Question 1

The supply of foreign currencies is upward sloping and the demand for foreign currencies is downward sloping.

Accepted Answer

A) True 
 B)False

Question 2

If the cost of buying an identical basket of goods in country A is greater than country B:

Accepted Answer

A) ​People will tend to sell currency from country A and buy currency from country B. 
B) ​The prices of those baskets of goods will tend to converge. 
C) ​If the goods in the baskets are internationally traded, the tendency for prices to converge will be stronger. 
D) ​All of the above are true. 
A) ​People will tend to sell currency from country A and buy currency from country B. 
B) ​The prices of those baskets of goods will tend to converge. 
C) ​If the goods in the baskets are internationally traded, the tendency for prices to converge will be stronger. 
D) ​All of the above are true.

Question 3

The term "dirty float" is used to describe a:

Accepted Answer

A) ​currency that is allowed to float only in prosperous times. 
B) ​nation that switches from free to fixed rates of exchange. 
C) ​black market in foreign currencies. 
D) ​floating currency that is sometimes changed by government central bank authorities. 
A) ​currency that is allowed to float only in prosperous times. 
B) ​nation that switches from free to fixed rates of exchange. 
C) ​black market in foreign currencies. 
D) ​floating currency that is sometimes changed by government central bank authorities.

Question 4

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

Accepted Answer

A) ​It will increase the supply of U.S.dollars. 
B) ​It will decrease the supply of U.S.dollars. 
C) ​It will increase the demand for U.S.dollars. 
D) ​It will decrease the demand for U.S.dollars. 
A) ​It will increase the supply of U.S.dollars. 
B) ​It will decrease the supply of U.S.dollars. 
C) ​It will increase the demand for U.S.dollars. 
D) ​It will decrease the demand for U.S.dollars.

Question 5

Which of the following is true?

Accepted Answer

A) ​U.S.imports are considered a credit item in the balance of payment, because the dollars sold to buy the necessary foreign currency add to foreign claims against U.S.buyers. 
B) ​When the U.S.runs a trade deficit in goods and services with the rest of the world, the rest of the world must be running a trade surplus in goods and services with the U.S. 
C) ​When the U.S.runs a trade deficit in goods, it must run a trade surplus in services. 
D) ​None of the above is true. 
A) ​U.S.imports are considered a credit item in the balance of payment, because the dollars sold to buy the necessary foreign currency add to foreign claims against U.S.buyers. 
B) ​When the U.S.runs a trade deficit in goods and services with the rest of the world, the rest of the world must be running a trade surplus in goods and services with the U.S. 
C) ​When the U.S.runs a trade deficit in goods, it must run a trade surplus in services. 
D) ​None of the above is true.

Question 6

Explain how each of the following will affect the relative values of the dollar and the euro used in France:
$\bullet$Income growth higher in the United States than in $\bullet$Inflation higher in France than in the United States.
$\bullet$A real interest rate higher in the United States than in France.

Accepted Answer

Income growth higher in the United State

Question 7

Which of the following would be a credit in the U.S. balance of payments?

Accepted Answer

A) ​the purchase of a German car by an American 
B) ​the purchase of insurance from Lloyds of London by a U.S.resident 
C) ​a trip to Japan by an American student 
D) ​a short-term loan extended to a South American country by the United States government 
A) ​the purchase of a German car by an American 
B) ​the purchase of insurance from Lloyds of London by a U.S.resident 
C) ​a trip to Japan by an American student 
D) ​a short-term loan extended to a South American country by the United States government

Question 8

If a Japanese pension fund decides to purchase U.S. government bonds, what is the effect in the exchange market?

Accepted Answer

A) ​It will increase the supply of U.S.dollars. 
B) ​It will decrease the supply of U.S.dollars. 
C) ​It will increase the demand for U.S.dollars. 
D) ​It will decrease the demand for U.S.dollars. 
A) ​It will increase the supply of U.S.dollars. 
B) ​It will decrease the supply of U.S.dollars. 
C) ​It will increase the demand for U.S.dollars. 
D) ​It will decrease the demand for U.S.dollars.

Question 9

Deflation in the United States would tend to make the exchange value of the dollar depreciate.

Accepted Answer

A) True 
 B)False

Question 10

A country can have a negative balance of trade and a positive balance of goods and services.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following will create a demand for or a supply of currencies?

Accepted Answer

A) ​Trade in goods 
B) ​Trade in services 
C) ​Trade in financial instruments 
D) ​Any of the above. 
A) ​Trade in goods 
B) ​Trade in services 
C) ​Trade in financial instruments 
D) ​Any of the above.

Question 12

Why is the demand for foreign currencies known as a derived demand?

Accepted Answer

The demand for foreign currenc

Question 13

An increase in foreign demand for U.S. exports will ____ the demand for U.S. dollars and cause the U.S. dollar to ____ in value.

Accepted Answer

A) ​increase; appreciate 
B) ​increase; depreciate 
C) ​decrease; appreciate 
D) ​decrease; depreciate 
A) ​increase; appreciate 
B) ​increase; depreciate 
C) ​decrease; appreciate 
D) ​decrease; depreciate

Question 14

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 6 pesos per dollar, it would tend to:

Accepted Answer

A) ​increase U.S.exports to Mexico. 
B) ​decrease U.S.exports to Mexico. 
C) ​increase Mexican exports to the rest of the world. 
D) ​decrease Mexican exports to the rest of the world. 
A) ​increase U.S.exports to Mexico. 
B) ​decrease U.S.exports to Mexico. 
C) ​increase Mexican exports to the rest of the world. 
D) ​decrease Mexican exports to the rest of the world.

Question 15

A country would tend to experience currency depreciation relative to other countries if:

Accepted Answer

A) ​the profitability of investments within the country increases relative to the rest of the world. 
B) ​people in the foreign currency markets expect the value of the currency to rise in the near future. 
C) ​the foreign demand for its exports decreases. 
D) ​none of the above. 
A) ​the profitability of investments within the country increases relative to the rest of the world. 
B) ​people in the foreign currency markets expect the value of the currency to rise in the near future. 
C) ​the foreign demand for its exports decreases. 
D) ​none of the above.

Question 16

On January 12, 2011, the U.S. dollar was worth 76.89 Japanese yen. Roughly how many U.S. dollars did it take to buy 50 yen?

Accepted Answer

A) ​0.01 
B) ​0.65 
C) ​1.86 
D) ​3845 
A) ​0.01 
B) ​0.65 
C) ​1.86 
D) ​3845

Question 17

The balance on goods and services is the same as the balance on the current account.

Accepted Answer

A) True 
 B)False

Question 18

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would ____ the U.S. price of German goods, ____ the number of German goods that would be demanded in the U.S.

Accepted Answer

A) ​decrease; reducing. 
B) ​decrease; increasing. 
C) ​increase; reducing. 
D) ​increase; increasing. 
A) ​decrease; reducing. 
B) ​decrease; increasing. 
C) ​increase; reducing. 
D) ​increase; increasing.

Question 19

A decrease in U.S. interest rates will, other things equal, tend to:

Accepted Answer

A) ​lower the foreign exchange value of the dollar. 
B) ​help U.S.exporters. 
C) ​cause a net outflow of capital from the U.S. 
D) ​do all of the above. 
A) ​lower the foreign exchange value of the dollar. 
B) ​help U.S.exporters. 
C) ​cause a net outflow of capital from the U.S. 
D) ​do all of the above.

Question 20

A current account deficit is matched by a financial account surplus.

Accepted Answer

A) True 
 B)False

The supply of foreign currencies is upward sloping and the demand for foreign currencies is downward sloping.

If the cost of buying an identical basket of goods in country A is greater than country B:

The term "dirty float" is used to describe a:

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

Which of the following is true?

Which of the following would be a credit in the U.S. balance of payments?

If a Japanese pension fund decides to purchase U.S. government bonds, what is the effect in the exchange market?

Deflation in the United States would tend to make the exchange value of the dollar depreciate.

A country can have a negative balance of trade and a positive balance of goods and services.

Which of the following will create a demand for or a supply of currencies?

Why is the demand for foreign currencies known as a derived demand?

An increase in foreign demand for U.S. exports will the demand for U.S. dollars and cause the U.S. dollar to in value.

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 6 pesos per dollar, it would tend to:

A country would tend to experience currency depreciation relative to other countries if:

On January 12, 2011, the U.S. dollar was worth 76.89 Japanese yen. Roughly how many U.S. dollars did it take to buy 50 yen?

The balance on goods and services is the same as the balance on the current account.

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would the U.S. price of German goods, the number of German goods that would be demanded in the U.S.

A decrease in U.S. interest rates will, other things equal, tend to:

A current account deficit is matched by a financial account surplus.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Filters

Exam 21: Financial Markets, Saving, and Investment

The supply of foreign currencies is upward sloping and the demand for foreign currencies is downward sloping.

If the cost of buying an identical basket of goods in country A is greater than country B:

The term "dirty float" is used to describe a:

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

Which of the following is true?

Which of the following would be a credit in the U.S. balance of payments?

If a Japanese pension fund decides to purchase U.S. government bonds, what is the effect in the exchange market?

Deflation in the United States would tend to make the exchange value of the dollar depreciate.

A country can have a negative balance of trade and a positive balance of goods and services.

Which of the following will create a demand for or a supply of currencies?

Why is the demand for foreign currencies known as a derived demand?

An increase in foreign demand for U.S. exports will ____ the demand for U.S. dollars and cause the U.S. dollar to ____ in value.

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 6 pesos per dollar, it would tend to:

A country would tend to experience currency depreciation relative to other countries if:

On January 12, 2011, the U.S. dollar was worth 76.89 Japanese yen. Roughly how many U.S. dollars did it take to buy 50 yen?

The balance on goods and services is the same as the balance on the current account.

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would ____ the U.S. price of German goods, ____ the number of German goods that would be demanded in the U.S.

A decrease in U.S. interest rates will, other things equal, tend to:

A current account deficit is matched by a financial account surplus.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Filters

An increase in foreign demand for U.S. exports will the demand for U.S. dollars and cause the U.S. dollar to in value.

A change in the euro-dollar exchange rate from $1 per euro to $2 per euro would the U.S. price of German goods, the number of German goods that would be demanded in the U.S.