Exam 15: International and Balance of Payments Issues in the Macro Economy

Under a fixed exchange rate system, to prevent the depreciation of the dollar as a result of a balance of payments deficit, the Fed will increase the demand for dollars by supplying a foreign currency from its reserve assets.

The current flows of goods, services, investment income, and unilateral transfers between a country and the rest of the world is called the:

Exports are:

When it became known in 1997 that the Thai government had insufficient foreign exchange reserves to maintain the exchange rate, how did currency speculators respond? What policy did the IMF suggest?

The U.S. imports Japanese cars with a domestic price of 5,000,000 yen and the yen/dollar exchange rate is 120 on January 1, 2003. On January 1, 2004 the yen/dollar exchange rate is 125. What is the dollar price of the cars on January 1, 2003? What is the dollar price of the cars on January 1, 2004?

An increase in the demand for dollars on the foreign exchange market, all else equal, will result in:

Borrowing from another country that occurs when the country has a trade deficit and its citizens sell real and financial assets to foreigners is called a capital inflow.

In January 2001, the euro/dollar exchange rate was 1.10, and in January 2002, the euro/dollar exchange rate was 1.120 What happened to the exchange rate during this period?

In an open economy with global capital markets and mobile capital:

The trade balance must equal the level of private and public saving in the country.

The weak euro in 1999-2000 put upward pressure on inflation in Europe by increasing the price of imported goods.

Changes in domestic and foreign income result in:

The international financial organization created at the Bretton Woods conference in 1944 that helps developing countries obtain low-interest loans is called the:

Under a flexible exchange rate system, if the quantity supplied of dollars is greater than the quantity demanded of dollars, there is a:

A trade deficit means:

Holding everything else constant, a country's imports will decrease if the:

Exports are positively related to domestic income and negatively related to the exchange rate.

A restrictive monetary policy, all else equal, will:

The balance of payments accounts are divided into two sections: the current account and the capital account.

The difference between the interest income or receipts earned on investments int eh rest of the world by the residents of a given country and the payments to foreigners on investments they have made in the given country is called: