1. The world bank system is controlled by _______.
Answer
Correct Answer:
A weighted voting system
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2. The exchange rate system that exists in the 21st century ______.
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Correct Answer:
Was not planned, but occurred by accident
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3. When the Japanese yen appreciates relative to the U.S. dollar, ceteris paribus, then ______.
Answer
Correct Answer:
U.S. consumers need a greater number of dollars to buy a given number of Japanese yen
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4. If U.S. consumers were to receive fewer and fewer British pounds per U.S. dollar, the effect would be ______, ceteris paribus.
Answer
Correct Answer:
Increasing prices for imports of British goods to the United States
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5. During the late 1970s the U.S. government attempted but mostly failed to ______.
Answer
Correct Answer:
Prevent depreciation of the U.S. dollar
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6. If currency speculators believe that the value of the U.S. dollar will soon be falling because of an anticipated rise in the U.S. inflation rate compared to the Japanese inflation rate, ______.
Answer
Correct Answer:
Those who are holding U.S. dollars will convert them to yen
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7. When the U.S. dollar appreciates compared to the yen, this means that ______.
Answer
Correct Answer:
A U.S. dollar can buy more units of yen than before
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8. An increase in European tastes for U.S. goods, ceteris paribus, would ______.
Answer
Correct Answer:
Increase the supply of euros on the euro foreign exchange market
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9. An increase in average U.S. incomes, ceteris paribus, will lead to ______ demand for euros and a(n) ______ exchange rate for the euro.
Answer
Correct Answer:
Increased; higher
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10. Which of the following statements accurately describes capital movements?
Answer
Correct Answer:
In an open economy, individuals, firms, and governments are able to borrow from and lend to foreigners.
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11. Which of the following statements accurately describes the supply curve for euros?
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Correct Answer:
There is a positive relationship between the dollar price of euros and the quantity of euros supplied.
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12. Which of the following statements accurately describes the demand curve for euros?
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Correct Answer:
There is an inverse relationship between the dollar price of euros and the quantity of euros demanded.
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13. A strong U.S. dollar will ______ the price of imports and make trips to foreign countries ______.
Answer
Correct Answer:
Lower; less expensive
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14. Suppose the United States receives more humanitarian aid from foreigners than it supplies abroad. How would this impact the balance of payments?
Answer
Correct Answer:
Net unilateral transfers would be positive.
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15. Which of the following line items is a credit in the current account?
Answer
Correct Answer:
Service exports
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16. Which of the following statements accurately defines the current account?
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Correct Answer:
It is a record of a country’s imports and exports of goods and services, net investment income, and net transfers.
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17. Purchasing-power-parity theory is about how exchange rates move to equalize the purchasing power of different______.
Answer
Correct Answer:
Currencies
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18. A record of foreign purchases or assets is called______ account.
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Correct Answer:
Financial
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19. The price of one unit of a country’s currency in terms of another country’s currency is called the exchange rate.
Answer
Correct Answer:
True
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20. Fluctuations in currency values are determined by_____.
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Correct Answer:
Government
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21. Record of country’s imports,net investment and net transfers
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Correct Answer:
Current account
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22. The net surplus or deficit resulting from the level of exportation and importation of merchandise is called _____ of trade.
Answer
Correct Answer:
Balance
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23. The record of international transactions in which a nation has engaged over a _____ is called the balance of payments.
Answer
Correct Answer:
Year
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