Question 1

In "closing the gold window" in 1971,President Nixon

Accepted Answer

A) did both d and e 
B) did all of the following 
C) refused to exchange gold for dollars 
D) forced the dollar to appreciate 
E) called in all gold circulating domestically 
A) did both d and e 
B) did all of the following 
C) refused to exchange gold for dollars 
D) forced the dollar to appreciate 
E) called in all gold circulating domestically

Question 2

If fewer U.S.dollars are needed to buy a Swiss franc,then

Accepted Answer

A) Swiss goods become relatively more expensive to U.S.residents 
B) U.S.residents buy fewer francs 
C) U.S.goods become relatively cheaper to Swiss residents 
D) U.S.residents buy more Swiss goods 
E) U.S.residents supply more francs 
A) Swiss goods become relatively more expensive to U.S.residents 
B) U.S.residents buy fewer francs 
C) U.S.goods become relatively cheaper to Swiss residents 
D) U.S.residents buy more Swiss goods 
E) U.S.residents supply more francs

Question 3

The U.S.dollar will appreciate if

Accepted Answer

A) the U.S.demand for foreign exchange decreases 
B) the U.S.demand for foreign exchange increases 
C) the U.S.supply of foreign exchange decreases 
D) Americans want to buy more foreign goods 
E) foreigners want fewer American goods 
A) the U.S.demand for foreign exchange decreases 
B) the U.S.demand for foreign exchange increases 
C) the U.S.supply of foreign exchange decreases 
D) Americans want to buy more foreign goods 
E) foreigners want fewer American goods

Question 4

A German who exchanges euros for dollars in a U.S.airport is

Accepted Answer

A) contributing to U.S.exports 
B) lending dollars to Germans 
C) participating in the foreign exchange market 
D) engaging in speculative activities 
E) engaging in illegal activities 
A) contributing to U.S.exports 
B) lending dollars to Germans 
C) participating in the foreign exchange market 
D) engaging in speculative activities 
E) engaging in illegal activities

Question 5

In the balance of payments accounts,a net importer of capital is a nation that

Accepted Answer

A) sells more goods in foreign countries than it imports 
B) buys more goods from foreign countries than it exports 
C) sells more assets to individuals in other countries than the assets it buys from them 
D) buys more assets from individuals in other countries than the assets it sells to them 
E) imports less machinery than it exports 
A) sells more goods in foreign countries than it imports 
B) buys more goods from foreign countries than it exports 
C) sells more assets to individuals in other countries than the assets it buys from them 
D) buys more assets from individuals in other countries than the assets it sells to them 
E) imports less machinery than it exports

Question 6

Which of the following would increase the U.S.demand for foreign currency?

Accepted Answer

A) an increase in the U.S.demand for foreign goods 
B) an increase in incomes abroad 
C) a decrease in U.S.incomes 
D) a decrease in the U.S.demand for foreign goods 
E) an increase in U.S.real interest rates 
A) an increase in the U.S.demand for foreign goods 
B) an increase in incomes abroad 
C) a decrease in U.S.incomes 
D) a decrease in the U.S.demand for foreign goods 
E) an increase in U.S.real interest rates

Question 7

If the U.S.dollar depreciates,it becomes cheaper for U.S.residents to travel in foreign countries.

Accepted Answer

A) True 
 B)False

Question 8

If on Monday you can buy 13 Mexican pesos per U.S.dollar and on Wednesday you can buy 15 Mexican pesos per U.S.dollar,

Accepted Answer

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

Question 9

Which of the following is not considered as a unilateral transfer?

Accepted Answer

A) income earned from foreign investments 
B) foreign aid 
C) personal gifts to friends or family abroad 
D) institutional charitable donations 
E) government transfers to foreign residents 
A) income earned from foreign investments 
B) foreign aid 
C) personal gifts to friends or family abroad 
D) institutional charitable donations 
E) government transfers to foreign residents

Question 10

Exhibit 18-8
 
-In Exhibit 18-8 a movement from point A to F represents a depreciation in the value of the dollar.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a partial explanation for why the PPP theory does not apply to the Big Mac Index?

Accepted Answer

A) Wages do not differ across countries 
B) Trade barriers,such as tariffs and quotas on beef,may distort local prices 
C) Taxes do not distort local prices 
D) Rent does not vary substantially across countries 
E) The Big Mac is traded internationally 
A) Wages do not differ across countries 
B) Trade barriers,such as tariffs and quotas on beef,may distort local prices 
C) Taxes do not distort local prices 
D) Rent does not vary substantially across countries 
E) The Big Mac is traded internationally

Question 12

A country's balance of payments summarizes all economic transactions during a given period between residents of that country and residents of other countries.

Accepted Answer

A) True 
 B)False

Question 13

Imagine that there are only two nations in the world,the United States and Mexico.If Americans buy more goods made in Mexico,other things constant,the

Accepted Answer

A) U.S.demand curve for Mexican pesos will shift rightward 
B) U.S.demand curve for Mexican pesos will shift leftward 
C) U.S.supply curve of Mexican pesos will shift leftward 
D) U.S.supply curve of Mexican pesos will shift rightward 
E) U.S.supply curve of Mexican pesos will shift upward 
A) U.S.demand curve for Mexican pesos will shift rightward 
B) U.S.demand curve for Mexican pesos will shift leftward 
C) U.S.supply curve of Mexican pesos will shift leftward 
D) U.S.supply curve of Mexican pesos will shift rightward 
E) U.S.supply curve of Mexican pesos will shift upward

Question 14

Current account transactions are records of the income and expenditures from exports and imports,plus international financial investments and borrowing.

Accepted Answer

A) True 
 B)False

Question 15

If a country runs a deficit in its current account,it is because

Accepted Answer

A) exports exceed imports 
B) imports exceed exports 
C) net unilateral transfers are negative 
D) foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers 
E) foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers 
A) exports exceed imports 
B) imports exceed exports 
C) net unilateral transfers are negative 
D) foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers 
E) foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers

Question 16

The capital account keeps track of the amount of

Accepted Answer

A) foreign-owned machinery in a country 
B) domestically owned machinery in foreign countries 
C) exports and imports of goods only 
D) exports and imports of goods and services 
E) assets in one country owned by citizens of another 
A) foreign-owned machinery in a country 
B) domestically owned machinery in foreign countries 
C) exports and imports of goods only 
D) exports and imports of goods and services 
E) assets in one country owned by citizens of another

Question 17

In order for the balance of payments to balance,

Accepted Answer

A) the current account balance must equal the capital account balance 
B) international reserves must flow out of the country 
C) international reserves must flow into the country 
D) the current account balance plus the capital account balance plus the net flow of international reserves plus the statistical discrepancy must equal zero 
E) the current account balance plus the capital account balance plus the net flow of international reserves must be greater than the statistical discrepancy 
A) the current account balance must equal the capital account balance 
B) international reserves must flow out of the country 
C) international reserves must flow into the country 
D) the current account balance plus the capital account balance plus the net flow of international reserves plus the statistical discrepancy must equal zero 
E) the current account balance plus the capital account balance plus the net flow of international reserves must be greater than the statistical discrepancy

Question 18

The merchandise trade balance does not include

Accepted Answer

A) exports of refrigerators 
B) imports of automobiles 
C) exports of agricultural products 
D) shipping and insurance costs 
E) imports of food items with heavy tariffs 
A) exports of refrigerators 
B) imports of automobiles 
C) exports of agricultural products 
D) shipping and insurance costs 
E) imports of food items with heavy tariffs

Question 19

The Bretton Woods agreement did all of the following except

Accepted Answer

A) set up the International Monetary Fund 
B) name the U.S.dollar as the key reserve currency 
C) set the price of gold at $35 per ounce 
D) fix exchange rates 
E) return the international monetary system to the gold standard 
A) set up the International Monetary Fund 
B) name the U.S.dollar as the key reserve currency 
C) set the price of gold at $35 per ounce 
D) fix exchange rates 
E) return the international monetary system to the gold standard

Question 20

Exhibit 18-5  
-Suppose that U.S.tastes for British goods increase.Then,in Exhibit 18-5

Accepted Answer

A) the supply curve shifts from S1 to S2 
B) the supply curve shifts from S2 to S1 
C) the demand curve shifts from D2 to D1 
D) the demand curve shifts from D1 to D2 
E) both demand and supply shift to the right 
A) the supply curve shifts from S1 to S2 
B) the supply curve shifts from S2 to S1 
C) the demand curve shifts from D2 to D1 
D) the demand curve shifts from D1 to D2 
E) both demand and supply shift to the right

Exam 20: International Finance

In "closing the gold window" in 1971,President Nixon

If fewer U.S.dollars are needed to buy a Swiss franc,then

The U.S.dollar will appreciate if

A German who exchanges euros for dollars in a U.S.airport is

In the balance of payments accounts,a net importer of capital is a nation that

Which of the following would increase the U.S.demand for foreign currency?

If the U.S.dollar depreciates,it becomes cheaper for U.S.residents to travel in foreign countries.

If on Monday you can buy 13 Mexican pesos per U.S.dollar and on Wednesday you can buy 15 Mexican pesos per U.S.dollar,

Which of the following is not considered as a unilateral transfer?

Exhibit 18-8 -In Exhibit 18-8 a movement from point A to F represents a depreciation in the value of the dollar.

Which of the following is a partial explanation for why the PPP theory does not apply to the Big Mac Index?

A country's balance of payments summarizes all economic transactions during a given period between residents of that country and residents of other countries.

Imagine that there are only two nations in the world,the United States and Mexico.If Americans buy more goods made in Mexico,other things constant,the

Current account transactions are records of the income and expenditures from exports and imports,plus international financial investments and borrowing.

If a country runs a deficit in its current account,it is because

The capital account keeps track of the amount of

In order for the balance of payments to balance,

The merchandise trade balance does not include

The Bretton Woods agreement did all of the following except

Exhibit 18-5 -Suppose that U.S.tastes for British goods increase.Then,in Exhibit 18-5

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