Unit 6

Suppose that the exchange rate between the United States dollar ($) and the Thai currency, baht (฿), is ฿1=$0.05. Leticia wants to buy a ฿600 souvenir from Thailand. What is the souvenir's price in dollars?

$30 (the souvenir's price in baht ×× the exchange rate ($/฿)

Which of the following transactions is recorded as a credit entry in the country's current account?

Exports of consumer goods

Which of the following is recorded in a country's balance of payments accounts?

Financial capital flows between the country and the rest of the world

Current account balance

The current account balance is the sum of net exports (exports − imports), net income from abroad, and net unilateral transfers

the government of a country imposes a tariff on its imports of foreign goods

The supply of the currency will decrease and the currency will appreciate.