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Chapter 21: International Finance

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;;30.In a floating-exchange-rate system, the capital-account balance equals;A) The negative of the current-account balance.;B) Foreign purchases of U.S. assets minus U.S. purchases of foreign assets.;C) The balance of payments minus the sum trade balance, the services balance, and unilateral transfers.;D) All of the above.;29.Under floating exchange rates the capital-account balance is equal to the negative of;A) Trade balance + services balance + unilateral transfers.;B) Trade balance + capital-account balance + services balance.;C) Current-account balance + exports + unilateral transfers.;D) Unilateral transfers + exports + imports.;28.The capital account includes;A) Trade in goods. C) Unilateral transfers.;B) Trade in services. D) Foreign purchases of U.S. assets.;27.The current-account balance equals;A) Exports minus imports.;B) Foreign purchases of U.S. assets minus U.S. purchases of foreign assets.;C) The trade balance plus the services balance plus unilateral transfers.;D) All of the above.;26. The current account balance is equal to;A) Trade balance + services balance - capital-account balance.;B) Trade balance + services balance + capital-account balance.;C) Trade balance + services balance + unilateral transfers.;D) Total payments made by residents of the United States to foreigners plus total payments made by foreigners to residents of the United States.;25. The net balance of payments is;A) The difference between exports and imports.;B) The difference between the current-account balance and the capital-account balance.;C) The sum of the current-account balance and the trade-account balance.;D) The sum of the current-account balance and the capital-account balance.;24. An increase in the U.S. trade deficit could be caused by;A) An appreciation of the dollar in terms of other currencies.;B) An increase in the rate of inflation in the U.S.;C) The imposition of a tariff on imported goods.;D) A depreciation of the dollar in terms of other currencies.;23.Theoretically, the net balance of payments is;A) Foreign demand for a country's currency minus foreign supply.;B) The current account plus the capital account.;C) A country's capital inflow minus its capital outflow.;D) Exports minus imports.;22.The merchandise trade balance is equal to;A) The difference between merchandise exports and merchandise imports.;B) The difference between service exports and service imports.;C) The capital account balance.;D) The current-account balance.;21.The merchandise trade balance for the United States equals;A) The difference between service exports and service imports.;B) The difference between dollar value of merchandise exports and dollar value of merchandise imports.;C) Exports minus imports.;D) The current-account balance minus the capital-account balance.;20. Merchandise exports minus merchandise imports defines a country's;A) Current-account balance. C) Balance of payments.;B) Capital-account balance. D) Trade balance.;19.If the exchange rate between the U.S. dollar and Japanese yen changes from $1=100 yen to $1=90 yen, then;A) All Japanese producers and consumers will lose.;B) U.S. auto producers and autoworkers will lose.;C) U.S. consumers of Japanese TV sets will benefit.;D) Japanese tourists to the U.S. will benefit.;18.Suppose a U.S. firm purchases some English china. The china costs 1,000 British pounds. At the exchange rate of $1.45 = 1 pound, the dollar price of the china is;A) $250. B) $690. C) $1,450. D) $2,000.;17.If one euro is equal to 0.60 U.S. dollars, what would be the euro price of a car that costs $10,000?;A) 5,000 euros. B) 16,667 euros. C) 60,000 euros. D) 10,000 euros.;16. An increase in the price of the U.S. dollar in terms of euros will cause, ceteris paribus;A) A lower European inflation rate.;B) Higher interest rates in the United States.;C) European goods to be cheaper to residents of the United States.;D) All of the above.;15. A change in the exchange rate for a country's currency alters the prices of;A) Exports only. C) Both exports and imports.;B) Imports only. D) Only domestic goods and services.;14. When the exchange rate between the U.S. dollar and the Japanese yen is $1=100 yen, this is an indication that;A) It would take 100 yen to purchase $1. C) The dollar is depreciating compared to the yen.;B) The yen is stronger than the U.S. dollar. D) All of the above.;13.Changes in the value of the euro affect the economies of;A) Only those countries using the euro as currency.;B) All European countries but there would be no significant impact on countries outside Europe.;C) Potentially the entire world.;D) There would be no significant impact on any economies as long as exchange rates are flexible.;12.When Americans buy Mercedes-Benz automobiles made in Germany, they are generating a;A) Supply of U.S. dollars and a supply of a foreign currency.;B) Supply of U.S. dollars and a demand for a foreign currency.;C) Demand for U.S. dollars and a supply of a foreign currency.;D) Demand for U.S. dollars and a demand for a foreign currency.;11.When foreign countries buy wheat grown in the United States, they are generating a;A) Demand for U.S. dollars and a demand for a foreign currency.;B) Demand for U.S. dollars and a supply of a foreign currency.;C) Supply of U.S. dollars and a demand for a foreign currency.;D) Supply of U.S. dollars and a supply of a foreign currency.;10.Which of the following generates a supply of dollars in the foreign-exchange market?;A) Transfers of money by foreign nationals to relatives in the United States.;B) U.S. exports to foreign countries.;C) U.S. military installations abroad.;D) Purchases of real estate investment in the United States by foreign nationals.;9. Which of the following generates demand for foreign currencies?;A) Expenditures by Americans traveling abroad.;B) Exports from the United States to foreign countries.;C) The purchase by foreigners of bonds issued by the U.S. government.;D) Transfers of money from foreigners to relatives in the United States.;8.Which of the following generates demand for foreign currencies?;A) Exports from the United States to foreign countries.;B) Imports of foreign goods by firms located in the U.S.;C) The building of plants by foreign corporations in the U.S.;D) All of the above.;7. Which of the following generates a demand for dollars in the foreign-exchange market?;A) The demand for exports from the United States. C) Speculation.;B) Investment by foreigners in the United States. D) All of the above.;6.Which of the following generates a demand for dollars in the foreign-exchange market?;A) Transfers of money by foreign workers in the United States to relatives abroad.;B) U.S. military installations abroad.

 

Paper#74408 | Written in 18-Jul-2015

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