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Foreign Exchange Market & Purchasing Power 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. All of the following are true, EXCEPT that the current account _____.

Question 2 2. Which of the following statements regarding an exchange rate is not true?

Question 3 3. Which of the following is true of purchasing power?

Question 4 4.

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?

Question 5 5. Which exchange rate would most likely be used for a good or service that will be delivered at a future date?

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Question 6 6. Predict the effect on the exchange rate when the Federal Reserve uses monetary policy to increase income or available money.

Question 7 7. _____ are payments made by those in the domestic economy to purchase financial and physical assets in other countries.

Question 8 8. Which of the following is FALSE concerning trade?

Question 9 9. The exchange rate between two countries will remain the same as the ratio of the price levels for the same two countries. This is an example of _____.

Question 10 10. If a country had $1 million in exports and $1.5 million in imports, what would the trade balance be?

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Question 11 11. Latervia is a very small country that has exports of $100,000, imports of $20,000, net income from abroad $250,000, and net current transfers $200,000. What is Latervia's current account?

Question 12 12. Identify the situation where a weak currency, or lower exchange rate, can be beneficial.

Question 13 13.

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

Question 15 15. What is true about contractionary monetary or fiscal policy?

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Question 16 16. When the American dollar buys more than its equivalent in another currency, it is considered to be _____ the other currency.

Question 17 17. Which of the following statements is true?

Question 18 18. If more Americans want to suddenly purchase goods in Mexico, what likely happens?

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 does NOT impact the trade balance of a country?

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Question 21 21. Which of the following is NOT a component of the current account?

Question 22 22. If U.S. exports to Japan increased, what most likely happened?

Question 23 23. Which of the following is NOT associated with foreign trade?

Question 24 24. Why is the balance of payments useful for understanding the state of the economy?

Question 25 25. An increase in the value of a domestic currency will mainly affect _____.

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Question 26 26. What is most likely to happen with a strong dollar?

Question 27 27. The U.S. dollar is valued at 0.94 euros. If arbitrage occurs, what will happen to the value of the dollar?

Question 28 28. When are exchange rates determined by demand and supply forces?

Question 29 29. Why can the currency exchange rate have a large impact on the trade balance?

Question 30 30. Why does Saudi Arabia have a large trade surplus?

Foreign Exchange Market & Purchasing Power 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!

Business 308: Globalization & International Management  /  Business Courses
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