Exam 33: Exchange Rates and the Balance of Payments

The market in which households, firms and governments buy and sell national currencies is known as

The legally established value of a country's monetary unit in terms of another under the Bretton Woods system was called the

-Based on the transactions in the above table, what is the change in the U.S. balance of merchandise trade?

The effect that a gift given to a U.S. citizen from a foreign resident will have on the balance of payments is to

Suppose the Canadian central bank wants to keep the exchange rate of the Canadian dollar with the U.S. dollar constant over time. An increase in the demand for Canadian goods by American residents will lead the Canadian central bank to

An example of a deficit item on the U.S. balance of payments is

-In the above figure, the equilibrium exchange rate between U.S. dollars and British pounds is

The International Monetary System was established

-Refer to the above figure. Suppose E is the original equilibrium. An increase in the U.S. demand for Japanese-made goods will lead to

The difference between the exports and imports of goods in a country is referred to as the

Suppose a country has a current account surplus and that there is no intervention by finance ministries or central banks. This current account surplus indicates that the country has

Under a pure gold standard

Suppose U.S. interest rates fall. This reduction in U.S. interest rates will cause which of the following to occur?

Distinguish between the balance of payments and the balance of trade.

When the balance of trade is in balance, we know with certainty that

A country's balance of payments shows a

The financing of U.S. export transactions, ceteris paribus

Based on the U.S. historical experience with the gold standard, we can conclude that

With a pure gold standard

Under the Bretton Woods agreement, the officially determined value of a country's currency is referred to as its