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

In February 2002, the euro/dollar exchange rate was 1.20, and in May 2002, the euro/dollar exchange rate was 1.10. What happened to the exchange rate during this period?

What will a U.S. corporation do if it believes that the dollar will continue to appreciate when it changes foreign earnings back into dollars?

In the foreign exchange market, the quantity supplied of dollars is 300 whereas the quantity demanded of dollars is 500 results in a:

The major factor contributing to the depreciation of the Euro in 1999 and 2000 was:

Capital inflows occur if foreign interest rates are greater than domestic interest rates.

What is the difference between a sterilized and non-sterilized central bank intervention in the foreign exchange market?

Using the foreign exchange market diagram, graphically illustrate and explain the impact of U.S. interest rates that exceed foreign interest rates, all else constant, on the exchange rate.

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

When a country's export spending exceeds import spending, the country is experiencing a:

What did the European Central Bank ECB) do to bolster the value of the euro in September 2000?

The difference between nominal and real exchange rates is:

Actions taken by a country's central bank to prevent balance of payments policies from influencing the country's domestic money supply is called a:

Capital inflows occur if:

A lending of a country's savings that occurs when the country has a trade deficit and its citizens purchase real and financial assets from abroad is called a capital inflow.

You are given the following information. Exports X = 1,300 Imports M = 2,000 Capital inflows k_i = 800 Capital outflows k_o = 300 Compute net exports, net capital flows, and the balance of payments.

Briefly explain the behavior of the Federal Reserve considering a balance of payments disequilibria within a fixed exchange rate system.

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

In an open economy, total income is the sum of exports and imports.

In the foreign exchange market, foreign residents wishing to purchase U.S. exports or U.S. real and financial assets must:

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