Question 1

Which statement is false?

Accepted Answer

A)  Foreigners own a much greater percentage of the assets in the U.S.then they did in the early 1980s.
B)  Americans have assets of over $1 trillion in foreign countries.
C)  The dollar value of assets held by Americans in foreign countries has been declining since 1985.
D)  None of the statements is false.E) B) and D)
F) A) and B)

Question 2

Statement I: A declining dollar makes foreign investment in dollar-denominated assets more attractive.
Statement II: In the last 20 years,foreigners have expanded their role in the U.S.as both creditors and owners.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) None of the above
F) A) and B)

Question 3

In the year _____________________,our President announced that we would no longer redeem dollars for gold.

Accepted Answer

The answer of In the year _____________________,our President announced that...

Question 4

Under the gold standard,a country with a negative balance of trade would experience

Accepted Answer

A)  an inflow of gold and higher prices.
B)  an inflow of gold and lower prices.
C)  an outflow of gold and higher prices.
D)  an outflow of gold and lower prices.E) All of the above
F) A) and B)

Question 5

Suppose the exchange rate between the U.S.and Argentina is initially set at 20 pesos per dollar and increases to 25 pesos per dollar.In the U.S.economy this would be expected to

Accepted Answer

A)  increase exports and decrease imports.
B)  increase both exports imports.
C)  decrease both exports imports.
D)  increase imports but have an unpredictable effect on exports.
E)  increase imports and decrease exports.F) C) and E)
G) A) and B)

Question 6

If the U.S.demand for German goods increases,then

Accepted Answer

A)  the U.S.current account deficit with Germany will improve.
B)  Germany will experience currency devaluation.
C)  the U.S.dollar will appreciate in value against the euro.
D)  the euro will depreciate in value against the U.S.dollar.
E)  the euro will appreciate in value against the U.S.dollar.F) B) and C)
G) B) and D)

Question 7

The balance of payments accounts contain information about the

Accepted Answer

A)  purchases of U.S.financial assets by foreigners.
B)  purchases of foreign financial assets by U.S.citizens.
C)  levels of U.S.exports and imports.
D)  All of the choices/statements are true.E) None of the above
F) A) and B)

Question 8

Under a gold standard,a country with a trade deficit should expect gold to flow _______.

Accepted Answer

The answer of Under a gold standard,a country with a...

Question 9

Statement I: Decisions affecting the U.S.economy are being made increasingly in London,Frankfurt,and Tokyo.
Statement II: America is borrowing largely for today's consumption rather than for productive investments.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) None of the above
F) All of the above

Question 10

The market in which the currency of one country is traded for the currency of another country is called

Accepted Answer

A)  the futures market.
B)  the commodities market.
C)  the foreign exchange market.
D)  the international trade market.E) None of the above
F) All of the above

Question 11

If the rate of exchange for a pound of $4,the rate of exchange for the dollar is _____ pound.

Accepted Answer

The answer of If the rate of exchange for a...

Question 12

If the demand of U.S.dollars drops sharply

Accepted Answer

A)  the dollar will depreciate in value.
B)  foreigners holding U.S.assets will suffer tremendous losses.
C)  Americans will have to pay a lot more for imported goods.
D)  the U.S.standard of living will fall.
E)  All of the choices are truE.F) A) and D)
G) D) and E)

Question 13

The foreign exchange rate refers to

Accepted Answer

A)  the price at which purchases and sales of foreign goods take place.
B)  exports minus imports.
C)  the amount of one currency that must be paid to obtain one unit of another currency.
D)  the ratio of exports to imports.E) A) and B)
F) B) and D)

Question 14

Foreign exchange rates are

Accepted Answer

A)  price at which purchases and sales of foreign goods take place.
B)  movement of goods and services from one country to another.
C)  the price of one currency in terms of a second currency.
D)  differences between exports and imports.E) None of the above
F) A) and B)

Question 15

Floating exchange rates

Accepted Answer

A)  float according to the laws of supply and demand.
B)  are fixed by speculators in foreign exchange markets.
C)  are rarely used in foreign exchange transactions.
D)  All of the choices are true characteristics.E) None of the above
F) A) and C)

Question 16

An increase in the dollar price of the English pound will cause a __________________ in the pound price of the dollar.

Accepted Answer

The answer of An increase in the dollar price of...

Question 17

When the current account is in deficit,the capital account must

Accepted Answer

A)  be balanced.
B)  be zero.
C)  not add to the deficit.
D)  have an equal and offsetting surplus.E) None of the above
F) All of the above

Question 18

If 40 Russian rubles = $1 U.S. ,

Accepted Answer

A)  1 ruble = $.025
B)  1 U.S.cent = 4 rubles
C)  40 U.S.cents = 100 rubles
D)  $4 = 120 rubles
E)  25 rubles = 80 U.S.centsF) C) and D)
G) B) and E)

Question 19

The United States first became a creditor nation in the year ______.

Accepted Answer

The answer of The United States first became a creditor...

Question 20

In 2009,we had a current account ________ and a capital account ______.

Accepted Answer

A)  surplus;surplus
B)  deficit;deficit
C)  deficit;surplus
D)  surplus;deficitE) None of the above
F) A) and D)

Exam 32: International Finance

The foreign exchange rate refers to

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Under the gold standard,a country with a negative balance of trade would experience

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The balance of payments accounts contain information about the

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If 40 Russian rubles = $1 U.S. ,

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Statement I: Decisions affecting the U.S.economy are being made increasingly in London,Frankfurt,and Tokyo. Statement II: America is borrowing largely for today's consumption rather than for productive investments.

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Foreign exchange rates are

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If the rate of exchange for a pound of $4,the rate of exchange for the dollar is _____ pound.

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Which statement is false?

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The market in which the currency of one country is traded for the currency of another country is called

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Statement I: A declining dollar makes foreign investment in dollar-denominated assets more attractive. Statement II: In the last 20 years,foreigners have expanded their role in the U.S.as both creditors and owners.

Correct AnswerverifiedShow Answer

Suppose the exchange rate between the U.S.and Argentina is initially set at 20 pesos per dollar and increases to 25 pesos per dollar.In the U.S.economy this would be expected to

Correct AnswerverifiedShow Answer

An increase in the dollar price of the English pound will cause a __________________ in the pound price of the dollar.

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In the year _____________________,our President announced that we would no longer redeem dollars for gold.

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In 2009,we had a current account ________ and a capital account ______.

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If the U.S.demand for German goods increases,then

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If the demand of U.S.dollars drops sharply

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Under a gold standard,a country with a trade deficit should expect gold to flow _______.

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When the current account is in deficit,the capital account must

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Floating exchange rates

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The United States first became a creditor nation in the year ______.

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In 2009,we had a current account __ and a capital account .

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