Question 1

Which of the following changes in the exchange rate represents a depreciation of the dollar?

Accepted Answer

The answer of Which of the following changes in the...

Question 2

An appreciation of one's currency means that:

Accepted Answer

The answer of An appreciation of one's currency means that:
...

Question 3

Trade can increase the consumption possibilities of nations.

Accepted Answer

Trade allows nations to specialize in the production of goods and services that they have a comparative advantage in, and then import other goods and services that they need or want but cannot produce efficiently themselves. This leads to a greater availability of goods and services and increased consumption possibilities for nations involved in trade.

Question 4

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

A nation's currency is likely to appreciate if its domestic prices are stable while its trading partners are experiencing inflation. This is because the nation's goods become relatively cheaper and more attractive to foreign buyers, increasing demand for the nation's currency to purchase these goods.

Question 5

Exhibit 21-7  Foreign exchange market for U.S. dollars and British pounds  Exhibit 21-7 shows a situation in which:

Accepted Answer

The exchange rate for British pounds in terms of U.S. dollars has increased from $1.60 per pound to $1.80 per pound, indicating that the pound has appreciated. At the same time, the exchange rate for U.S. dollars in terms of British pounds has decreased from 0.625 pounds per dollar to 0.555 pounds per dollar, indicating that the dollar has depreciated. Therefore, the correct choice is C: the dollar has depreciated and the pound has appreciated.

Question 6

If the dollar appreciates:

Accepted Answer

The answer of If the dollar appreciates:
...

Question 7

A strong U.S. dollar is one that has:

Accepted Answer

A strong U.S. dollar is one that has appreciated.

Question 8

When countries specialize, total world output increases, and, therefore, the potential for greater total world consumption also increases.

Accepted Answer

When countries specialize, they can produce goods and services at a lower opportunity cost, leading to higher efficiency and productivity. This, in turn, increases total world output, creating a potential for greater global consumption.

Question 9

If the Japanese price level falls relative to the price level in the United States, then:

Accepted Answer

If the Japanese price level falls relative to the price level in the United States, then Japanese goods will become cheaper relative to US goods. This will lead to an increase in demand for Japanese goods and a decrease in demand for US goods. As a result, the demand for dollars will decrease and the supply of dollars will increase. This will lead to a fall in the value of the dollar.

Question 10

A depreciation in the value of the U.S. dollar would:

Accepted Answer

The answer of A depreciation in the value of the...

Question 11

An increase in demand for a nation's currency in the foreign exchange market will:

Accepted Answer

An increase in demand for a nation's currency in the foreign exchange market will cause a shortage of the currency, driving up its value and causing it to appreciate.

Question 12

A depreciation of one's currency means that:

Accepted Answer

A depreciation of a currency means that it now requires more of this currency in exchange for one unit of another currency. This means that the currency has lost value compared to other currencies, making imports more expensive and exports more competitive as they become cheaper for foreign buyers.

Question 13

An appreciation in the U.S. dollar benefits which of the following groups of people?

Accepted Answer

The answer of An appreciation in the U.S. dollar benefits...

Question 14

Exhibit 21-7  Foreign exchange market for U.S. dollars and British pounds  Which of the following could cause the dollar-pound exchange rates to change as shown in Exhibit 21-7?

Accepted Answer

An increase in the U.S. price level while the British price level remains unchanged would lead to a decrease in the demand for U.S. dollars and an increase in the supply of U.S. dollars in the foreign exchange market, causing the exchange rate to depreciate (i.e., the value of the British pound in terms of U.S. dollars would increase). Therefore, choice C is the correct answer. The other choices are unlikely to cause a change in the exchange rates as shown in the exhibit.

Question 15

A depreciation of one's currency means that:

Accepted Answer

The answer of A depreciation of one's currency means that:
...

Question 16

Which of the following changes in the exchange rate represents an appreciation of the dollar?

Accepted Answer

The answer of Which of the following changes in the...

Question 17

If free trade is opened between two countries, then one country must gain at the other country's expense.

Accepted Answer

Free trade allows for the mutual benefit of both countries involved. It allows for the exchange of goods and services that each country specializes in, leading to increased efficiency and lower prices for consumers. Both countries can gain from free trade, it is not a zero-sum game where one country gains at the expense of the other.

Question 18

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

Accepted Answer

The answer of If real interest rates in the United...

Question 19

A nation's trade deficit will expand when its:

Accepted Answer

When a nation's currency appreciates, its exports become more expensive for foreign buyers, and imports become cheaper for domestic consumers, leading to an expansion of the trade deficit.

Question 20

A weak U.S. dollar is one that has:

Accepted Answer

A weak U.S. dollar is one that has depreciated, making U.S. goods cheaper for foreign buyers, thus helping U.S. exporters.

Quiz 21: International Trade and Finance

Which of the following changes in the exchange rate represents a depreciation of the dollar?

An appreciation of one's currency means that:

Trade can increase the consumption possibilities of nations.

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Exhibit 21-7 Foreign exchange market for U.S. dollars and British pounds Exhibit 21-7 shows a situation in which:

If the dollar appreciates:

A strong U.S. dollar is one that has:

When countries specialize, total world output increases, and, therefore, the potential for greater total world consumption also increases.

If the Japanese price level falls relative to the price level in the United States, then:

A depreciation in the value of the U.S. dollar would:

An increase in demand for a nation's currency in the foreign exchange market will:

A depreciation of one's currency means that:

An appreciation in the U.S. dollar benefits which of the following groups of people?

Exhibit 21-7 Foreign exchange market for U.S. dollars and British pounds Which of the following could cause the dollar-pound exchange rates to change as shown in Exhibit 21-7?

A depreciation of one's currency means that:

Which of the following changes in the exchange rate represents an appreciation of the dollar?

If free trade is opened between two countries, then one country must gain at the other country's expense.

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

A nation's trade deficit will expand when its:

A weak U.S. dollar is one that has: