Question 1

The U.S.dollar has depreciated relative to the Japanese yen if it takes

Accepted Answer

A)  fewer yen to buy a dollar. 
B)  more yen to buy a dollar. 
C)  more dollars to buy a yen. 
D)  fewer dollars to buy a yen. 
E)  a and c

Question 2

-Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E3,the peso is __________ and there is a __________.

Accepted Answer

A)  overvalued; surplus of dollars 
B)  undervalued; shortage of pesos 
C)  overvalued; shortage of dollars 
D)  undervalued; surplus of pesos

Question 3

The higher the U.S.dollar price per Mexican peso,the __________ Mexican goods are for Americans and the __________ Mexican goods Americans will buy; thus __________ pesos will be demanded.

Accepted Answer

A)  more expensive; fewer,more 
B)  less expensive; more,fewer 
C)  more expensive; fewer,fewer 
D)  less expensive; fewer,more 
E)  none of the above

Question 4

Research by economists Bloom,Draca,and Van Reenen revealed that imports from China were associated with not only lower consumer goods prices,but also a ______________ cost of inputs for domestic firms,a(n)______________ in the variety of products those domestic firms sold,and a(n)_______________ in U.S.productivity.

Accepted Answer

A)  lower; increase; increase 
B)  higher; decrease; increase 
C)  lower; increase; decrease 
D)  higher; increase; decrease 
E)  ​lower; decrease; decrease

Question 5

Suppose that on Monday,a Big Mac cost $3.00 in the United States and 310 Japanese yen in Japan.On Monday,the exchange rate was $1 = 85 yen.According to the purchasing power parity theory,the yen was __________ by approximately __________ percent.

Accepted Answer

A)  overvalued; 22 
B)  undervalued; 40 
C)  overvalued; 29 
D)  undervalued; 22 
E)  overvalued; 18

Question 6

The U.S.dollar currently serves as the "unit of account" of major global products.

Accepted Answer

A) True 
 B)False

Question 7

-Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E1,the dollar is __________ and there is a __________ of pesos.

Accepted Answer

A)  overvalued; surplus 
B)  undervalued; surplus 
C)  overvalued; shortage 
D)  undervalued; shortage

Question 8

-Refer to Exhibit 35-5.Based on the information provided in this table,between Monday and Tuesday,the U.S.dollar ____________ against the Thai baht and the baht _____________ against the U.S.dollar.

Accepted Answer

A)  appreciated; appreciated 
B)  depreciated; appreciated 
C)  appreciated; depreciated 
D)  depreciated; depreciated

Question 9

If the income of U.S.citizens falls relative to the income of Japanese citizens,the dollar will __________ in terms of the yen,and the yen will __________ in terms of the dollar.

Accepted Answer

A)  appreciate; depreciate 
B)  appreciate; remain unaffected 
C)  depreciate; appreciate 
D)  depreciate; remain unaffected 
E)  remain unaffected; appreciate

Question 10

If,under a fixed exchange rate system,the dollar price of a Mexican peso is above its equilibrium level,then the

Accepted Answer

A)  dollar is undervalued. 
B)  peso is undervalued. 
C)  dollar has appreciated. 
D)  peso has depreciated.

Question 11

Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.11 per peso.If the exchange rate then changes to $0.08 per peso,there will be a(n)__________ in the quantity demanded of dollars by Mexicans,and therefore there will be a(n)__________ in the quantity supplied of pesos to the foreign exchange market.

Accepted Answer

A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase

Question 12

Some economists have found that U.S.imports of Chinese goods and resources

Accepted Answer

A)  lower the price of goods for U.S.consumers. 
B)  lower the cost of inputs for U.S.firms. 
C)  increase the variety of products in U.S.markets. 
D)  may enhance productivity of U.S.firms. 
E)  all of the above

Question 13

In a foreign exchange market diagram with pesos per dollar on the vertical axis,the quantity of __________ would be on the horizontal axis,and the U.S.demand for Mexican goods would help to determine the __________ curve.

Accepted Answer

A)  dollars; demand 
B)  dollars; supply 
C)  pesos; demand 
D)  pesos; supply

Question 14

All economists agree that the European Union is an example of a true a optimal currency area.

Accepted Answer

A) True 
 B)False

Question 15

A "devaluation" occurs when

Accepted Answer

A)  the official price of a currency is raised. 
B)  the official price of a currency is lowered. 
C)  a nation's currency depreciates under a flexible exchange rate system. 
D)  a nation's currency appreciates under a flexible exchange rate system. 
E)  none of the above

Question 16

If,under a fixed exchange rate system,the dollar price of Mexican pesos is below its equilibrium level,then the

Accepted Answer

A)  dollar is undervalued. 
B)  peso is undervalued. 
C)  dollar has depreciated. 
D)  peso has appreciated. 
E)  a and c

Question 17

If inflation in the United States rises relative to the inflation rate in Mexico,the dollar will __________ in terms of the peso and the peso will __________ in terms of the dollar.

Accepted Answer

A)  remain unaffected; appreciate 
B)  remain unaffected; depreciate 
C)  depreciate; remain unaffected 
D)  depreciate; appreciate 
E)  remain unaffected; remain unaffected

Question 18

A "revaluation" occurs when

Accepted Answer

A)  a nation's currency appreciates under a flexible exchange rate system. 
B)  the official price of a currency is lowered. 
C)  a nation's currency depreciates under a flexible exchange rate system. 
D)  the official price of a currency is raised. 
E)  none of the above

Question 19

There is a flexible exchange rate system and only two countries in the world,the United States and Mexico.An increase in income growth in Mexico relative to income growth in the United States will cause the

Accepted Answer

A)  dollar to appreciate. 
B)  peso to depreciate. 
C)  dollar to depreciate. 
D)  a and b 
E)  There is not enough information to answer the question.

Question 20

If,under a fixed exchange rate system,the dollar price of a Mexican peso is above its equilibrium level,then the

Accepted Answer

A)  dollar is overvalued. 
B)  peso is overvalued. 
C)  dollar has appreciated. 
D)  peso has depreciated.

Exam 22: The Economic Case for and Against Government: Five Topics Considered

The U.S.dollar has depreciated relative to the Japanese yen if it takes

-Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₃,the peso is and there is a .

The higher the U.S.dollar price per Mexican peso,the Mexican goods are for Americans and the Mexican goods Americans will buy; thus __ pesos will be demanded.

Research by economists Bloom,Draca,and Van Reenen revealed that imports from China were associated with not only lower consumer goods prices,but also a cost of inputs for domestic firms,a(n) in the variety of products those domestic firms sold,and a(n) ___ in U.S.productivity.

Suppose that on Monday,a Big Mac cost $3.00 in the United States and 310 Japanese yen in Japan.On Monday,the exchange rate was $1 = 85 yen.According to the purchasing power parity theory,the yen was by approximately percent.

The U.S.dollar currently serves as the "unit of account" of major global products.

-Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₁,the dollar is and there is a of pesos.

-Refer to Exhibit 35-5.Based on the information provided in this table,between Monday and Tuesday,the U.S.dollar against the Thai baht and the baht _ against the U.S.dollar.

If the income of U.S.citizens falls relative to the income of Japanese citizens,the dollar will in terms of the yen,and the yen will in terms of the dollar.

If,under a fixed exchange rate system,the dollar price of a Mexican peso is above its equilibrium level,then the

Some economists have found that U.S.imports of Chinese goods and resources

In a foreign exchange market diagram with pesos per dollar on the vertical axis,the quantity of would be on the horizontal axis,and the U.S.demand for Mexican goods would help to determine the curve.

All economists agree that the European Union is an example of a true a optimal currency area.

A "devaluation" occurs when

If,under a fixed exchange rate system,the dollar price of Mexican pesos is below its equilibrium level,then the

If inflation in the United States rises relative to the inflation rate in Mexico,the dollar will in terms of the peso and the peso will in terms of the dollar.

A "revaluation" occurs when

There is a flexible exchange rate system and only two countries in the world,the United States and Mexico.An increase in income growth in Mexico relative to income growth in the United States will cause the

If,under a fixed exchange rate system,the dollar price of a Mexican peso is above its equilibrium level,then the