Exam 7: an Introduction to the Foreign Exchange Market and the Balance of Payments

Which of the following transactions will be included in the financial account of the balance of payments of any country?

When domestic currency depreciates, foreign demand for domestic goods increases.

Which of the following would not be a part of the merchandise trade balance?

A country that experiences a large deficit in the merchandise trade account should always aim at eliminating this trade deficit by adopting strict foreign trade policies.

Which of the following will increase the demand for U.S.products in the international market?

If one U.S.dollar = 11.76 Mexican pesos, then the reciprocal exchange rate equals:

The euro is a common currency of all European countries.

Which of the following correctly describes a foreign exchange market?

The net balance on the balance of payments accounts:

If Michelle can buy a woolen jacket for 40 Yuan in China, and Rebecca pays $40 for the same jacket in the U.S. , it implies the exchange rate between these two nations is 10 Yuan = $1.

A stereo system in Mexico costs 3, 200 Mexican pesos.If the dollar price of one Mexican pesos is $0.11, then the U.S.dollar value of the same stereo system is $352.

A majority of international transactions involves the buying and selling of _____.

The statistical discrepancy account is also referred to as:

When the equation X = GDP - C- I - G yields a negative X, it represents a situation in which the country:

Assume that the Danish krone price of one British pound is DKr10.5.If it costs 45 pounds per day to rent a car in London and DKr480.5 to do so in Copenhagen, which of the following is true?

Markets in which the currencies of different countries across the world are traded are called:

If the U.S.dollar price of one Japanese yen was $0.009 in 1997 and $0.011 in 2001, then the reciprocal exchange rate adjusted from $1 = ¥111.1 in 1997 to $1 = ¥90.9 in 2001.This implies that over this time period, the U.S.dollar experienced a depreciation relative to the Japanese yen.

The euro began trading in January 1999.

The _____ account reflects the movement of goods and services into and out of the country.The _____ account reflects the flow of financial assets into and out of the country.

The purchase of French wine by U.S.consumers will be accounted as: