Question 1

Under a system of fixed exchange rates, a nation which experiences chronic balance of payments deficits may:

Accepted Answer

A) initiate protectionist trade policies. 
B) run short of international monetary reserves. 
C) be forced to use contractionary monetary and fiscal policies. 
D) do all of the above. 
A) initiate protectionist trade policies. 
B) run short of international monetary reserves. 
C) be forced to use contractionary monetary and fiscal policies. 
D) do all of the above.

Question 2

Using Image 18.2 Global Perspective, In October 2017, one Canadian dollars bought:

Accepted Answer

A) 2 Mexican pesos. 
B) 9.23 Mexican pesos. 
C) 25 Mexican pesos. 
D) 15 Mexican pesos. 
A) 2 Mexican pesos. 
B) 9.23 Mexican pesos. 
C) 25 Mexican pesos. 
D) 15 Mexican pesos.

Question 3

If the exchange rate changes so that more Swiss francs are required to buy a dollar, then:

Accepted Answer

A) the Swiss franc has appreciated in value. 
B) Canadians will buy more Swiss goods and services. 
C) more Canadian goods and services will be demanded by the Swiss. 
D) the dollar has depreciated in value. 
A) the Swiss franc has appreciated in value. 
B) Canadians will buy more Swiss goods and services. 
C) more Canadian goods and services will be demanded by the Swiss. 
D) the dollar has depreciated in value.

Question 4

Assume that, under a system of flexible exchange rates, Mexicans decide to increase their investments in Canada.As a result:

Accepted Answer

A) Canadians will want to buy fewer Mexican goods at the new exchange rate. 
B) the peso and the dollar will both depreciate in value. 
C) the peso and the dollar will both appreciate in value. 
D) the peso will depreciate and the dollar will appreciate in value. 
A) Canadians will want to buy fewer Mexican goods at the new exchange rate. 
B) the peso and the dollar will both depreciate in value. 
C) the peso and the dollar will both appreciate in value. 
D) the peso will depreciate and the dollar will appreciate in value.

Question 5

The following table shows the balance of payments statement of Transylvania for 2013.All the figures are in billions of dollars.   Refer to the above data.In 2013, foreigners made a smaller volume of investments in Transylvania than Transylvanians invested abroad.

Accepted Answer

A) True 
 B)False

Question 6

The following table shows the balance of payments statement of Canada for 2014.All the figures are in billions of dollars.   Refer to the above information.In 2014, Canada's balance of services was:

Accepted Answer

A) $3 billion. 
B) -$9 billion. 
C) $15 billion. 
D) -$6 billion. 
A) $3 billion. 
B) -$9 billion. 
C) $15 billion. 
D) -$6 billion.

Question 7

Using Image 18.2 Global Perspective, In October 2017, one Canadian dollar bought:

Accepted Answer

A) 50 U.S.dollars. 
B) 0.80 U.S.dollars. 
C) 2.60 U.S.dollars. 
D) 17.8 U.S.dollars. 
A) 50 U.S.dollars. 
B) 0.80 U.S.dollars. 
C) 2.60 U.S.dollars. 
D) 17.8 U.S.dollars.

Question 8

If the price of British pounds, measured in terms of Canadian dollars is rising then, the price of Canadian dollars, measured in terms of British pounds, is also rising.

Accepted Answer

A) True 
 B)False

Question 9

The following table shows the trade between Canada and Transylvania for the year 2012.All figures are in billions of dollars.   Refer to the information above.Canada had a merchandise trade:

Accepted Answer

A) surplus of $137 billion. 
B) surplus of $9 billion. 
C) deficit of $9 billion. 
D) deficit of $128 billion 
A) surplus of $137 billion. 
B) surplus of $9 billion. 
C) deficit of $9 billion. 
D) deficit of $128 billion

Question 10

Exports cause:

Accepted Answer

A) an outflow of money and an inflow of goods and services. 
B) an inflow of money and an inflow of goods and services. 
C) an outflow of money and an outflow of goods and services. 
D) an inflow of money and an outflow of goods and services. 
A) an outflow of money and an inflow of goods and services. 
B) an inflow of money and an inflow of goods and services. 
C) an outflow of money and an outflow of goods and services. 
D) an inflow of money and an outflow of goods and services.

Question 11

If a nation's balance on current account is a negative $20 billion, while its balance on capital account is a positive $16.5 billion, we can conclude with certainty that this nation is experiencing:

Accepted Answer

A) a merchandise trade deficit. 
B) a merchandise trade surplus. 
C) a reduction in its stock of foreign currency. 
D) a balance of payments surplus. 
A) a merchandise trade deficit. 
B) a merchandise trade surplus. 
C) a reduction in its stock of foreign currency. 
D) a balance of payments surplus.

Question 12

In saying that the present system of flexible exchange rates is managed we mean that:

Accepted Answer

A) countries which allow their exchange rate to move freely will lose their borrowing privileges with the IMF. 
B) the value of any IMF member's currency can only vary 2 percent from its par value. 
C) IMF officials determine exchange rates on a day-to-day basis. 
D) the central banks of various countries buy and sell foreign exchange to smooth out short-term fluctuations or undesirable trends in exchange rates. 
A) countries which allow their exchange rate to move freely will lose their borrowing privileges with the IMF. 
B) the value of any IMF member's currency can only vary 2 percent from its par value. 
C) IMF officials determine exchange rates on a day-to-day basis. 
D) the central banks of various countries buy and sell foreign exchange to smooth out short-term fluctuations or undesirable trends in exchange rates.

Question 13

Suppose the current account balance of an economy is -$50 billion and the capital account balance of the economy is $61 billion.Given the information, it can be said that the balance in the official settlement account is:

Accepted Answer

A) -$11 billion. 
B) $11 billion. 
C) -$111billion. 
D) $111 billion. 
A) -$11 billion. 
B) $11 billion. 
C) -$111billion. 
D) $111 billion.

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

Under a system of fixed exchange rates, a nation which experiences chronic balance of payments deficits may:

Using Image 18.2 Global Perspective, In October 2017, one Canadian dollars bought:

If the exchange rate changes so that more Swiss francs are required to buy a dollar, then:

Assume that, under a system of flexible exchange rates, Mexicans decide to increase their investments in Canada.As a result:

The following table shows the balance of payments statement of Transylvania for 2013.All the figures are in billions of dollars. Refer to the above data.In 2013, foreigners made a smaller volume of investments in Transylvania than Transylvanians invested abroad.

The following table shows the balance of payments statement of Canada for 2014.All the figures are in billions of dollars. Refer to the above information.In 2014, Canada's balance of services was:

Using Image 18.2 Global Perspective, In October 2017, one Canadian dollar bought:

If the price of British pounds, measured in terms of Canadian dollars is rising then, the price of Canadian dollars, measured in terms of British pounds, is also rising.

The following table shows the trade between Canada and Transylvania for the year 2012.All figures are in billions of dollars. Refer to the information above.Canada had a merchandise trade:

Exports cause:

If a nation's balance on current account is a negative $20 billion, while its balance on capital account is a positive $16.5 billion, we can conclude with certainty that this nation is experiencing:

In saying that the present system of flexible exchange rates is managed we mean that:

Suppose the current account balance of an economy is -$50 billion and the capital account balance of the economy is $61 billion.Given the information, it can be said that the balance in the official settlement account is:

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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