Question :
121) Refer to Figure 35-4. Suppose the Bank of Canada : 1384551
121) Refer to Figure 35-4. Suppose the Bank of Canada pegs the exchange rate at and the supply curve is . The Bank would have to ________ foreign exchange in the amount of ________ per month.
A) sell;
B) sell;
C) purchase;
D) purchase;
E) No transaction would be necessary
122) Refer to Figure 35-4. Suppose the Bank of Canada pegs the exchange rate at and the supply curve is . The Bank would have to ________ foreign exchange in the amount of ________ per month.
A) purchase;
B) purchase;
C) sell;
D) sell;
E) No transaction would be necessary
123) People who might be called “neomercantalists” are most likely to argue that
1) the benefits from international trade increase with the size of the trade surplus;
2) the power of the government is related to the size of the trade balance;
3) the country’s living standard is related to the size of the trade surplus.
A) 1 and 2
B) 2 and 3
C) 1, 2, and 3
D) 2 only
E) 3 only
124) If Canada has a current account deficit, it is
A) matched by a trade surplus of the same size.
B) matched by a deficit on the capital-service portion of the current account.
C) matched by a capital account deficit of the same size.
D) matched by a capital account surplus of the same size.
E) not matched by a change in the capital account.
125) Mercantilists, both ancient and modern, believe that a country’s gains from trade arise primarily from having
A) exports equal imports.
B) a trade deficit.
C) comparative advantage in the production of products in which their opportunity costs are low.
D) imports exceed exports.
E) exports exceed imports.
126) Any country’s current account can be expressed as CA =
A) (S + T) – (T + G).
B) (S + I) + (T + G).
C) (S – I) – (T – G).
D) (S – I) + (T – G).
E) (S + I) – (T – G).
127) Consider the balance of payments for a small country. Suppose that in this country private saving is $4 million, its investment is $10 million, government purchases are $6 million, and net tax revenues are $15 million in a given year. The current account balance for this country is a
A) deficit of $6 million.
B) deficit of $9 million.
C) surplus of $3 million.
D) surplus of $9 million.
E) surplus of $15 million.
128) Other things being equal, an increase in the current account deficit could be due to
A) an increase in private saving.
B) a decrease in private saving.
C) a fall in domestic investment.
D) a fall in the government’s budget deficit.
E) a rise in the budget surplus.
129) Other things being equal, an increase in the current account deficit could result from
A) an increase in private saving.
B) a fall in domestic investment.
C) a rise in domestic investment.
D) a fall in the government’s budget deficit.
E) a rise in the government’s budget surplus.
130) Other things being equal, an increase in the current account deficit could result from
A) an increase in private saving.
B) a fall in domestic investment.
C) a fall in the government’s budget deficit.
D) a rise in the government’s budget deficit.
E) a rise in the budget surplus.
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