Foreign Exchange and the Balance of Payments Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1.

Assume the following exchange rates:

1 Dollar = 102 Japanese Yen

1 Dollar = 0.6 British Pound

1 Dollar = 0.91 Swiss Franc

1 Dollar = 13 Pesos

Which of the following is the least amount of money?

Question 2 2. An increase in the value of a domestic currency will mainly affect _____.

Question 3 3. What is true about contractionary monetary or fiscal policy?

Question 4 4. Which exchange rate would most likely be used for a good or service that will be delivered at a future date?

Question 5 5. Which of the following is FALSE concerning trade?

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Question 6 6. If the exchange rate between the U.S. dollar and Mexican Peso is 13 Pesos to 1 U.S. dollar, how many dollars would a gallon of ice cream costing 52 pesos be?

Question 7 7. Which two components make up the balance of payments account?

Question 8 8. What are goods that are produced in a foreign country but sold in a home country called?

Question 9 9. When expansionary monetary policy leads to a decrease in interest rates, the exchange rate _____.

Question 10 10.

Consider a scenario where there has been a decrease in the exchange rate of the American dollar.

How will the inflation and import prices vary?

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Question 11 11. _____ are payments made by those in the domestic economy to purchase financial and physical assets in other countries.

Question 12 12. _____ are goods that are produced in a home country, but sold to foreign countries.

Question 13 13. What is most likely to happen with a strong dollar?

Question 14 14. Why can the currency exchange rate have a large impact on the trade balance?

Question 15 15. When are exchange rates determined by demand and supply forces?

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Question 16 16. Which of the following does NOT impact the trade balance of a country?

Question 17 17. How can a fiscal policy affect exchange rates?

Question 18 18. What is the rate at which one currency is converted in another called?

Question 19 19. Deduce the effects of having a higher exchange rate for the U.S. dollar on foreign currencies and imports.

Question 20 20. Which of the following statements is true?

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Question 21 21. Predict the effect on the exchange rate when the Federal Reserve uses monetary policy to increase income or available money.

Question 22 22. Which of the following is NOT associated with foreign trade?

Question 23 23.

Given the following, what is the balance of payments?

Foreign Investment in Domestic sector = $1,000,000

Domestic Investment in Foreign sector = $500,000

Exports = $1,000,000

Imports = $2,000,000

Question 24 24. All of the following are types of exchange rates that countries can use, except:

Question 25 25. If U.S. exports to Japan increased, what most likely happened?

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Question 26 26. All of the following are true, EXCEPT that the current account _____.

Question 27 27. Identify the situation where a weak currency, or lower exchange rate, can be beneficial.

Question 28 28. If more Americans want to suddenly purchase goods in Mexico, what likely happens?

Question 29 29. Why is the balance of payments useful for understanding the state of the economy?

Question 30 30. What would you expect if there is an increase in exchange rate?

Foreign Exchange and the Balance of Payments Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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