Question 1

Ceteris paribus, if Canadians decide they want to eat more U.S.-grown soybeans, this causes the ________ U.S.currency to _______.

Accepted Answer

If Canadians decide they want to eat more U.S.-grown soybeans, this will increase the demand for U.S. soybeans, causing the price of soybeans to increase. As a result, U.S. exports to Canada will generate more revenue, and this demand for U.S. goods will cause an increase in U.S. currency.

Question 2

Excess demand for a specific foreign currency, such as the pound, implies a

Accepted Answer

If there is excess demand for a specific foreign currency, such as the pound, it means that more US dollars are being used to purchase pounds than the amount of pounds being sold for US dollars. This leads to a balance-of-payments deficit for the United States, as there is an outflow of dollars to purchase pounds, which might be used to purchase US goods and services.

Question 3

A mechanism for fixing exchange rates is the

Accepted Answer

The Gold standard is a mechanism for fixing exchange rates by pegging currencies to a specific amount of gold, providing a stable basis for international trade.

Question 4

Ceteris paribus, if the French decide they want to drink more Chinese-grown tea, this causes the ________ Chinese currency to _______.

Accepted Answer

If the French decide they want to drink more Chinese-grown tea, this increases the demand for Chinese tea. This would lead to an increase in the demand for Chinese currency to purchase the tea, causing an increase in the value of the Chinese currency. Therefore, the correct answer is option C, "demand for; increase".

Question 5

As a result of an increase in demand from D₂ to D₁ in Figure 36.4, ceteris paribus, the price of a $40,000 U.S.computer system, in terms of Japanese yen, would: =

Accepted Answer

The answer of  As a result of an increase...

Question 6

Which of the following is not likely to occur because of exchange rate fluctuations?

Accepted Answer

Exchange rate fluctuations can affect international trade and investment, but they are unlikely to lead to an end to flexible exchange rates worldwide. Therefore, option A is not likely to occur. On the other hand, B, C, and D are all possible consequences of exchange rate fluctuations. A strengthening of a country's currency can decrease the demand for its exports, as they become more expensive to foreign buyers. Conversely, a weakening of the currency can increase the demand for imports, as they become cheaper for domestic buyers. Finally, exchange rate fluctuations can also cause inflation by making imported goods more expensive, which can lead to higher prices for domestic consumers.

Question 7

A major problem with countries setting fixed exchange rates for their currencies is

Accepted Answer

The answer of A major problem with countries setting fixed...

Question 8

The fact that the United States has become the world's largest debtor nation is an indication that

Accepted Answer

The status of the United States as the world's largest debtor nation indicates that it is able to borrow large sums internationally, which suggests confidence in its economy by global investors. This reflects the attractiveness of the U.S. economy to foreign investors rather than its decline or the need for trade restrictions or a return to the gold standard.

Question 9

Ceteris paribus, if Americans decide they want to drive more German-made cars, this causes the ________ German currency to _______.

Accepted Answer

When Americans decide they want to drive more German-made cars, they need to buy more German currency to pay for these cars, which increases the demand for the German currency.

Question 10

Suppose the U.S.dollar is defined by law as being equal to 0.1 ounce of gold.Further suppose the British pound is defined as being equal to 0.05 ounce of gold.The implied exchange rate between the pound and the dollar is

Accepted Answer

Given the definitions, 1 dollar = 0.1 ounce of gold and 1 pound = 0.05 ounce of gold. Therefore, 1 dollar can be exchanged for 2 pounds (0.1 / 0.05 = 2), establishing a fixed rate based on the legal definitions of their values in gold.

Question 11

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Accepted Answer

The return to a worldwide gold standard is not a consequence of resistance to exchange rate fluctuations. The other options are all related to the potential consequences of changes in the value of a currency, such as uncertainty for investors and changes in the prices of exports and imports.

Question 12

Under a system of fixed exchange rates, excess demand by Germans for the Swiss franc represents a potential

Accepted Answer

If Germans have an excess demand for Swiss francs, it implies that they are importing more from Switzerland than exporting to Switzerland. This will lead to a German trade deficit with Switzerland and a balance-of-payments deficit with Switzerland.

Question 13

An excess demand for foreign currency at current exchange rates is known as a

Accepted Answer

An excess demand for foreign currency at current exchange rates indicates that a country's imports exceed its exports, leading to an outflow of domestic currency to purchase foreign currency. This situation is known as a balance-of-payments deficit.

Question 14

Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.

Accepted Answer

If Americans decide to buy more Japanese-made television sets, they need to exchange their US dollars for Japanese yen to make the purchases. This increases the demand for yen in the foreign exchange market, which leads to a shortage of yen and an appreciation of the yen. This, in turn, makes Japanese goods more expensive for Americans and US goods cheaper for Japanese, causing a relative decrease in US exports to Japan and an increase in US imports from Japan, resulting in a balance-of-payments deficit for the United States.

Question 15

The inflow of foreign investment into the United States

Accepted Answer

The inflow of foreign investment into the United States stimulates more economic growth for the country by providing additional capital, creating jobs, and supporting the development of industries. This can have a positive effect on the U.S. economy by increasing production and productivity, and improving competitiveness. It also shows that foreign investors have confidence in the stability and potential of the U.S. economy.

Question 16

In a fixed exchange rate system,

Accepted Answer

The answer of In a fixed exchange rate system,
...

Question 17

The amount by which the quantity demanded exceeds the quantity supplied at a given price is a

Accepted Answer

A situation where the quantity demanded exceeds the quantity supplied leads to a shortage in the market. Therefore, the best choice is B, market shortage. The other options (A, C, and D) do not apply as they refer to different economic concepts.

Question 18

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus, an increase in imports of French goods by Japanese consumers, ceteris paribus, would result in a

Accepted Answer

An increase in imports of French goods by Japanese consumers would result in an outflow of yen to pay for the imports. This would create a balance-of-payments deficit for Japan as it must sell more of its currency to purchase the francs needed to pay for the increased imports. France would not experience a balance-of-trade deficit as its exports have not changed. Similarly, there would not be a market surplus of francs or a balance-of-payments surplus for Japan.

Question 19

Because of the United States'long-standing trade deficit with Japan, the supply of U.S.dollars in Japan has increased.Which of the following is true about this situation?

Accepted Answer

An increase in the supply of U.S. dollars in Japan will lead to a decrease in the value of the U.S. dollar in terms of yen (assuming all other factors remain equal), making Japanese goods relatively more expensive for U.S. consumers and potentially reducing imports from Japan, thereby potentially reducing the trade deficit. Note that while trade restrictions (option A) could also potentially reduce imports from Japan, they are not the only way to address the trade deficit and can have negative consequences such as retaliation from Japan or higher costs for U.S. consumers. Option C is not necessarily true, as the trade deficit may decrease or stabilize in the future depending on various economic factors. Option D is incorrect, as we can make certain predictions about the trade deficit based on economic analysis.

Question 20

An excess demand for domestic currency at current exchange rates is known as a

Accepted Answer

An excess demand for domestic currency at current exchange rates indicates that more foreign currency is being converted into the domestic currency than vice versa, typically reflecting a situation where a country's exports exceed its imports or it is receiving more investments than it is making abroad. This scenario is indicative of a balance-of-payments surplus, as the country is receiving more money from abroad than it is sending out.

Quiz 22: International Finance

Ceteris paribus, if Canadians decide they want to eat more U.S.-grown soybeans, this causes the __ U.S.currency to _.

Excess demand for a specific foreign currency, such as the pound, implies a

A mechanism for fixing exchange rates is the

Ceteris paribus, if the French decide they want to drink more Chinese-grown tea, this causes the __ Chinese currency to _.

As a result of an increase in demand from D₂ to D₁ in Figure 36.4, ceteris paribus, the price of a $40,000 U.S.computer system, in terms of Japanese yen, would: =

Which of the following is not likely to occur because of exchange rate fluctuations?

A major problem with countries setting fixed exchange rates for their currencies is

The fact that the United States has become the world's largest debtor nation is an indication that

Ceteris paribus, if Americans decide they want to drive more German-made cars, this causes the __ German currency to _.

Suppose the U.S.dollar is defined by law as being equal to 0.1 ounce of gold.Further suppose the British pound is defined as being equal to 0.05 ounce of gold.The implied exchange rate between the pound and the dollar is

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Under a system of fixed exchange rates, excess demand by Germans for the Swiss franc represents a potential

An excess demand for foreign currency at current exchange rates is known as a

Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market of Japanese currency and creates a balance-of-payments for the United States.

The inflow of foreign investment into the United States

In a fixed exchange rate system,

The amount by which the quantity demanded exceeds the quantity supplied at a given price is a

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus, an increase in imports of French goods by Japanese consumers, ceteris paribus, would result in a

Because of the United States'long-standing trade deficit with Japan, the supply of U.S.dollars in Japan has increased.Which of the following is true about this situation?

An excess demand for domestic currency at current exchange rates is known as a

Quiz 22: International Finance

Ceteris paribus, if Canadians decide they want to eat more U.S.-grown soybeans, this causes the ________ U.S.currency to _______.

Excess demand for a specific foreign currency, such as the pound, implies a

A mechanism for fixing exchange rates is the

Ceteris paribus, if the French decide they want to drink more Chinese-grown tea, this causes the ________ Chinese currency to _______.

As a result of an increase in demand from D2 to D1 in Figure 36.4, ceteris paribus, the price of a $40,000 U.S.computer system, in terms of Japanese yen, would: =

Which of the following is not likely to occur because of exchange rate fluctuations?

A major problem with countries setting fixed exchange rates for their currencies is

The fact that the United States has become the world's largest debtor nation is an indication that

Ceteris paribus, if Americans decide they want to drive more German-made cars, this causes the ________ German currency to _______.

Suppose the U.S.dollar is defined by law as being equal to 0.1 ounce of gold.Further suppose the British pound is defined as being equal to 0.05 ounce of gold.The implied exchange rate between the pound and the dollar is

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Under a system of fixed exchange rates, excess demand by Germans for the Swiss franc represents a potential

An excess demand for foreign currency at current exchange rates is known as a

Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.

The inflow of foreign investment into the United States

In a fixed exchange rate system,

The amount by which the quantity demanded exceeds the quantity supplied at a given price is a

Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus, an increase in imports of French goods by Japanese consumers, ceteris paribus, would result in a

Because of the United States'long-standing trade deficit with Japan, the supply of U.S.dollars in Japan has increased.Which of the following is true about this situation?

An excess demand for domestic currency at current exchange rates is known as a

Ceteris paribus, if Canadians decide they want to eat more U.S.-grown soybeans, this causes the __ U.S.currency to _.

Ceteris paribus, if the French decide they want to drink more Chinese-grown tea, this causes the __ Chinese currency to _.

As a result of an increase in demand from D₂ to D₁ in Figure 36.4, ceteris paribus, the price of a $40,000 U.S.computer system, in terms of Japanese yen, would: =

Ceteris paribus, if Americans decide they want to drive more German-made cars, this causes the __ German currency to _.

Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market of Japanese currency and creates a balance-of-payments for the United States.