Open economy: international trade and finance: Unit test
Which of the following is an exchange rate for the baht?
0.125 cedi per baht
Which of the following is the correct way to express the exchange rate of a Canadian dollar?
40 Rubles per 1 CAD$
Which of the following is a correct exchange rate for the krone?
5 baht per krone
If exchange rates are freely floating, what is the missing exchange rate for the cedi?
8 baht per cedi
How is this purchase counted in the balance of payments in each country?
A debit in Gatorland's financial account; a credit in Hamsterville's financial account.
Which of the following best describes the balance of payments accounts?
A record of all international transactions
Which of the following statements is true about the balance of payments account?
A surplus in the financial account means there is a deficit in the current account
Which of the following describes something that would definitely be recorded as an increase in the current account?
An increase in net exports
Which of the following is most likely to cause a currency to depreciate while discouraging capital formation?
An increase in the demand for loanable funds.
What effect does the change in the market for loanable funds in Dodgeland have on Burginville's currency and the real interest rate in Burginville?
Burginville's real interest rates increase and its currency depreciates.
Which of the following represents the balance of payments?
CA=-FA
What will happen to the value of Johnsrudia's currency, its imports, and its exports?
Currency appreciates; imports increase; exports decrease
What happens to the currency of Maxistan and aggregate demand in Maxistan if the demand for its financial assets decreases?
Currency depreciates; aggregate demand (AD) increases
If tourism to Hamsterville increases, what will happen in the foreign exchange market for the SNSNS, N and the exchange rate for the SNSNS, N (in terms of the Canadian dollar)?
Demand for the SN increases; SN appreciates
Which term describes the situation in the foreign exchange market for the euro where the quantity demanded of the euro is equal to the quantity supplied of the euro?
Equilibrium
What is the impact of this action on the financial account, the value of the Hamsterville currency (the Hamsterville snark), and imports into Hamsterville in the short run?
Financial account increases; snark appreciates; imports increase
What change will occur in the balance of payments accounts in Wakanda when it sells bonds to Hamsterville?
Financial capital inflows increase
Which of the following is NOT a reason why citizens of the United States would want to buy the euro?
For tourism travel to the United States from Europe
If citizens of Hamsterville want to buy U.S. goods, what happens in the market for the Snark and in the market for the U.S. dollar?
Hamsterville supplies snarks in the market for snarks; Hamsterville demands dollars in the market for dollars
What will happen to the value of Hamsterville's currency and the value of Hamsterville's exports ?
Hamsterville's currency depreciates and its exports increase.
If Flora hears that the peso has appreciated, which of the following best describes the impact the appreciation has on her trip?
Her purchasing power has increased.
If Bill hears that the New Zealand dollar has depreciated against the Russian ruble, which of the following best describes the impact the depreciation has on his trip?
His purchasing power has decreased.
Which of the following best describes what an exchange rate is in the foreign exchange market?
How much of one currency it takes to buy another currency
What will happen to the value of Ile's currency and the value of Ile's exports as a result of the decreased demand for foreign financial assets?
Ile's currency appreciates; exports from Ile decrease
If Maxistan runs a budget surplus, how will this impact Ile in the short run?
Increases the unemployment rate in Ile
Which of the following would cause the demand for the cedi to increase?
Indian demand for Ghanian products increases.
What effect will expansionary monetary policy have on interest rates, the price level, and the exchange rate of the snark?
Interest rates and the exchange rate will decrease, but the price level will increases
What happens to interest rates and exports in the short run in Atlantis if the central bank of Atlantis buys bonds?
Interest rates decrease; exports increase
Which of the following statements about the financial account is true?
It can be balanced, show a surplus, or show a deficit
If a country has a trade deficit, which of the following must also be true?
It has a financial account surplus
Which of the following statements about the current account is accurate?
It is not always balanced.
Which of the following best describes a depreciated currency?
It takes less of another currency to buy that currency
Which of the following best describes depreciation of a currency?
It takes less of another currency to purchase that currency
Which of the following best describes an appreciated currency?
It takes more of another currency to buy that currency
Which of the following best describes appreciation of a currency?
It takes more of another currency to purchase that currency
If the cedi has depreciated. What does that mean for tourists heading to Ghana to watch the tournament
It will take less of their currency to buy the cedi
What would this have meant for tourists heading to Russia to watch the World Cup in June 2018?
It would have taken more of their currency to buy the ruble
Which of the following would increase the demand in the foreign exchange market for the U.S. dollar?
Japanese residents want to buy more goods exported from the U.S.
What effect does this have on real interest rates in Maxistan and the value of Ile's currency?
Maxistan's real interest rate decreases and the value of Ile's currency appreciates
What will happen to net exports and aggregate demand (AD) in the eurozone if the exchange rate changes to 5 quetzals per euro?
Net exports and AD in the eurozone will increase.
If the exchange rate changes to 8 cedis per dollar, what will be the effect on net exports and employment in the United States?
Net exports and employment will decrease.
All of the following increase the demand for the snark EXCEP
Other countries buy less of Hamsterville's exports
All of the following increase the demand for the snark EXCEPT
Other countries buy less of Hamsterville's exports
What will happen to output and employment Japan as a result of the change in the exchange rate shown in this graph?
Output and employment increase.
What will happen to output, price level, and employment in the Eurozone as a result of the change in the exchange rate of the Euro shown in this graph?
Output, employment, and price level will decrease.
What effect will the change shown in this graph have on output, employment, and the price level in Hamiltonia?
Output, employment, and price level will increase.
What effect will the change shown in this graph have on output, employment, and the price level in the United States?
Output, employment, and the price level all decrease.
Assuming there is no change in the nominal exchange rate, what will be the effect of contractionary monetary policy in Canada on the Canadian price level and the real exchange rate (RER) of the Canadian dollar?
Price level will decrease; RER will decrease.
Which of the following best describes the effect of this action on real interest rates in Frankland and the value of the Frankland's currency, the percy?
Real interest rates decrease and the Frankland percy appreciates.
What effect does this have on real interest rates and the value of Johnsrudia's currency?
Real interest rates decrease and the currency depreciates
What effect does this have in Marthaland on real interest rates and the value of Marthaland's currency in the short run and economic growth in the long run?
Real interest rates decrease, Marthaland's currency depreciates, and economic growth increases.
What effect does this have on real interest rates, exports, and long-run aggregate supply?
Real interest rates increase, exports decrease, and long-run aggregate supply increases.
Assuming that wages are sticky, which of the following best describes the impact of these actions on real output and the price level?
Real output will decrease; the price level will decrease
Which of the following would be most likely to have caused the change shown in the foreign exchange market?
Residents of Maxistan want to buy more foreign assets.
Which of the following describes an appropriate action that the central bank of Maxistan could take to offset the change in the value of Maxistan's currency?
Sell its currency or buy another country's currency.
Which of the following describes who benefits from a depreciation of the Japanese yen in international currency markets?
South African residents visiting Japan
If the (E.U.) imposes a quota limiting imports from the United States, what will happen to the market for Euros and the exchange rate for the Euro?
Supply of the euro decreases; the euro appreciates
What is the effect of the increased demand for Marthaland's financial assets on the real value of each country's currency?
The Burginland eagle depreciates and the Marthland jean appreciates.
What can we definitely say happened between 2016 and 2017?
The SB appreciated
Based on this information, which of the following statements must be true?
The SB depreciated
Which of the following happens if the U.S. imposes tariffs on Chinese goods?
The U.S. dollar appreciates.
What happens to the value of each currency if Maxistan places a tariff on exports from Theopolis?
The card depreciates and the peso appreciates.
Which of the following will occur in the balance of payments if Wakanda begins to export more than it imports?
The current account will move to a surplus
What will be the impact of the increase in the price level in Atlantis on the foreign exchange market for the Atlantian dollar and the exchange rate for the Atlantian dollar?
The demand for the Atlantian dollar decreases; the Atlantian dollar depreciates
Which of the following best describes the impact if Japan places a tarriff on Canadian exports?
The demand for the Canadian dollar decreases and the supply of the Japanese yen decreases.
What will be the impact of the decrease in the relative price level in Johnsrudia on the foreign exchange market for the Johnrsrudian dollar and the exchange rate for the Johnrsrudian dollar?
The demand for the Johnrsrudian dollar increases; the Johnrsrudian dollar appreciates
Which of the following would definitely lead to an appreciation of the dollar?
The demand for the dollar increases
What effect will the increase in demand for Hamsterville's financial assets have on the market for the percy and the market for the snark?
The demand for the snark increases and the supply of the percy increases.
Which of the following would be an example of an appreciation of the baht?
The exchange rate changes from 2 rupees per baht to 3 rupees per baht
Which of the following can be concluded based on this exchange rate?
The exchange rate of the ruble is 0.5 pesos per ruble
Which of the following will occur as a result of an increase in exports?
The financial account will move to a deficit
Which of the following would NOT be included in the current account of Wakanda?
The nation of Maxistan buys a bond from Wakanda
Which of the following happen to the value of the Mexican peso and the Canadian dollar?
The peso depreciates and the dollar appreciates.
In the foreign exchange market for the Mexican peso, which of the following would best describe the exchange rate for the peso?
The price of a peso in terms of some other currency
Which of the following describes an equilibrium in the foreign exchange market?
The quantity of a currency demanded is equal to the quantity of a currency supplied
Which of the following best defines the exchange rate for the Aruban florin?
The quantity of cedi per florin
How would Japan react to a depreciation of its own currency (the yen)?
The quantity of yen supplied would decrease
If the exchange rate changes to 5 quetzal per dollar, what happened to the value of the quetzal and what happens to Guatemala's exports?
The quetzal appreciated and its exports will decrease.
Which of the following happens when the supply of the rupee increases?
The rupee depreciates and the yen appreciates.
What will happen to the exchange rate of the snark and the exchange rate of the percy?
The snark will appreciate; the percy will depreciate.
How will the importation of chocolate from Belgium impact the market for the dollar and the market for the euro?
The supply of the dollar and the demand for the euro will increase.
Which of the following causes the quetzl to appreciate?
The supply of the dollar increases.
If citizens of Hamiltonia want to take advantage of relatively higher interest rates in the United States, which of the following will happen?
The supply of the shot in the foreign exchange market for the shot will increase.
Which of the following would we expect to happen?
The won will depreciate
What happens to real interest rates and the value of Hamiltonia's currency as a result of the budget deficit?
There will be an increase in real interest rates and an appreciation of Hamiltonia's currency.
What happens to the exchange rate for the yen and Japanese exports as the result of the change in the market for loanable funds?
Yen appreciates; exports decrease
If the United States is a trading partner with Nickelstan, which of the following is the correct choice of a label for the vertical axis in this market?
\$ per NN
Which of the following is a likely consequence of an increase in business optimism in Ghana?
a depreciation of the rupee against the cedi
What's the impact of this economic change on the values of the cedi and rupee?
cedi depreciates; rupee appreciates
Which of the following best describes the chain of events that will occur if the value of the U.S. dollar appreciates?
exports ↓ → Aggregate demand (AD) ↓
The currency of Japan is the yen, and the currency of the United States is the U.S. dollar. Which of the following graphs depicts the impact on the exchange rate for the U.S. dollar if the United States imposes a tariff on goods from Japan?
one red line going downward, two green going up ward with a arrow from left to right. As well as (q$, yen/$)
Which of the following graphs correctly shows the impact of the decrease in relative prices on the exchange rate for the Maxistan peso?
red arrow inward
Which of the following graphs depicts the impact on the exchange rate for the yen if the United States imposes a tariff on goods from Japan?
red arrow inward
Which of the following graphs correctly illustrates the impact this will have on the foreign exchange market for the Hamsterville Snark (SN)?
red arrow outwards
Contractionary fiscal policy in Maxistan has lowered the rate of inflation in Maxistan to 2\%2%2, percent. The current rate of inflation in Ile is 10\%10%10, percent. Which of the following graphs correctly shows the impact of the decrease in relative prices on the exchange rate for the Maxistan peso?
two red peso lines go downward as the red line goes from the left to right