D. an increase in U.S. imports of services
40.
Which one of the following, other things equal, will directly alter the U.S. balance of trade?
41.
In a nation‘s balance of payments, which one of the following items is always recorded as a
positive entry?
42.
In 2015, the United States’ balance on goods was about
43.
Suppose the balance on the financial account is +$200 billion and the balance on the capital
account is +$2 billion. The size of the current account is
44.
Suppose the balance on the financial account is −$300 billion and the balance on the capital
account is +$5 billion. The size of the current account is
41–23
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D i f f i c u l t y : 03 Hard
Learning Objective: 41-02 Analyze the balance sheet the United States uses to account for the
international payments it makes and receives.
Test Bank: I
T o p i c : The Balance of Payments
45.
Suppose the balance on the current account is +$100 billion and the balance on the capital
account is −$1 billion. The balance on the financial account is
46.
Suppose the balance on the current account is +$50 billion and the balance on the capital
account is +$1 billion. The balance on the financial account is
47.
In the U.S. balance of payments account for a certain year, a positive number in the financial
account means a
41–24
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written consent of McGraw-Hill Education.
B. net reduction in the ownership of assets by U.S. interests.
C.
buildup of total foreign debt.
D.
reduction of total foreign debt.
48.
With which of the following countries does the United States have its largest goods and
services deficit?
49.
A market in which the money of one nation is exchanged for the money of another nation is a
41–25
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written consent of McGraw-Hill Education.
T o p i c : Flexible Exchange Rates
50.
If the dollar price of yen rises, then
51.
If the exchange rate between the U.S. dollar and the Japanese yen is $1 = 200 yen, then the
dollar price of yen is
52.
The following are hypothetical exchange rates: $1 = 140 yen; 1 Swiss franc = $0.10. We can
conclude that
41–26
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Ac c ess i bi l it y : Keyboard Navigation
Blooms: Understand
Diffic u l t y: 02 Medium
Learning Objective: 41–03 Discuss how exchange rates are determined in currency markets
that have flexible exchange rates.
Test Bank: I
T o p i c : Flexible Exchange Rates
53.
The following are hypothetical exchange rates: 2 euros = 1 pound; $1 = 2 pounds. We can
conclude that
54.
If the rate of exchange for a pound is $4, the rate of exchange for the dollar is
55.
In considering yen and dollars, when the dollar rate of exchange for the yen rises
41–27
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written consent of McGraw-Hill Education.
B.
the yen rate of exchange for the dollar will also rise.
C.
the yen rate of exchange for the dollar may either fall or rise.
D.
U.S. net exports to Japan will fall.
56.
In considering euros and dollars, the rates of exchange for the euro and the dollar
57.
If the equilibrium exchange rate changes so that fewer dollars are needed to buy a South
Korean won, then
41–28
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written consent of McGraw-Hill Education.
T o p i c : Flexible Exchange Rates
58.
If the exchange rate changes so that more Mexican pesos are required to buy a dollar, then
59.
Depreciation of the dollar will
60.
Appreciation of the Canadian dollar will
41–29
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Diffic u l t y: 02 Medium
Learning Objective: 41–03 Discuss how exchange rates are determined in currency markets
that have flexible exchange rates.
Test Bank: I
T o p i c : Flexible Exchange Rates
61.
If the U.S. dollar depreciates relative to the Russian ruble, the ruble
62.
The U.S. demand for British pounds is
63.
The U.S. supply of Japanese yen is
41–30
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A.
downsloping because a lower dollar price of yen means U.S. goods are cheaper to the
Japanese.
B. upsloping because a higher dollar price of yen means U.S. goods are cheaper to the Japanese.
C.
upsloping because a lower dollar price of yen means U.S. goods are cheaper to the Japanese.
D.
downsloping because a higher dollar price of yen means U.S. goods are cheaper to the
Japanese.
64.
The U.S. demand for euros is
65.
Which of the following will generate a demand for country X’s currency in the foreign
exchange market?
41–31
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Ac c ess i bi l it y : Keyboard Navigation
Blooms: Understand
Diffic u l t y: 02 Medium
Learning Objective: 41–03 Discuss how exchange rates are determined in currency markets
that have flexible exchange rates.
Test Bank: I
T o p i c : Flexible Exchange Rates
66.
The accompanying diagram represents a flexible exchange market for foreign currency. At the
equilibrium exchange rate,
67.
The accompanying diagram represents a flexible exchange market for foreign currency. At the
price $0.80 for 1 euro,
68.
The accompanying diagram represents a flexible exchange market for foreign currency. Other
things equal, a rightward shift of the demand curve would
69.
The accompanying diagram represents a flexible exchange market for foreign currency. Other
things equal, a leftward shift of the demand curve would
70.
The accompanying diagram represents a flexible exchange market for foreign currency. Other
things equal, a leftward shift of the supply curve would
71.
The accompanying diagram represents a flexible exchange market for foreign currency. Other
things equal, a rightward shift of the supply curve would
72.
Refer to the diagram. The initial demand for and supply of pesos are shown by D1 and S1. The
exchange rate will be
73.
Refer to the diagram. The initial demand for and supply of pesos are shown by D1 and S1.
Suppose the United States reduces its imports of Mexican goods, shifting its demand for pesos
from D1 to D2. If the United States was operating under a system of exchange controls, the U.S.
government would
74.
Refer to the diagram. The initial demand for and supply of pesos are shown by D1 and S1.
Suppose the United States reduces its imports of Mexican goods, shifting its demand for pesos
from D1 to D2. Under a system of freely floating exchange rates,
75.
Under a system of freely flexible (floating) exchange rates, a U.S. trade deficit with Mexico
will tend to cause
41–40
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written consent of McGraw-Hill Education.
Blooms: Understand
Diffic u l t y: 02 Medium
Learning Objective: 41–03 Discuss how exchange rates are determined in currency markets
that have flexible exchange rates.
Test Bank: I
T o p i c : Flexible Exchange Rates
76.
Which of the following have substantially equivalent effects on a nation‘s volume of exports
and imports?
77.
In a system of fixed exchange rates, if the dollar price of euros is above the market
equilibrium level,
78.