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| 1 | |
Increased U.S. imports: |
| | A) | increase the demand for foreign currencies and put downward pressure on the dollar |
| | B) | increase the supply of foreign currencies and put downward pressure on the dollar |
| | C) | decrease the demand for foreign currencies and put downward pressure on the dollar |
| | D) | decrease the demand for foreign currencies and put upward pressure on the dollar |
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| 2 | |
When traveling in Ireland, you pay the equivalent of $5 for a pint of Guinness priced at 2 pounds. The exchange rate is: |
| | A) | $1 = 2.5 pounds |
| | B) | 1 pound = $.25 |
| | C) | $1 = .4 pounds |
| | D) | 1 pound = $4 |
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| 3 | |
If a nation's balance on current account is positive and it has neither a deficit nor surplus in its overall balance of payments: |
| | A) | its imports exceed its exports |
| | B) | foreign purchases of its assets exceed its purchases of assets abroad |
| | C) | it has a trade deficit |
| | D) | it has a capital and financial account deficit |
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| 4 | |
If Nike purchases a shoe production facility in Malaysia, this would be recorded as a: |
| | A) | credit in the current account |
| | B) | debit in the current account |
| | C) | credit in the capital and financial account |
| | D) | debit in the capital and financial account |
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| 5 | |
The following table contains hypothetical data for the U.S. balance of payments in a particular year. Answer the next question on the basis of this information. All figures are in billions of dollars.
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Refer to the above data. The balance on financial account is a: |
| | A) | $50 billion deficit |
| | B) | $25 billion surplus |
| | C) | $40 billion surplus |
| | D) | $35 billion surplus |
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| 6 | |
One implication of widening U.S. trade deficits is: |
| | A) | appreciation of the dollar |
| | B) | reduced U.S. indebtedness to the rest of the world |
| | C) | increased current consumption |
| | D) | a lower dollar price of oil |
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| 7 | |
Use the following diagram to answer the next question:
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Refer to the diagram: All else equal, a leftward shift of the supply curve would cause: |
| | A) | the peso to appreciate |
| | B) | the dollar to appreciate |
| | C) | the peso to depreciate |
| | D) | a drop in U.S. exports to Mexico |
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| 8 | |
Suppose the exchange rate is currently $1 = 6 Norwegian kroner. If a Big Mac costs $2.50 in the U.S. and there is purchasing power parity, the price of a Big Mac in Oslo is: |
| | A) | 40 kroner |
| | B) | 25 kroner |
| | C) | 15 kroner |
| | D) | 12.5 kroner |
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| 9 | |
If the U.S. dollar appreciates against other currencies: |
| | A) | currency speculators will sell dollars |
| | B) | U.S. imports will become more expensive to U.S. consumers |
| | C) | U.S. exports will become more expensive to foreign consumers |
| | D) | the demand for the dollar will fall |
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| 10 | |
Use the following diagram to answer the next question:
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Refer to the diagram: If more Mexicans decide to vacation in the U.S., the: |
| | A) | demand curve will shift to the right and the peso will appreciate |
| | B) | demand curve will shift to the left and the dollar will depreciate |
| | C) | supply curve will shift to the left and the peso will depreciate |
| | D) | supply curve will shift to the right and the dollar will appreciate |
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