280)
An increase in the inflation rate of one country relative to another country will probably cause
280)
A)
a balance of trade deficit for the inflating country.
B)
a current account surplus for the inflating country.
C)
an increase in exports for the inflating country.
D)
an increase in the amount of official reserves held by the inflating country’s central bank.
281)
When all currencies are tied directly to gold, then
281)
A)
the price of each nation’s currency in terms of gold is flexible.
B)
currency exchange rates throughout the world are fixed.
C)
the world’s stock of gold cannot change.
D)
currency exchange rates throughout the world are flexible.
282)
Unilateral transfers represent
282)
A)
the balance of government bonds bought and sold by residents of a country.
B)
the balance of official transfers within an economy.
C)
the balance of financial giftsboth private and publicentering and leaving a country.
D)
the balance of services coming into a country.
283)
The use of foreign exchange reserves to keep exchange rates constant over time is called
283)
A)
B)
C)
D)
284)
If the United States has a trade deficit with China, then China must have
284)
A)
a trade surplus with the United States.
B)
a trade deficit with the United States.
C)
a trade surplus with countries other than the United States.
D)
a trade deficit with countries other than the United States.
285)
One problem associated with the gold standard was that
285)
A)
nations gave up control of their money supply.
B)
nations could not determine their current account balances.
C)
there was an incentive for individuals to hold gold at all interest rates.
D)
there was no fluctuation in exchange rates.
286)
The United States was taken off the gold standard by
286)
A)
B)
C)
D)
287)
An increase in the demand for the Brazilian real induces
287)
A)
an increase in the dollar price of a real.
B)
an increase in the demand for Brazilian goods.
C)
an increase in the real price of a dollar.
D)
a decrease in the supply of dollars.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
288)
Suppose the foreign exchange market is in equilibrium. Then, the U.S. government increases borrowing,
causing American interest rates to increase. What will happen to the price of the Japanese yen? Why?
289)
What brought about the end of the Bretton Woods Agreement?
290)
Why does the demand curve for Japanese yen slope down?
291)
Suppose there was a substantial increase in political instability in the rest of the world. What would be the
effects on the U.S. current account? Explain.
292)
Explain how the gold standard operated.
293)
In foreign exchange markets, who demands dollars and who supplies dollars?
294)
“When the balance of payments sums to zero is the only situation in which there is an equilibrium.” Do you
agree or disagree? Why?
295)
How are deficit and surplus items determined in the balance of payments?
296)
Distinguish between the balance of payments and the balance of trade.
297)
Why does the supply curve of Japanese yen slope up?
298)
What does it mean when the dollar appreciates? What does it mean when the dollar depreciates?
299)
Explain the three categories of balance of payments transactions.
300)
Suppose the U.S. inflation rate falls while the inflation rate among the members of the European Monetary
Union (EMU) holds constant. Other things equal, what will happen in the balance of payments accounts?
Answer Key
Testname: C33
Answer Key
Testname: C33
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Answer Key
Testname: C33
Answer Key
Testname: C33
Answer Key
Testname: C33
Answer Key
Testname: C33
Answer Key
Testname: C33
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