chap 4 Flashcards
The graph above shows the foreign exchange market for United States dollars in terms of Japanese yen. Assume that there is an increase in United States consumers’ preference for Japanese automobiles. Which of the following changes will most likely take place in the market for dollars?
The supply of dollars will increase
An increase in the international value of the United States dollar will most likely benefit
E: retired United States citizens living overseas on their social security checks
The table gives the values of selected accounts in a nation’s balance of payments in millions of dollars.
Exports $500Imports $400Net income from abroad −$150Net unilateral transfers $20
Based on the table, which of the following describes the balance in the current account and in the capital and financial account?
The current account is in deficit and the capital and financial account is in surplus.
Which of the following would cause the United States dollar to increase in value to the Japanese yen?
B: An increase in interest rates in the United States
A country can have an increased surplus in its balance of trade as a result of
B: declining imports and rising exports
If the price of the Swedish krona changes from 12 Japanese yen per krona to 13 Japanese yen per krona, then which of the following describes the change in the yen and the change in the cost of Swedish goods to residents of Japan?
a. Yen- Depreciation Change in Cost of Swedish Goods to Residents of Japan-Increase
a decrease in the value of a nation’s currency in a flexible exchange rate system is called macro test
currency depreciation
Which of the following best explains the change in the international value of the peso caused by a shift of the demand curve from D0D0 to D1D1 in the dollar-peso foreign exchange market?
The peso has depreciated because Americans’ demand for Mexican goods and services decreased.
Which of the following transactions would increase the current account surplus in Japan’s balance of payments accounts?
A Japan-based company sells roasted coffee to Canada.
Assume that the inflation rate in Country X is very high relative to the inflation rates in all of its trading partners. Which of the following is likely to happen to Country X’s currency on the foreign exchange market
B: The demand curve for the currency will shift to the left and the currency will depreciate
The price of one nation’s currency expressed in terms of another nation’s currency is called
B.the exchange rate
depreciation of the United States dollar in foreign exchange markets will result in which of the following?
An increase in aggregate demand because imports will decrease.
. An increase in which of the following would reduce the United States balance-of-trade deficit?
C The value of foreign currency relative to the United States dollar
Which of the following is true if exchange rates are freely floating?
A The free market forces of demand and supply determine the equilibrium exchange rates.
An increase in Japan’s demand for United States goods would cause the value of the dollar to
Appreciate because Japan would be buying more United States dollars
