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Exam 40: The Balance of Payments, Exchange Rates, and Trade Deficits

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Question 71

Multiple Choice

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Appreciation of the Canadian dollar will:

A) intensify an existing disequilibrium in Canada's balance of payments.
B) make Canada's exports less expensive and its imports more expensive.
C) make Canada's exports more expensive and its imports less expensive.
D) make Canada's exports and imports both more expensive.

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

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Question 72

Multiple Choice

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In 2012,the capital and financial account in the U.S.balance of payments was in:

A) deficit,and smaller than the current account deficit.
B) surplus,and equal to the current account deficit.
C) balance,with no deficit or surplus.
D) surplus,and smaller than the current account deficit.

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

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Question 73

Multiple Choice

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Under a system of freely floating exchange rates,an increase in the international value of a nation's currency will:

Which one of the following will not directly affect the U.S.balance on current account?

Under a system of freely flexible (floating) exchange rates,a U.S.trade deficit with Mexico will tend to cause:

Which of the following have substantially equivalent effects on a nation's volume of exports and imports?

The following table contains hypothetical data for the 2012 U.S.balance of payments.Answer the question on the basis of this information.All figures are in billions of dollars. $\begin{array}{lrrr} \text { 1) US Goods Exports } & +\$100\\ \text {2) US Goods Imports } &-80\\ \text {3) US Service Exports } &+40\\ \text {4) US Service Imports } &-90\\ \text { 5) Net Investment Income } &+20\\ \text { 6) Net Transfers } &-15\\ \text {7) Foreign Purchases of Assets in the United States } &+30\\ \text {8) US Purchases of Foreign Assets Abroad } &-10\\ \text { 9) Balance on Capital Account } &+5\\\end{array}$ Refer to the given data.The United States' balance on financial account is a:

Under the managed floating system of exchange rates:

Depreciation of the dollar will:

In the balance of payments of the United States,inflows of foreign currencies to the United States are recorded as:

Answer the question on the basis of the following information.In 1985,the exchange rate between the U.S.dollar and the Japanese yen was $1 = 262 yen;in 2003,the rate was $1 = 110 yen. Refer to the given information.Between 1985 and 2003,the:

With which of the following countries does the United States have its largest goods and services deficit?

In 2012,the capital account in the U.S.balance of payments was in:

Firms engaged in international trade can reduce exchange-rate risk by:

Answer the question on the basis of the following 2008 balance of payments statement for Transylvania.All figures are in billions of dollars. $\begin{array}{c}\begin{array}{lll}\text { 1) Goods Exports}\\\text { 2) Goods Imports}\\\text { 3) Service Exports}\\\text { 4) Service Imports}\\\text { 5) Net Investment Income}\\\text { 6) Net Transfers}\\\text { 7) Foreign Purchases of Assets}\\\text { 8) Purchases of Foreign Assets}\\\text { 9) Balance on Capital Account}\end{array}\begin{array}{r}+\$ 15 \\-17 \\+5 \\-2 \\-5 \\+4 \\+5 \\-11 \\+1\end{array}\end{array}$ Refer to the given data.Foreigners made a larger volume of asset purchases in Transylvania in 2008 than Transylvanians made asset purchases abroad.

If a U.S.importer can purchase 10,000 British pounds for $20,000,the rate of exchange is:

If the exchange rate between the U.S.dollar and the Japanese yen is $1 = 200 yen,then the dollar price of yen is:

In considering euros and dollars,the rates of exchange for the euro and the dollar: