a foreign currency becomes more expensive in United States dollars,we would expect

The balance of goods and services is

The demand curve for foreign exchange

If on Tuesday you can buy 125 yen per U.S.dollar and on Wednesday you can buy 120 yen per U.S.dollar,

An exchange rate is

Since 1983,the US has typically run a financial account surplus.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters