Chapter 32 Flashcards
As the dollar is devaluated
D. inflationary pressures are incresed and our standard of living is reduced.
Ove the last decade, foreigners have been exercising
B. an increaseing influence over interest rates in the US
In 2007, we had a current account_______ and a capital account_______.
B. deficit; surplus
During the 1980’s, foreigners expanded their role in the United States as
A. both creditors and owners
Which statement is false about trade?
C. We have been on the international gold standard since 1933.
Our basic problem with respect to our balance of trade is that
A. we consume too much and save too little
Since 1900, international finance has been based on all of these except
B. the silver standard
If we were on an international gold standard
A. trade imbalances would automatically be corrected
The main reason for balance of payments deficits has been
C. our negative balance of trade
A US importer of French wine would pay in
C. Euros
The total of our current plus capital accounts
A. will always be zero.
If we were on an international gold standard
C. trade deficits and surpluses would be eliminated
Devaluation would tend to
A. make the devaluation country’s goods cheaper
APpreciation of the Canadian dollar will
C. make Canada’s exports more expensive and its imports less expensive
Floating exchange rates
A. float according to the laws of supply and demand
Between the end of WWII and 1971, the US dollar was
A. the only major currency in the world convertible into gold for purposes of international payments
If US demand for imports increase it would be expected that the value of the dollar in international currency markets would tend to
C. decline
The foreign exchange rate refers to
C the amount of one currency that must be paid to obtain one usnit of another currency
In order to fiance the US current account deficit, we must
C. run a surplus in the capital account
When the current account is in deficit, the capital account must
D. have an equal and offsetting surplus
A depreciation of the dollar will
C. increase the amounts of US dollars demanded by foreigners
Under a system of freely flexible(floating) exchange rates an American trade deficit with Mexico will tend to cause
D. an increase in the dollar price of the pesos
Since 1995, our current account deficit has incrased every year except
D. 2000 and 2007
Nationa which experience relatively high rates of inflation
B. will experience a reduction in the value of their currencies in the foreign exchange markets
If the US government were to impose a 20% tariff on all foreign imports, this would likely lead to ____ in demand for foreign currencies, causing the dollar to ______.
C. a decrease; appreciated
