Exam 18: Part A: The Balance of Payments and Exchange Rates

In equilibrium, if $1 = .5 pounds sterling and 1 pound sterling = 40 Swiss francs, the exchange rate between dollars and Swiss francs will be:

The several financial crises in which country required a massive financial bailout by the International Monetary Fund.

The purchasing-power-parity theory holds that exchange rates equate the purchasing power of various currencies.

Under a system of flexible exchange rates, an increase in the international value of a nation's currency will:

Which of the following would contribute to a Canadian balance of payments surplus?

In the balance of payments of Canada, capital inflows are recorded as:

Refer to the above diagram.The initial demand for and supply of pesos are shown by D₁ and S₁.If the decline in Canadian imports from Mexico described in the previous question occurred under a system of flexible exchange rates:

Which of the following creates a supply of Euro in foreign exchange markets?

The current system of exchange rates can best be described as:

An increase in the dollar price of British pounds will:

The following table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra.Assume that a system of flexible exchange rates is in place. Refer to the above table.Suppose that Libra decided to import more Canadian products.We would expect the quantity of libras:

If in a system of fixed exchange rates the dollar price of pounds is above the market equilibrium

The following table shows the balance of payments statement for the hypothetical nation of Zabella for 2014.All the figures are in billions of dollars. Refer to the above data.Zabella's balance on goods and services shows a:

The following table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra.Assume that a system of flexible exchange rates is in place. Refer to the above table.The exchange rate is:

Suppose one Canadian dollar would buy 262 yen in 2005.However, it would buy only 123 yen in 2012.Relative to the yen, the value of the dollar:

In considering British pound and dollar, the rates of exchange for the pound and the dollar:

When the people involved in an exchange are from countries that use different currencies, an intermediate asset transaction has to take place:

The expectations of speculators in Canada that the exchange rate for the euro will fall in the future will increase the supply of euros in the foreign exchange market and decrease the exchange rate for the euros.

The Canadian demand for Swiss francs is:

If the dollar depreciates, Canadian exports will eventually rise and Canadian imports will eventually fall.