Question 1

Each of the following would decrease the demand for U.S. dollars, shifting the demand curve for dollars to the left, EXCEPT:

Accepted Answer

A)  a decreased preference for U.S.-made goods. 
B)  a decrease in real GDP abroad. 
C)  a decrease in the real interest rate on U.S. assets. 
D)  a depreciation of foreign currencies relative to the U.S. dollar. 
A)  a decreased preference for U.S.-made goods. 
B)  a decrease in real GDP abroad. 
C)  a decrease in the real interest rate on U.S. assets. 
D)  a depreciation of foreign currencies relative to the U.S. dollar.

Question 2

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

Accepted Answer

A)  it no longer has a central bank. 
B)  monetary policy must be used to keep the exchange rate's market equilibrium value at its official value. 
C)  banks will begin to hold 100% of their deposits in reserves. 
D)  it must eliminate its currency from circulation and replace it with the foreign currency. 
A)  it no longer has a central bank. 
B)  monetary policy must be used to keep the exchange rate's market equilibrium value at its official value. 
C)  banks will begin to hold 100% of their deposits in reserves. 
D)  it must eliminate its currency from circulation and replace it with the foreign currency.

Question 3

For a given domestic and foreign price level, a decrease in the nominal exchange rate ______ the real exchange rate.

Accepted Answer

A)  increases 
B)  decreases 
C)  may either increase or decrease 
D)  offsets any change in 
A)  increases 
B)  decreases 
C)  may either increase or decrease 
D)  offsets any change in

Question 4

An exchange rate that varies according to the supply and demand for the currency in the foreign exchange market is called a ______ exchange rate.

Accepted Answer

A)  real 
B)  nominal 
C)  fixed 
D)  flexible 
A)  real 
B)  nominal 
C)  fixed 
D)  flexible

Question 5

U.S. households wishing to purchase shares of stock in a European company are ______ the foreign exchange market.

Accepted Answer

A)  suppliers of U.S. dollars in 
B)  suppliers of Euros in 
C)  supplied Euros by the Fed for use in 
D)  demanders of U.S. dollars in 
A)  suppliers of U.S. dollars in 
B)  suppliers of Euros in 
C)  supplied Euros by the Fed for use in 
D)  demanders of U.S. dollars in

Question 6

If the United States has a $300 billion net capital inflow, then there must be a:

Accepted Answer

A)  trade surplus of $300 billion. 
B)  trade deficit of $300 billion. 
C)  trade surplus of $600 billion. 
D)  net capital outflow of $300 billion. 
A)  trade surplus of $300 billion. 
B)  trade deficit of $300 billion. 
C)  trade surplus of $600 billion. 
D)  net capital outflow of $300 billion.

Question 7

When the Chinese government buys U.S. government bonds, from the perspective of the United States, this is a(n):

Accepted Answer

A)  import. 
B)  export. 
C)  capital outflow. 
D)  capital inflow. 
A)  import. 
B)  export. 
C)  capital outflow. 
D)  capital inflow.

Question 8

The sum of national saving and capital inflows from abroad must equal:

Accepted Answer

A)  domestic investment in new capital goods. 
B)  capital outflows. 
C)  aggregate demand. 
D)  the trade deficit. 
A)  domestic investment in new capital goods. 
B)  capital outflows. 
C)  aggregate demand. 
D)  the trade deficit.

Question 9

The PPP theory would be most useful in predicting:

Accepted Answer

A)  short-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods. 
B)  long-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods. 
C)  short-run changes in the exchange rate for a country that mainly produces lightly-traded standardized goods. 
D)  long-run changes in the exchange rate for a country that mainly produces lightly-traded non-standardized goods. 
A)  short-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods. 
B)  long-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods. 
C)  short-run changes in the exchange rate for a country that mainly produces lightly-traded standardized goods. 
D)  long-run changes in the exchange rate for a country that mainly produces lightly-traded non-standardized goods.

Question 10

The nominal exchange rate is the:

Accepted Answer

A)  market on which currencies of various nations are traded for one another. 
B)  price of the average domestic good or service relative to the price of the average foreign good or service, when prices are expressed in terms of a common currency. 
C)  quantity of foreign currency assets held by a government for the purpose of purchasing the domestic currency in the foreign exchange market. 
D)  rate at which two currencies can be traded for each other. 
A)  market on which currencies of various nations are traded for one another. 
B)  price of the average domestic good or service relative to the price of the average foreign good or service, when prices are expressed in terms of a common currency. 
C)  quantity of foreign currency assets held by a government for the purpose of purchasing the domestic currency in the foreign exchange market. 
D)  rate at which two currencies can be traded for each other.

Each of the following would decrease the demand for U.S. dollars, shifting the demand curve for dollars to the left, EXCEPT:

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

For a given domestic and foreign price level, a decrease in the nominal exchange rate ______ the real exchange rate.

An exchange rate that varies according to the supply and demand for the currency in the foreign exchange market is called a ______ exchange rate.

U.S. households wishing to purchase shares of stock in a European company are ______ the foreign exchange market.

If the United States has a $300 billion net capital inflow, then there must be a:

When the Chinese government buys U.S. government bonds, from the perspective of the United States, this is a(n):

The sum of national saving and capital inflows from abroad must equal:

The PPP theory would be most useful in predicting:

The nominal exchange rate is the:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Filters

Exam 15: Aggregate Demand, Aggregate Supply, and Inflation

Each of the following would decrease the demand for U.S. dollars, shifting the demand curve for dollars to the left, EXCEPT:

If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:

For a given domestic and foreign price level, a decrease in the nominal exchange rate ______ the real exchange rate.

An exchange rate that varies according to the supply and demand for the currency in the foreign exchange market is called a ______ exchange rate.

U.S. households wishing to purchase shares of stock in a European company are ______ the foreign exchange market.

If the United States has a $300 billion net capital inflow, then there must be a:

When the Chinese government buys U.S. government bonds, from the perspective of the United States, this is a(n):

The sum of national saving and capital inflows from abroad must equal:

The PPP theory would be most useful in predicting:

The nominal exchange rate is the:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Filters