MACRO Unit 6
If the exchange rate is 1.2 euros per US dollar. If a restaurant meal costs 30 euros in paris, france, what is the dollar cost to a US tourist?
$25
Suppose that the exchange rate between the US dollar (S) and the Thai currency (&) is &1=$0.05. Leticia wants to buy a $600 souvenir from Thailand. Whats the price in dollars?
$30
Suppose that Angola's economy is booming resulting in an increase in the income of domestic residents. How will the increase in income most likely affect the foreign exchange value of the Angolan currency, the kwanza, and the Angolan net exports
The kwanza will depreciate and net exports will decrease
Assume that a nation's government uses an expansionary fiscal policy to restore full employment. What effect will the resulting change in the price level have on the supply and demand of the nation's currency in the foreign exchange market?
The supply will increase and the demand will decrease
The exchange rate for one Qatari riyal was 0.5 Turkish lira in 2012, and it increased to 1.25 Turkish lira in 2018. Which of the following is true about the value of the Turkish lira in 2018?
1 Turkish lira=0.8 Qatari riyal, and the Turkish lira depreciated
Assume Country X's economy is experiencing high rates of inflation. Which of the following policies will control the problem of inflation, and what is the consequent effect on the value of Country X's currency in foreign exchange markets?
A contractionary monetary policy will increase interest rates, which will cause currency to appreciate
Which of the following will happen to aggregate demand in the United States if the United States dollar appreciates in foreign exchange markets?
Aggregate demand will decrease because net exports will decrease
Which of the following changes in the United States will most likely increase aggregate demand in Japan?
An appreciation of the United States dollar relative to the yen
Which of the following will most likely cause an inflow of financial capital to Canada?
An increase in the Canadian federal budget deficit
the equilibrium real interest rate in britain increases to 8 percent while the equilibrium real interest rate in australia remains at 4 percent. So the financial capital will flow from?
Australia to Britain, decreasing the interest rate in Britain and increasing the interest are in Australia
If the current exchange rate for one Swiss franc is 0.84 euro and the equilibrium exchange rate for one Swiss franc is 0.88 euro, which of the following will occur in the flexible exchange market for the Swiss franc?
The Swiss franc will appreciate
How will an increase in private savings in the United States most likely affect financial capital flows and the value of the dollar in foreign exchange markets?
The United States will experience financial capital outflows, and the dollar will depreciate
Assuming the government of a country imposes a tariff on its imports of foreign goods, what is the likely effect on the country's currency in the foreign exchange markets?
The supply of the currency will decrease and the currency will appreciate
The loanable funds markets in Japan and Australia are in equilibrium, as shown in the graphs. Which of the following is most likely to happen?
There will be financial capital outflows from Japan to Australia, and the Japanese yen will appreciate
What would be a current account transaction?
a US firm sells $500 million of its products to a chinese company
If country A is experiencing high inflation relative to country B which is enjoying steady growth with a stable price level. What would occur in the foreign exchange market?
a depreciation of country A's currency
if a country has a deficit in its current account there will be?
a surplus in the capital and financial account
a depreciation of the US dollar in the foreign exchange markets will result in what?
an increase in AD bc imports will decrease
an increase in japan's demand for US goods would cause the value of the dollar?
appreciate because japan would be buying more US dollars
country A both imports and produces tea. If country A imposes a tariff on imported tea, what happens?
employment in the domestic tea industry will increase
Which of the following transactions is recorded as a credit entry in the country's current account?
exports
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
an increase in Canada's real interest rates relative to real interest rates in the rest of the world will lead to what?
financial capital inflow
if a country has a current account deficit whats true?
it must show a surplus in its capital account
Under a flexible exchange-rate system, the Indian rupee will appreciate against the Japanese yen when?
real interest rates in india increase relative to those in japan
who would an increase in the international value of the US dollar will most likely benefit?
retired citizens living overseas on their social security checks
an appreciation of the united states dollar on the foreign exchange market could be caused by a decrease in what?
the US consumer price index
the price of one nations currency expressed in terms of another nations currency is what?
the exchange rate
what transactions in the balance of payments is recorded as a credit entry in a nations capital and financial account?
the sale of common stock to foreign households
Whats true in the short run if consumers buy more imported goods and fewer domestic goods?
the trade balance moves toward deficit, and equilibrium income decreases
if country X has a trade deficit what is true?
the value of country X's imports exceeds the value of its exports
