Question 1

Under the gold standard,gold discoveries in Alaska and South America led to

Accepted Answer

A) both c and d 
B) a decrease in the domestic money supply 
C) inflation 
D) an increase in the domestic money supply 
E) deflation 
A) both c and d 
B) a decrease in the domestic money supply 
C) inflation 
D) an increase in the domestic money supply 
E) deflation

Question 2

Devaluation of a domestic currency

Accepted Answer

A) is also called revaluation 
B) refers to an increase in a floating exchange rate 
C) refers to a decrease in a floating exchange rate 
D) refers to an increase in a fixed exchange rate 
E) refers to a decrease in a fixed exchange rate 
A) is also called revaluation 
B) refers to an increase in a floating exchange rate 
C) refers to a decrease in a floating exchange rate 
D) refers to an increase in a fixed exchange rate 
E) refers to a decrease in a fixed exchange rate

Question 3

A drop in dollar price of British pounds means that

Accepted Answer

A) fewer dollars are needed to buy British pounds 
B) more dollars are needed to buy British pounds 
C) the mark has appreciated 
D) the dollar has depreciated 
E) British goods are now more expensive to Americans 
A) fewer dollars are needed to buy British pounds 
B) more dollars are needed to buy British pounds 
C) the mark has appreciated 
D) the dollar has depreciated 
E) British goods are now more expensive to Americans

Question 4

Foreign exchange means

Accepted Answer

A) changing dollars into foreign currency 
B) domestic currency held to finance international trade 
C) foreign currency 
D) trade between governments 
E) trade between individuals in different countries 
A) changing dollars into foreign currency 
B) domestic currency held to finance international trade 
C) foreign currency 
D) trade between governments 
E) trade between individuals in different countries

Question 5

Under a fixed exchange rate system,an increase in Japanese demand for U.S.agricultural goods would

Accepted Answer

A) cause the U.S.balance of trade to worsen 
B) increase the supply of yen relative to the dollar 
C) decrease Japanese demand for dollars 
D) cause the yen to appreciate 
E) cause an immediate revaluation of the yen 
A) cause the U.S.balance of trade to worsen 
B) increase the supply of yen relative to the dollar 
C) decrease Japanese demand for dollars 
D) cause the yen to appreciate 
E) cause an immediate revaluation of the yen

Question 6

Between 1917 and 1982,the US ran a financial account deficit.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would contribute,directly or indirectly,to a deficit in the capital account of the U.S.balance of payments?

Accepted Answer

A) A British citizen buys stock in Ford. 
B) A British citizen buys a bond from Ford. 
C) Interest rates fall in the United States relative to their level in the rest of the world. 
D) Australian publisher Rupert Murdoch buys The New York Times. 
E) Developing countries become more stable and so borrow less from U.S.banks. 
A) A British citizen buys stock in Ford. 
B) A British citizen buys a bond from Ford. 
C) Interest rates fall in the United States relative to their level in the rest of the world. 
D) Australian publisher Rupert Murdoch buys The New York Times. 
E) Developing countries become more stable and so borrow less from U.S.banks.

Question 8

Exhibit 18-3  
-In Exhibit 18-3,all of the following except one would cause the demand for pesos to shift from D to D',except one.Which is the exception?

Accepted Answer

A) an increase in income in the United States 
B) inflation in the United States 
C) a fall in income in the United States 
D) inflation in Central America 
E) an increase in wealth in the United States 
A) an increase in income in the United States 
B) inflation in the United States 
C) a fall in income in the United States 
D) inflation in Central America 
E) an increase in wealth in the United States

Question 9

The Bretton Woods agreement established the gold standard.

Accepted Answer

A) True 
 B)False

Question 10

Exchange rates

Accepted Answer

A) are always fixed 
B) fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied 
C) fluctuate to equate imports and exports 
D) fluctuate to equate interest rates in various countries 
E) fluctuate according to agreements between the governments of various countries 
A) are always fixed 
B) fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied 
C) fluctuate to equate imports and exports 
D) fluctuate to equate interest rates in various countries 
E) fluctuate according to agreements between the governments of various countries

Question 11

Wayne Brown is a Canadian citizen studying on our campus.When he came to school last fall,he had 400 Canadian dollars (C$),which at that time were worth $300 U.S.dollars (US$).When he went back to Canada in June,US$300 could purchase C$450.In June,the U.S.dollar purchased

Accepted Answer

A) 12.5 percent more Canadian dollars than it did last fall 
B) 12.5 percent fewer Canadian dollars than it did last fall 
C) 11.11 percent more Canadian dollars than it did last fall 
D) 11.11 percent fewer Canadian dollars than it did last fall 
E) the same amount of Canadian dollars,in percentage terms,as it did last fall 
A) 12.5 percent more Canadian dollars than it did last fall 
B) 12.5 percent fewer Canadian dollars than it did last fall 
C) 11.11 percent more Canadian dollars than it did last fall 
D) 11.11 percent fewer Canadian dollars than it did last fall 
E) the same amount of Canadian dollars,in percentage terms,as it did last fall

Question 12

Exhibit 18-8  
-Exhibit 18-8 shows the market for euros in the US.Initially the demand for euros is represented by D1 and the supply of euros is represented by S1.Equilibrium in the market for euros is at point A.In response to an increase in the income of US consumers the equilibrium moves to point D and the euro ________.

Accepted Answer

A) appreciates in value 
B) depreciates in value 
C) is devalued 
D) is revalued 
E) accommodates 
A) appreciates in value 
B) depreciates in value 
C) is devalued 
D) is revalued 
E) accommodates

Question 13

Net unilateral transfers in the United States in 2011 averaged about ______ per US resident.

Accepted Answer

A) $1250 
B) $850 
C) $520 
D) $440 
E) $210 
A) $1250 
B) $850 
C) $520 
D) $440 
E) $210

Question 14

Imagine that there are only two nations in the world,the United States and Mexico.If Mexico experiences a drop in the price of foreign exchange,people in Mexico will

Accepted Answer

A) have to buy more U.S.currency,because prices of imports from the United States will have increased 
B) end up buying less U.S.currency,because U.S.prices on goods will decrease to everyone 
C) be able to afford less U.S.currency,and imports from the United States will be more expensive 
D) be able to afford more U.S.currency,and imports from the United States will be cheaper 
E) be able to afford more U.S.currency,and imports from the United States will be more expensive 
A) have to buy more U.S.currency,because prices of imports from the United States will have increased 
B) end up buying less U.S.currency,because U.S.prices on goods will decrease to everyone 
C) be able to afford less U.S.currency,and imports from the United States will be more expensive 
D) be able to afford more U.S.currency,and imports from the United States will be cheaper 
E) be able to afford more U.S.currency,and imports from the United States will be more expensive

Question 15

Exhibit 18-6  
-In Exhibit 18-6 the free market exchange rate would be

Accepted Answer

A) equal to $.50 
B) equal to $.53 
C) less than $.50 
D) greater than $.53 
E) indeterminate 
A) equal to $.50 
B) equal to $.53 
C) less than $.50 
D) greater than $.53 
E) indeterminate

Question 16

Because of the accounting techniques used,the balance of payments shows that debits equal credits only if exports equal imports.

Accepted Answer

A) True 
 B)False

Question 17

If the U.S.dollar depreciates in the foreign exchange market,American exports will be __________ and American imports will be __________.

Accepted Answer

A) more expensive; more expensive 
B) cheaper; cheaper 
C) less expensive; less expensive 
D) less expensive; more expensive 
E) there will be no change 
A) more expensive; more expensive 
B) cheaper; cheaper 
C) less expensive; less expensive 
D) less expensive; more expensive 
E) there will be no change

Question 18

If the U.S.dollar appreciates relative to the Brazilian cruzeiro,then

Accepted Answer

A) the U.S.dollar-cruzeiro exchange rate will increase 
B) U.S.goods become less expensive in Brazil 
C) Brazilian goods become more expensive in the U.S. 
D) Brazilian investors will pay fewer cruzeiros to buy each U.S.dollar 
E) the U.S.will import more from Brazil 
A) the U.S.dollar-cruzeiro exchange rate will increase 
B) U.S.goods become less expensive in Brazil 
C) Brazilian goods become more expensive in the U.S. 
D) Brazilian investors will pay fewer cruzeiros to buy each U.S.dollar 
E) the U.S.will import more from Brazil

Question 19

The merchandise trade balance

Accepted Answer

A) reflects trade in intangibles like insurance and tourism 
B) includes personal gifts to friends abroad 
C) records the flow of financial assets like stocks and bonds 
D) equals the value of imports minus the value of exports 
E) equals the value of tangible products exported minus the value of tangible products imported 
A) reflects trade in intangibles like insurance and tourism 
B) includes personal gifts to friends abroad 
C) records the flow of financial assets like stocks and bonds 
D) equals the value of imports minus the value of exports 
E) equals the value of tangible products exported minus the value of tangible products imported

Question 20

The PPP theory says that in the long run the exchange rate between two currencies should move toward __________ the cost in each country of an identical basket of internationally traded goods.

Accepted Answer

A) equalizing 
B) minimizing 
C) maximizing 
D) reducing to zero 
E) disequilibrating 
A) equalizing 
B) minimizing 
C) maximizing 
D) reducing to zero 
E) disequilibrating

Exam 20: International Finance

Under the gold standard,gold discoveries in Alaska and South America led to

Devaluation of a domestic currency

A drop in dollar price of British pounds means that

Foreign exchange means

Under a fixed exchange rate system,an increase in Japanese demand for U.S.agricultural goods would

Between 1917 and 1982,the US ran a financial account deficit.

Which of the following would contribute,directly or indirectly,to a deficit in the capital account of the U.S.balance of payments?

Exhibit 18-3 -In Exhibit 18-3,all of the following except one would cause the demand for pesos to shift from D to D',except one.Which is the exception?

The Bretton Woods agreement established the gold standard.

Exchange rates

Wayne Brown is a Canadian citizen studying on our campus.When he came to school last fall,he had 400 Canadian dollars (C$),which at that time were worth $300 U.S.dollars (US$).When he went back to Canada in June,US$300 could purchase C$450.In June,the U.S.dollar purchased

Net unilateral transfers in the United States in 2011 averaged about ______ per US resident.

Imagine that there are only two nations in the world,the United States and Mexico.If Mexico experiences a drop in the price of foreign exchange,people in Mexico will

Exhibit 18-6 -In Exhibit 18-6 the free market exchange rate would be

Because of the accounting techniques used,the balance of payments shows that debits equal credits only if exports equal imports.

If the U.S.dollar depreciates in the foreign exchange market,American exports will be __________ and American imports will be __________.

If the U.S.dollar appreciates relative to the Brazilian cruzeiro,then

The merchandise trade balance

The PPP theory says that in the long run the exchange rate between two currencies should move toward __________ the cost in each country of an identical basket of internationally traded goods.

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

If the U.S.dollar depreciates in the foreign exchange market,American exports will be and American imports will be .