Question : 19.4   Integrative Questions 1) Which of the following generally becomes positive : 1238299

19.4   Integrative Questions

1) Which of the following generally becomes positive when the value of U.S. exports exceeds the value of U.S. imports?

A) the exchange rate

B) the balance of payments account

C) capital and financial account

D) current account

E) the official settlements account

2) For many years, U.S. investment has exceeded savings and government expenditure has exceeded taxes. These imbalances (deficits) have been financed through international ________ by the United States as shown by the surplus on the balance of payments ________ account.

A) borrowing; capital and financial

B) lending; current

C) borrowing; current

D) lending; official settlements

E) borrowing; official settlements

3) If the exchange rate appreciates, then the

A) quantity of dollars demanded decreases.

B) quantity of dollars demanded increases.

C) demand for dollars decreases.

D) demand for dollars increases.

E) supply of dollars decreases.

4) If the exchange rate depreciates, then the

A) quantity of dollars demanded decreases.

B) quantity of dollars demanded increases.

C) demand for dollars decreases.

D) demand for dollars increases.

E) supply of dollars decreases.

5) If the exchange rate is constant and U.S. exports increase, then in the foreign exchange market the

A) quantity of U.S. dollars demanded decreases.

B) quantity of U.S. dollars demanded increases.

C) demand for U.S. dollars decreases.

D) demand for U.S. dollars increases.

E) supply of U.S. dollars increases.

6) If the exchange rate is constant and U.S. imports increase, then in the foreign exchange market the

A) quantity of U.S. dollars supplied decreases.

B) quantity of U.S. dollars supplied increases.

C) supply of U.S. dollars decreases.

D) supply of U.S. dollars increases.

E) demand for U.S. dollars increases.

7) If the prices for the same goods and services are different in two nations, the exchange rate adjusts over the long run to achieve

A) zero net exports for each nation.

B) purchasing power parity between the two currencies.

C) balance of payments account between the two nations equal to zero.

D) interest rate parity.

E) a zero current account balance between the two nations.

8) Changes in a currency’s exchange rate adjust immediately to insure that

A) purchasing power parity always prevails.

B) interest rate parity always prevails.

C) official settlements account parity always prevails.

D) net exports always equal zero.

E) current account balance equals zero.

9) If the U.S. dollar depreciates against the euro, what can the Fed do to keep the dollar’s exchange rate stable?

A) nothing

B) decrease U.S. imports by increasing tariffs

C) sell dollars in the foreign exchange market

D) buy dollars in the foreign exchange market

E) buy euros in the foreign exchange market

10) If the price in Japan of a U.S. dollar becomes a larger number of yen, the U.S. dollar has ________.  The yen has ________ because it buys ________ dollars.

A) appreciated; depreciated; fewer

B) appreciated; depreciated; more

C) appreciated; appreciated; fewer

D) depreciated; appreciated; more

E) appreciated; appreciated; more