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Exam 9: The Exchange Rate and the Balance of Payments

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Question 201

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In June 2008,the dollar bought 1.6 Brazilian reals and in October,the dollar bought 2.4 reals. This resulted in a

A) a movement upward along the supply curve for dollars.
B) a movement downward along the supply curve for dollars.
C) rightward shift in the supply curve for dollars.
D) leftward shift in the supply curve for dollars.

E) A) and D)
F) B) and C)

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Question 202

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-The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 2.40 Brazilian reals per dollar,

A) there will be a shortage of dollars.
B) $40 billion dollars will be demanded.
C) $40 billion dollars will be supplied.
D) there will be a surplus of dollars.

E) A) and D)
F) B) and D)

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Question 203

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The real exchange rate is

Suppose that the U.S.government gives foreign aid to Turkey.This transaction would directly

The private sector surplus or deficit equals

Which of the following occurrences would NOT shift the demand curve for U.S.dollars in the foreign exchange market?

The value of net exports increases when the value of ________.

The demand curve for U.S.dollars slopes downward because as the dollar ________ U.S.goods become ________ expensive to foreign residents,so they purchase fewer U.S.goods,and the quantity of dollars demanded decreases.

Which of the following is included in a nation's capital and financial account? I. the purchase of foreign stocks and bonds II. the sale of foreign stocks and bonds III. importing a piece of capital equipment

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world,the country is a

$\begin{array}{c}\begin{array}{|l|}\hline \text {Item}\\\hline \text {Exports of goods and }\\\text {services}\\\hline \text {Imports of goods and}\\ \text {services}\\\hline \text {Net interest income}\\\hline \text {Net transfers}\\\hline \text {Urland's investment }\\\text {abroad}\\\hline \text {Foreign investment in}\\\text {Urland }\\\hline\end{array}\begin{array}{c|}\hline\text { Billions of dollars }\\\hline635 \\\\\hline-555\\\\\hline-18 \\\hline22 \\\hline-467 \\\\\hline 321 \\\\\hline \end{array}\end{array}$ -The above table shows some of the balance of payments accounts for Urland.What is Urland's balance on the current account?

Name three factors in the foreign exchange market that affect either the quantity of dollars demanded or the demand for dollars.Discuss whether the factor increases or decreases the number of dollars people want to hold.

If the official settlements account is zero,whenever the United States has a current account deficit,it must also have a capital account deficit.

If the nominal exchange rate rises and price levels stay constant,the real exchange rate will

When the U.S.exchange rate rises,foreign goods become ________ and U.S.imports ________.

Suppose the peso-dollar foreign exchange rate changes from 50 pesos per dollar to 30 pesos per dollar.Then the peso has ________ against the dollar and the dollar has ________ against the peso.

Last year the exchange rate between U.S.dollars and Mexican pesos was 10 pesos per dollar. Today is it 11 pesos per dollar. Here,the dollar ________ against the peso,and the peso ________ against the dollar

The ________ the expected profit from holding a foreign currency,the greater is the ________ in the foreign exchange market.

The exchange rate is the price at which the ________ of one country exchanges for the ________ of another country.

$\begin{array}{c}\begin{array}{|l|}\hline \text {Item}\\\hline \text {Exports of goods and }\\\text {services}\\\hline \text {Imports of goods and}\\ \text {services}\\\hline \text {Net interest income}\\\hline \text {Net transfers}\\\hline \text {Urland's investment }\\\text {abroad}\\\hline \text {Foreign investment in}\\\text {Urland }\\\hline\end{array}\begin{array}{c|}\hline\text { Billions of dollars }\\\hline635 \\\\\hline-555\\\\\hline-18 \\\hline22 \\\hline-467 \\\\\hline 321 \\\\\hline \end{array}\end{array}$ -The above table shows some of the balance of payments accounts for Urland.What is Urland's balance in the official settlements account?