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Question 11.A country is spending $1 billion annually on growing its economy, compared to savings of $500 million in the same time period. What type of current account balance does this suggest?
Question 22.A particular candidate's reelection campaign centers on detailing to her constituents the sum of the balance of trade, which she is unhappy with. What economic term is she referring to?
Question 33._____ transactions are often referred to as foreign or international trade and involve the inflow and outflow of money.
Question 44.You have just arrived at your overseas destination and your first task is to visit the currency exchange. The exchange rate between the dollar and the foreign currency is 1 to .50. You hand the attendant a $100 bill. How much of the foreign currency will you receive back given the current exchange rate?
Question 55.A government official recognizes that an overseas country's currency has decreased in value relative to U.S. currency. Therefore, one can conclude that:
Question 66.A chief economist finds a steady trend of imports from other countries becoming more expensive and the onset of inflation. Which item is MOST likely responsible for these economic events?
Question 77.As an economics student, you are trying to figure out the reason behind why foreign exports appear to be so cheap relative to domestic goods. What is a potential explanation for this?
Question 88.What is a possible economic strategy for a country to broaden the price appeal of their exports?
Question 99.American automobile manufacturers are noticing a decrease in their exports to the European market. What rationale BEST explains this outcome?
Question 1010.A country's economic advisers are attempting to make their exports appealing via lowered prices, boost tourism to their country, and attract foreign investors. What economic pathway would they MOST likely consider?
Question 1111.Interest rates are an element of fiscal policy that can affect the exchange rate. Which additional item can affect the exchange rate?
Question 1212.Which item is MOST likely to be affected by both fiscal and monetary policies?
Question 1313.What type of fiscal policy will cause a decrease in the value of the dollar relative to the exchange rate?
Question 1414.From a trade perspective, balanced trade and money flows would suggest:
Question 1515.A growing economy imports $10 billion and exports $12 billion. What is this country's trade balance?
Question 1616.Several European countries have just submitted their balance of payments upon request by a U.S. diplomat. What is recorded on this document?
Question 1717.The U.S. is attempting to bolster trade with several Asian countries. Our incoming goods appear to be less expensive, suggesting that the local currency _____.
Question 1818.What is most likely to happen with a strong dollar?
Question 1919.When are exchange rates determined by demand and supply forces?
Question 2020.Which of the following statements about the financial/capital account is NOT true?
Question 2121.If the exchange rate between the U.S. dollar and Mexican Peso is 13 Pecos to 1 U.S. dollar, how many dollars would a gallon of ice cream costing 52 pesos be?
Question 2222.All of the following are true, EXCEPT that the current account _____.
Question 2323.Identify the situation where a weak currency, or lower exchange rate, can be beneficial.
Question 2424.When expansionary monetary policy leads to a decrease in interest rates, the exchange rate _____.
Question 2525.Why does Saudi Arabia have a large trade surplus?
Question 2626.How is domestic currency related to exports?
Question 2727.What is the rate at which one currency is converted in another called?
Question 2828.Why is the balance of payments useful for understanding the state of the economy?
Question 2929.Which of the following statements regarding an exchange rate is not true?
Question 3030.Which of the following is NOT a component of the current account?
Foreign Exchange and the Balance of Payments Chapter Exam Instructions
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