Exam 9: The Exchange Rate and the Balance of Payments

Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus,due to increased demand for world travel.As a result,

If a country during its entire history has invested more in the rest of the world than the rest of the world has invested in it,the country is a

________ can intervene directly in the foreign exchange market by buying or selling dollars.

In June 2008,$1 bought 0.5 pounds and in October,$1 bought 0.65 pounds.As a result of this change,________ between June and October.

If the yen appreciates in value against the dollar,the dollar must have depreciated against the yen.

Suppose the exchange rate between the U.S.dollar and the Mexican peso was $1 = 5 pesos.A can of Pepsi sells for $2 in Boston and 12 pesos in Mexico City.

If X - M = $0 and the government sector has a deficit of $250 billion,the private sector

If the price level in the U.S.is 120,the price level in South Africa is 140,and the nominal exchange rate is 7 South African rands per dollar,then the real exchange rate is

If net exports is 100 and the private sector balance is 150,then the government sector balance is

Explain the effect on the demand for dollars in the foreign exchange market of an increase in the U.S.interest rate differential.

If a country has a capital and financial account surplus,that country's stock of international indebtedness is

By definition,currency depreciation occurs when the value of

Given the U.S.price level P,the foreign country price level P*,and the real exchange rate RER in foreign currency per U.S.dollar,the nominal exchange rate E would be given by

If the U.S.interest rate differential increases,in the foreign exchange market the demand for U.S.dollars ________ and the supply of U.S.dollars ________.

-The figure above illustrates the U.S.foreign exchange market.Illustrate how the exchange rate changes if the expected future exchange rate falls.Does the dollar appreciate or depreciate?

Item Billions of dollars Exports of goods and services, X Imports of goods and services, M 1,000 Net taxes, T Government expenditure, G 1,300 Saving, S Investment, I 650 -Using the data in the above table,if the government sector runs a deficit of $250 billion and net exports equal -$500 billion,then saving must equal

Item Imports of goods and services Exports of goods and services Net interest income Net transfers U.S. investment abroad Foreign investment in the United States Billions of dollars -750 1,000 -50 -50 -350 200 -The data in the table above are the U.S.balance of payments.What is the capital and financial account balance?

If the dollar's value changes from 120 yen per dollar to 110 yen per dollar,the dollar has

If we import more than we export from the rest of the world we

Looking at the U.S.balance of payments for the last two decades,how have the current account and the capital account changed?