Question 1

The devaluation (depreciation) of one currency implies the revaluation (appreciation) of other currencies.​

Accepted Answer

This is because in a devaluation, the value of one currency decreases in relation to other currencies. As a result, other currencies become relatively more valuable and experience a revaluation or appreciation.

Question 2

If a nation has a surplus in its current account,​
1) it exports fewer goods than it imports
2) it exports more goods than it imports
3) the value of its currency should fall
4) the value of its currency should rise

Accepted Answer

If a nation has a surplus in its current account, it means that it is exporting more goods and services than it is importing. This leads to an increase in demand for the nation's currency, which in turn increases the value of the currency. Therefore, the correct options are 2 and 4.

Question 3

If a nation exports more goods than it imports, it has a surplus in the current account.​

Accepted Answer

This is true as a surplus in the current account means that the nation is receiving more income from exporting goods than it is spending on importing goods, resulting in a positive balance of trade.

Question 4

​The International Monetary Fund has the capacity to make loans to foreign governments.

Accepted Answer

The International Monetary Fund (IMF) is an international organization that offers financial assistance, policy advice, and technical assistance to its member countries. One of the main functions of the IMF is to provide loans to member countries experiencing economic difficulties. These loans are known as "IMF loans" or "IMF programs." However, these loans are intended to support policies that promote economic stability and growth, rather than simply providing financial assistance.

Question 5

​From the viewpoint of international currency flows, foreign investments in plant and equipment are no different from investments in foreign securities.

Accepted Answer

This statement is true. Both foreign investments in plant and equipment and foreign investments in securities result in international currency flows.

Question 6

Which of the following causes a currency inflow?​

Accepted Answer

Dividends received from foreign investments can cause a currency inflow as it represents money coming into the country from the foreign investment.

Question 7

​The International Monetary Fund is the global central bank that controls international interest rates.

Accepted Answer

The International Monetary Fund (IMF) is not a global central bank and does not control international interest rates. It is an organization that works to promote international monetary cooperation, exchange rate stability, and economic growth. While it does provide loans and financial assistance to member countries, it does not set global interest rates.

Question 8

Which of the following causes a currency inflow?​
1) foreign travel and foreign investments
2) domestic travel by foreigners
3) dividend payments from foreign corporations
4) dividend payments to foreign investors

Accepted Answer

2) Domestic travel by foreigners and 3) Dividend payments from foreign corporations both result in money flowing into the country, thereby causing a currency inflow.

Question 9

If a nation exports fewer goods than it imports, it​
1) experiences an outflow of currency
2) experiences an inflow of currency
3) has a surplus in its current account
4) has a deficit in its current account

Accepted Answer

If a nation exports fewer goods than it imports, it has a deficit in its current account. This means it is spending more on imports and paying out more currency than it is earning from exports. As a result, it will experience an outflow of currency, further contributing to the deficit.

Question 10

What is a nation's cash inflow (outflow) on its current account and its capital account given the following information? Was there a net currency inflow or outflow?
​ $$\begin{array} { l l l } 
\text { imports } & \$ 145 \
\text { exports } & 211 & \
\text { direct investments abroad } & 72 & \
\text { foreign investments in the country } & 143 \
\text { foreign purchases of domestic securities } & 86 \
\text { purchases of foreign securities } & 29 \
\text { net income from foreign investments } & 37 \
\text { government spending abroad } & 22
\end{array}$$ ​

Accepted Answer

The answer of What is a nation's cash inflow (outflow)...

Question 11

If the American dollar is devalued, American goods are cheaper to individuals holding dollars.

Accepted Answer

When the American dollar is devalued, it means the value of the dollar has decreased relative to other currencies. This makes American goods cheaper to foreign buyers who are paying with their stronger currencies, but not to individuals holding dollars, as their purchasing power in dollars has not changed.

Question 12

If the price of the European euro is $1.26, how many euros are necessary to purchase $1.00?​

Accepted Answer

The answer of If the price of the European euro...

Question 13

The International Monetary Fund

Accepted Answer

The International Monetary Fund (IMF) holds a pool of currencies from its member countries, which it can use to provide financial assistance and support to countries facing balance of payments problems.

Question 14

​If the demand for a currency exceeds the supply, the currency will be devalued under a system of freely fluctuating exchange rates.

Accepted Answer

If the demand for a currency exceeds the supply, the currency will appreciate (not devalue) under a system of freely fluctuating exchange rates. On the other hand, if the supply of a currency exceeds the demand, the currency will depreciate.

Question 15

​Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.

Accepted Answer

This is because an increase in supply of a currency means there are more units of the currency available in the foreign exchange market, which will drive down the price of the currency as people will be willing to sell it at a lower price. On the other hand, if demand for a currency exceeds supply, the currency will appreciate as people will be willing to pay more for it.

Quiz 6: International Currency Flows

The devaluation (depreciation) of one currency implies the revaluation (appreciation) of other currencies.

If a nation has a surplus in its current account, 1) it exports fewer goods than it imports 2) it exports more goods than it imports 3) the value of its currency should fall 4) the value of its currency should rise

If a nation exports more goods than it imports, it has a surplus in the current account.

The International Monetary Fund has the capacity to make loans to foreign governments.

From the viewpoint of international currency flows, foreign investments in plant and equipment are no different from investments in foreign securities.

Which of the following causes a currency inflow?

The International Monetary Fund is the global central bank that controls international interest rates.

Which of the following causes a currency inflow? 1) foreign travel and foreign investments 2) domestic travel by foreigners 3) dividend payments from foreign corporations 4) dividend payments to foreign investors

If a nation exports fewer goods than it imports, it 1) experiences an outflow of currency 2) experiences an inflow of currency 3) has a surplus in its current account 4) has a deficit in its current account

If the American dollar is devalued, American goods are cheaper to individuals holding dollars.

If the price of the European euro is $1.26, how many euros are necessary to purchase $1.00?

The International Monetary Fund

If the demand for a currency exceeds the supply, the currency will be devalued under a system of freely fluctuating exchange rates.

Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.

Quiz 6: International Currency Flows

The devaluation (depreciation) of one currency implies the revaluation (appreciation) of other currencies.​

If a nation has a surplus in its current account,​ 1) it exports fewer goods than it imports 2) it exports more goods than it imports 3) the value of its currency should fall 4) the value of its currency should rise

If a nation exports more goods than it imports, it has a surplus in the current account.​

​The International Monetary Fund has the capacity to make loans to foreign governments.

​From the viewpoint of international currency flows, foreign investments in plant and equipment are no different from investments in foreign securities.

Which of the following causes a currency inflow?​

​The International Monetary Fund is the global central bank that controls international interest rates.

Which of the following causes a currency inflow?​ 1) foreign travel and foreign investments 2) domestic travel by foreigners 3) dividend payments from foreign corporations 4) dividend payments to foreign investors

If a nation exports fewer goods than it imports, it​ 1) experiences an outflow of currency 2) experiences an inflow of currency 3) has a surplus in its current account 4) has a deficit in its current account

If the American dollar is devalued, American goods are cheaper to individuals holding dollars.

If the price of the European euro is $1.26, how many euros are necessary to purchase $1.00?​

The International Monetary Fund

​If the demand for a currency exceeds the supply, the currency will be devalued under a system of freely fluctuating exchange rates.

​Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.

The devaluation (depreciation) of one currency implies the revaluation (appreciation) of other currencies.

If a nation has a surplus in its current account, 1) it exports fewer goods than it imports 2) it exports more goods than it imports 3) the value of its currency should fall 4) the value of its currency should rise

If a nation exports more goods than it imports, it has a surplus in the current account.

The International Monetary Fund has the capacity to make loans to foreign governments.

From the viewpoint of international currency flows, foreign investments in plant and equipment are no different from investments in foreign securities.

Which of the following causes a currency inflow?

The International Monetary Fund is the global central bank that controls international interest rates.

Which of the following causes a currency inflow? 1) foreign travel and foreign investments 2) domestic travel by foreigners 3) dividend payments from foreign corporations 4) dividend payments to foreign investors

If a nation exports fewer goods than it imports, it 1) experiences an outflow of currency 2) experiences an inflow of currency 3) has a surplus in its current account 4) has a deficit in its current account

If the price of the European euro is $1.26, how many euros are necessary to purchase $1.00?

If the demand for a currency exceeds the supply, the currency will be devalued under a system of freely fluctuating exchange rates.

Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.