Question 1

A family from New York City eats in a restaurant in Mexico City. In the accounting for U.S. international transactions, this transaction would appear in the _____, and it would be entered as a payment _____ foreigners.

Accepted Answer

A)   current account; to
B)   current account; from
C)   financial account; to
D)   financial account; fromE) A) and B)
F) C) and D)

Question 2

Use the following to answer questions: 
-(Figure: The Loanable Funds Model in the U.S. Market)  Refer to Figure: The Loanable Funds Model in the U.S. Market. If the actual interest rate is equal to 4% in the U.S. market, then the quantity supplied of loanable funds will be _____ the quantity of loanable funds demanded.

Accepted Answer

A)   greater than
B)   less than
C)   equal to
D)   unrelated toE) A) and B)
F) A) and C)

Question 3

If the government wants to increase the value of its currency in foreign exchange markets, it can use expansionary monetary policy.

Accepted Answer

A) True 
 B)False

Question 4

Countries with government budget surpluses are likely to have capital inflows, all other things equal.

Accepted Answer

A) True 
 B)False

Question 5

An exchange rate regime is a rule governing policy for the exchange rate.

Accepted Answer

A) True 
 B)False

Question 6

Major drawbacks of a fixed exchange rate do NOT include:

Accepted Answer

A)   exchange controls must be imposed at the cost of administrative red tape and corruption.
B)   resources must be diverted to the accumulation of large foreign exchange reserves.
C)   monetary policy cannot be used to stabilize output and the inflation rate.
D)   commerce among countries is more uncertain and riskier.E) All of the above
F) A) and D)

Question 7

Since they reduce uncertainty, fixed exchange rates are good for business.

Accepted Answer

A) True 
 B)False

Question 8

After a revaluation, all other things equal, a country's balance of payments on the current account will likely:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain the same.
D)   fluctuate randomly.E) A) and D)
F) B) and D)

Question 9

After a revaluation, all other things equal, exports will likely _____ and imports will likely _____.

Accepted Answer

A)   increase; increase
B)   decrease; decrease
C)   increase; decrease
D)   decrease; increaseE) All of the above
F) C) and D)

Question 10

Money flows into the United States from other countries as a direct result of:

Accepted Answer

A)   foreign purchases of U.S. goods and services.
B)   U.S. purchases of foreign goods and services.
C)   U.S. investment in foreign companies.
D)   U.S. purchases of foreign assets.E) B) and D)
F) B) and C)

Question 11

Which statement is NOT true of a fixed exchange rate system?

Accepted Answer

A)   It is good for business.
B)   Foreign exchange reserves are costly.
C)   It keeps a country from using inflationary policies.
D)   It makes pursuing domestic macroeconomic objectives easier.E) A) and B)
F) All of the above

Question 12

If the rate of exchange is €1 = US$2, then US$1 =

Accepted Answer

A)   €0.50.
B)   €2.
C)   $0.50.
D)   $2.00.E) None of the above
F) All of the above

Question 13

If the United States exports $100 billion of goods and services and imports $150 billion of goods and services and there is no other factor income or transfers, the balance on the current account is:

Accepted Answer

A)   $250 billion.
B)   -$250 billion.
C)   $50 billion.
D)   -$50 billion.E) C) and D)
F) B) and C)

Question 14

In the 1970s most European countries were unhappy with floating exchange rates because they made each country's domestic monetary policy ineffective.

Accepted Answer

A) True 
 B)False

Question 15

The pound sterling floats. If the exchange rate for the pound changes from $1.68 to $1.60, the pound has:

Accepted Answer

A)   depreciated.
B)   been devalued.
C)   appreciated.
D)   been revalued.E) C) and D)
F) A) and B)

Question 16

The Chinese yuan is on a fixed rate. If the government of China uses monetary policy to change the exchange rate of the yuan from $0.16 to $0.10, the Chinese yuan has appreciated.

Accepted Answer

A) True 
 B)False

Question 17

The value of accounting services purchased by clients in China is included in the merchandise trade balance.

Accepted Answer

A) True 
 B)False

Question 18

In countries with rapidly growing economies, like China and India, the demand for loanable funds is _____ and interest rates are _____ than in countries with slowly growing economies.

Accepted Answer

A)   larger; higher
B)   larger; lower
C)   smaller; higher
D)   smaller; lowerE) B) and D)
F) C) and D)

Question 19

If the U.S. dollar changes from $1 = €1 to $0.80 = €1:

Accepted Answer

A)   the dollar has depreciated relative to the euro.
B)   the dollar has been fixed by the United States and the euro bloc.
C)   the dollar has appreciated relative to the euro.
D)   U.S. goods are now cheaper in the eurozone.E) B) and C)
F) All of the above

Question 20

The benefits of fixed exchange rates served as one of the motivations for the international system of fixed rates established after World War II.

Accepted Answer

A) True 
 B)False

Exam 18: International Macroeconomics

In countries with rapidly growing economies, like China and India, the demand for loanable funds is _ and interest rates are _ than in countries with slowly growing economies.

Correct Answer
verified

If the U.S. dollar changes from $1 = €1 to $0.80 = €1:

Correct Answer
verified

Since they reduce uncertainty, fixed exchange rates are good for business.

Correct Answer
verified

The benefits of fixed exchange rates served as one of the motivations for the international system of fixed rates established after World War II.

Correct Answer
verified

A family from New York City eats in a restaurant in Mexico City. In the accounting for U.S. international transactions, this transaction would appear in the _, and it would be entered as a payment _ foreigners.

Correct Answer
verified

The pound sterling floats. If the exchange rate for the pound changes from $1.68 to $1.60, the pound has:

Correct Answer
verified

If the United States exports $100 billion of goods and services and imports $150 billion of goods and services and there is no other factor income or transfers, the balance on the current account is:

Correct Answer
verified

The Chinese yuan is on a fixed rate. If the government of China uses monetary policy to change the exchange rate of the yuan from $0.16 to $0.10, the Chinese yuan has appreciated.

Correct Answer
verified

Correct Answer
verified

In the 1970s most European countries were unhappy with floating exchange rates because they made each country's domestic monetary policy ineffective.

Correct Answer
verified

Countries with government budget surpluses are likely to have capital inflows, all other things equal.

Correct Answer
verified

After a revaluation, all other things equal, exports will likely _ and imports will likely _.

Correct Answer
verified

Which statement is NOT true of a fixed exchange rate system?

Correct Answer
verified

After a revaluation, all other things equal, a country's balance of payments on the current account will likely:

Correct Answer
verified

The value of accounting services purchased by clients in China is included in the merchandise trade balance.

Correct Answer
verified

Major drawbacks of a fixed exchange rate do NOT include:

Correct Answer
verified

An exchange rate regime is a rule governing policy for the exchange rate.

Correct Answer
verified

If the government wants to increase the value of its currency in foreign exchange markets, it can use expansionary monetary policy.

Correct Answer
verified

Money flows into the United States from other countries as a direct result of:

Correct Answer
verified

If the rate of exchange is €1 = US$2, then US$1 =

Correct Answer
verified

Exam 18: International Macroeconomics

In countries with rapidly growing economies, like China and India, the demand for loanable funds is _____ and interest rates are _____ than in countries with slowly growing economies.

Correct AnswerverifiedShow Answer

If the U.S. dollar changes from $1 = €1 to $0.80 = €1:

Correct AnswerverifiedShow Answer

Since they reduce uncertainty, fixed exchange rates are good for business.

Correct AnswerverifiedShow Answer

The benefits of fixed exchange rates served as one of the motivations for the international system of fixed rates established after World War II.

Correct AnswerverifiedShow Answer

A family from New York City eats in a restaurant in Mexico City. In the accounting for U.S. international transactions, this transaction would appear in the _____, and it would be entered as a payment _____ foreigners.

Correct AnswerverifiedShow Answer

The pound sterling floats. If the exchange rate for the pound changes from $1.68 to $1.60, the pound has:

Correct AnswerverifiedShow Answer

If the United States exports $100 billion of goods and services and imports $150 billion of goods and services and there is no other factor income or transfers, the balance on the current account is:

Correct AnswerverifiedShow Answer

The Chinese yuan is on a fixed rate. If the government of China uses monetary policy to change the exchange rate of the yuan from $0.16 to $0.10, the Chinese yuan has appreciated.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the 1970s most European countries were unhappy with floating exchange rates because they made each country's domestic monetary policy ineffective.

Correct AnswerverifiedShow Answer

Countries with government budget surpluses are likely to have capital inflows, all other things equal.

Correct AnswerverifiedShow Answer

After a revaluation, all other things equal, exports will likely _____ and imports will likely _____.

Correct AnswerverifiedShow Answer

Which statement is NOT true of a fixed exchange rate system?

Correct AnswerverifiedShow Answer

After a revaluation, all other things equal, a country's balance of payments on the current account will likely:

Correct AnswerverifiedShow Answer

The value of accounting services purchased by clients in China is included in the merchandise trade balance.

Correct AnswerverifiedShow Answer

Major drawbacks of a fixed exchange rate do NOT include:

Correct AnswerverifiedShow Answer

An exchange rate regime is a rule governing policy for the exchange rate.

Correct AnswerverifiedShow Answer

If the government wants to increase the value of its currency in foreign exchange markets, it can use expansionary monetary policy.

Correct AnswerverifiedShow Answer

Money flows into the United States from other countries as a direct result of:

Correct AnswerverifiedShow Answer

If the rate of exchange is €1 = US$2, then US$1 =

Correct AnswerverifiedShow Answer

In countries with rapidly growing economies, like China and India, the demand for loanable funds is _ and interest rates are _ than in countries with slowly growing economies.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A family from New York City eats in a restaurant in Mexico City. In the accounting for U.S. international transactions, this transaction would appear in the _, and it would be entered as a payment _ foreigners.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

After a revaluation, all other things equal, exports will likely _ and imports will likely _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified