Question 1 of 56 1 0 1 0 Points Suppose Boulinas exports equal 50 billion its purchases of foreign assets equal 100 billion and foreign purchase of Boulinas assets equal 200 billion What is Boulinas balance on its current account A 100 billion B 100 billion C 150 billion D 150 billion Answer Key B Question 2 of 56 1 0 1 0 Points As incomes in foreign nations rise foreigners will buy less from the United States and more from their own economies A True B False Answer Key False Question 3 of 56 1 0 1 0 Points An appreciation of the U S dollar against other currencies means that A the U S dollar trades for less foreign currency B the U S dollar trades for more foreign currency C foreign currency has risen in value relative to the dollar D the U S dollar has fallen in value relative to the foreign currency Answer Key B Question 4 of 56 1 0 1 0 Points Under China s current regime of fixed exchange rates and capital mobility the main concern is domestic A unemployment B inflation C depreciation D liquidation Answer Key B Question 5 of 56 1 0 1 0 Points Which of the following statements is true about foreign demand for U S exports A Lower costs of production in developing countries have led to falling demand for U S exports B Although foreign demand for U S exports has generally been falling it has grown in one area namely technology intensive products C The demand for U S exports is almost as large as investment and government purchases component of aggregate demand D Rising prices in the U S relative to prices in foreign countries have led to falling demand for U S exports Answer Key C Question 6 of 56 1 0 1 0 Points Under flexible exchange rates monetary policy has impacts on the domestic economy while fiscal policy has weaker impacts as compared to in a closed economy A weaker weaker B stronger weaker C weaker stronger D stronger stronger Answer Key B Question 7 of 56 1 0 1 0 Points If the U S has a capital account surplus it means that A foreigners purchase more of U S assets than U S residents purchase foreign assets B U S exports of capital goods exceed its imports of capital goods C U S residents purchase more foreign assets than foreigners purchase U S assets D the quantity supplied of U S financial assets exceed the quantity demanded Answer Key A Question 8 of 56 1 0 1 0 Points In the short run an increase in net exports causes A an increase in real GDP and the price level B an increase in real GDP and a decrease in the price level C adecrease in real GDP and an increase in the price level D a decrease in real GDP and the price level Answer Key A Question 9 of 56 1 0 1 0 Points How will a recession in Japan affect the Singapore s economy given that Singapore is an important trading partner A Singapore s net exports are likely to fall because Japan s recession will reduce Singapore s imports B Singapore s net exports are likely to fall because Japan s recession will reduce Japan s imports C Singapore s net exports are likely to rise because Japan s recession will discourage its other trading partners from buying Japanese purchase products D Singapore s net exports are likely to rise because shortages in Japan due to its recession will discourage Singapore s exports to Japan Answer Key B Question 10 of 56 1 0 1 0 Points Purchasing power parity describes the forces that determine A prices in the short run B prices in the long run C exchange rates in the short run D exchange rates in the long run Answer Key D Question 11 of 56 1 0 1 0 Points International reserves are A foreign exchange held by governments only B foreign exchange held by central banks only C foreign exchange held by governments or central banks D gold only E various internationally acceptable assets Answer Key E Question 12 of 56 1 0 1 0 Points Suppose there is an increased demand from foreign countries for Iowa pork What happens to the U S dollar exchange rate in a flexible foreign currency market A The demand and supply of U S dollars increase leading to an increase in the quantity of dollars traded and an indeterminate effect on the exchange rate B The supply of U S dollars increases causing the U S dollar exchange rate to fall C The demand for U S dollars increases and the supply decreases leading to an increase in the U S dollar exchange rate D The demand for U S dollars increases causing the U S dollar exchange rate to rise Answer Key D Question 13 of 56 1 0 1 0 Points In the long run if inflation is higher in India than in the U S one would expect A the dollar to depreciate relative to the rupee B the rupee to depreciate relative to the dollar C the rupee to appreciate relative to the dollar D two of the above are correct Answer Key B Question 14 of 56 1 0 1 0 Points A statement of spending flows into and out of the country during a particular period for purchases of assets is called a A current account B capital account C net foreign investment account D net outflow account Answer Key B Question 15 of 56 1 0 1 0 Points Suppose an American family from New York City eats in a restaurant in Mexico City How will this transaction be recorded in U S international transactions A It is recorded in the current account as a positive plus item B It is recorded in the current account as a negative minus item C It is recorded in the capital account as a plus item D It is recorded in the current account as a negative item Answer Key B Question 16 of 56 0 0 1 0 Points Which of the following is an advantage of a free floating exchange rate system A A free floating exchange rate acts as a buffer to insulate an economy from the impact of international events B Under a system of free floating exchange rates a nation will over the long run experience more surpluses than deficits in its balance of payments C Fluctuating exchange rates reduces the risk involved in international transactions riskier and thus lower the cost of doing business with other countries D A free floating exchange rate system improves the effectiveness of a country s monetary policy and promotes price stability Answer Key A Question 17 of 56 1 0 1 0 Points The current account is A an accounting statement that includes all spending flows across a nation s border including the purchase of assets B an accounting statement that includes all spending flows across a nation s border for the purchase of goods and services …