In a closed economy, national saving

is always less than investment.

is always more than investment.

Every international transaction automatically enters the balance of payments

twice, once as a credit and once as a debit.

once either as a credit or as a debit.

An American travels to Paris and pays for a $100 dinner with the credit card issued by an U.S. company. How is this accounted for in the U.S. balance of payments?

Current account, French service import

Current account, U.S. good export

Financial account, U.S. asset export

Financial account, U.S. asset import

An appreciation of a country's currency,

Raises the relative price of its exports and lowers the relative price of its imports.

Decreases the relative price of its exports and lowers the relative price of its imports

Raises the relative price of its exports and raises the relative price of its imports

Lowers the relative price of its exports and raises the relative price of its imports

Which one of the following statements is the most accurate?

A depreciation of a country's currency makes its goods cheaper for foreigners.

A depreciation of a country's currency makes its goods more expensive for foreigners.

A depreciation of a country's currency makes its goods cheaper for its own residents.

A depreciation of a country's currency makes its goods cheaper.

Which one of the following statements is the most accurate? The term spot exchange rate is

Misleading because even spot exchanges usually become effective only two days after a deal is struck

Misleading because even spot exchanges usually become effective only three days after a deal is struck

Misleading because even spot exchanges usually become effective only four days after a deal is struck

Misleading because even spot exchanges usually become effective only five days after a deal is struck

Misleading because even spot exchanges usually become effective only six days after a deal is struck

A foreign exchange swap

Is a spot sale of a currency combined with a forward repurchase of the currency

Is a forward repurchase of the currency

Is a spot sale of a currency combined with a forward sale of the currency

An American put option on foreign exchange

Gives the buyer the right to sell the foreign currency at a known exchange rate at any time during the period of the option

Gives the seller the right to sell the foreign currency at a known exchange rate at any time during the period of the option

Gives the buyer the right to sell the foreign currency at a known exchange rate at a specific time in the future

Obligates the buyer to sell the foreign currency at a known exchange rate at any time during the period of the option

Which one of the following statements is the most accurate?

The dollar rate of return on euro deposits is approximately the euro interest rate plus the rate of depreciation of the dollar against the euro.

The dollar rate of return on euro deposits is the euro interest rate plus the rate of depreciation of the dollar against the euro.

The dollar rate of return on euro deposits is approximately the euro interest rate minus the rate of depreciation of the dollar against the euro.

The dollar rate of return on euro deposits is the euro interest rate minus the rate of depreciation of the dollar against the euro.

The dollar rate of return on euro deposits is approximately the euro interest rate plus the rate of appreciation of the dollar against the euro.

If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then

It is impossible to tell given the information.

An investor should invest only in dollars.

An investor should invest only in euros.

An investor should be indifferent between dollars and euros.

If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, and the expected rate of dollar depreciation against the euro is eight percent, then

An investor should invest only in euros.

An investor should invest only in dollars.

An investor should be indifferent between dollars and euros.

It is impossible to tell given the information.

Which of the following statements is the most accurate?

For a given U.S. interest rate and a given expectation with regards to the future exchange rate, a rise in the interest rate paid by euro deposits causes the dollar to depreciate.

For a given U.S. interest rate and a given expectation with regards to the future exchange rate, a rise in the interest rate paid by euro deposits causes the dollar to appreciate.

A rise in the interest rate paid by euro deposits does not affect the value of the dollar.

A rise in the interest rate paid by euro deposits causes the dollar to depreciate.

In the beginning of 2022, you pay $100 for a share of stock that pays you a dividend of $1 at the beginning of 2023. If the stock price rises from $100 to $109 per share over the year:

then you have earned a rate of 10 percent over 2022.

then you have earned a rate of 5 percent over 2022.

then you have earned a rate of 1 percent over 2022.

then you have earned a rate of 9 percent over 2022.

then you have earned a rate of 4 percent over 2022.

The action of arbitrage is

the process of buying a currency cheap and selling it high.

the process of buying a currency high and selling it cheap.

the process of buying and selling currency at the same price.

the process of selling currency at different prices in different markets.

Which major actor is at the center of the foreign exchange market?

Non-bank financial institutions

Money supply includes

checking deposits held by households and firms.

deposits in the foreign exchange markets.

In the asset market based approach, the exchange rate between currencies depends on

the interest rate that can be earned on deposits of those currencies and the expected future exchange rate.

the interest rate that can be earned on deposits of those currencies.

the expected future exchange rate.

An individual's need for liquidity would be up if:

the average value of transactions carried out by the individual rose.

the average value of transactions carried out by the individual fell.

the individual received a new ATM card.

If individuals are holding more money than they desire,

they will attempt to reduce their liquidity by using money to purchase interest-bearing assets.

they will attempt to reduce their liquidity by using money to purchase goods.

they will attempt to reduce their liquidity by converting real money holdings into nominal money holdings.

In the graph of money market equilibrium, the aggregate real money demand schedule L(R,Y) has

a negative slope because a rise in the interest rate reduces the desired real money holdings of each household and firm in the economy

a positive slope because a rise in the interest rate raises the desired real money holdings of each household and firm in the economy

a positive slope because a rise in the interest rate reduces the desired real money holdings of each household and firm in the economy

a zero slope because a rise in the interest rate keeps constant the desired real money holdings of each household and firm in the economy

real GNP, changes in interest rates cause movements along the L(R,Y) schedule.

nominal GNP, changes in interest rates cause movements along the L(R,Y) schedule.

real GNP, changes in interest rates cause a leftward shift of the L(R,Y) schedule.

real GNP, changes in interest rates cause a rightward shift of the L(R,Y) schedule.

nominal GNP, changes in interest rates cause leftward shift in the L(R,Y) schedule.

In the graph of money market equilibrium, the money supply schedule is

vertical because MS is set by the central bank while P is taken as given.

horizontal because MS is set by the central bank.

vertical because MS is set by the central bank.

vertical because MS is set by the households and firms while P is taken as given.

vertical because MS and P are set by the central bank.

If there is initially

excess supply of money, the interest rate falls, and if there is initially an excess demand, it rises.

excess demand for money, the interest rate falls, and if there is initially an excess supply, it rises.

excess supply of money, the interest rate increases, and if there is initially an excess demand, it falls.

excess supply of money, the interest rate falls, and if there is initially an excess demand, it further falls.

An economy's long-run equilibrium is

The equilibrium that would occur if prices were perfectly flexible and always adjusted immediately to preserve full employment.

The equilibrium that would occur if prices were perfectly flexible.

The equilibrium that would occur if prices were perfectly flexible and always adjusted immediately.

The equilibrium that would occur if prices were perfectly fixed to preserve full employment.

The equilibrium that would occur if prices were perfectly fixed at the full employment point.

An one-time permanent change in the level of the supply of money

has no effect on the long-run values of the interest rate and real output.

increases the long-run values of the interest rate and real output.

decreases the long-run values of the interest rate and real output.

has no effect on the long-run value of only the interest rate.

has no effect on the long-run values of only real output.

Aggregate money demand may

change as a result of demographic trends or financial innovations such as electronic cash-transfer facilities.

change only as a result of demographic trends.

change only as a result of financial innovations such as electronic cash-transfer facilities.

not change as a result of demographic trends or financial innovations such as electronic cash-transfer facilities.

change as a result of demographic trends but not as a result of financial innovations such as electronic cash-transfer facilities.

After a permanent increase in the home money supply,

The exchange rate overshoots in the short run.

The exchange rate overshoots in the long run.

The exchange rate smoothly depreciates in the short run.

The exchange rate smoothly appreciates in the short run.

If real income increases:

The money demand curve shifts out

There is a movement upward along the money demand curve

There is a movement downward along the money demand curve

The money demand curve shifts in

Real income does not affect the demand for money

Given other things equal, an increase in a country's money supply causes:

its currency to depreciate in the foreign exchange market

its currency to appreciate in the foreign exchange market

does not affect its currency in the foreign market

does affect its currency in the foreign market in an ambiguous manor

A permanent change in the money supply has

no effect on the long-run values of the interest rate or real output, a proportional change in the money supply and price level's long-run value in the same direction

ambiguous effect on the long-run values of the interest rate or real output, a proportional change in the money supply and price level's long-run value in the opposite direction

proportional effect on the long-run values of the interest rate or real output, a proportional change in the money supply and price level's long-run value in the same direction

no effect on the long-run values of the interest rate or real output, no change in the money supply and price level's long-run value

In the graph of money market equilibrium, the money demand schedule is

negatively sloped because a rise in the interest rate causes the real money demand to fall.

negatively sloped because a rise in the interest rate causes the real money demand to rise.

positively sloped because a rise in the interest rate causes the real money demand to fall.

positively sloped because a rise in the interest rate causes the real money demand to rise.

Given other things equal, a reduction in a country's money supply causes:

its currency to appreciate in the foreign exchange market.

its currency to depreciate in the foreign exchange market.

does not affect its currency in the foreign market.

does affect its currency in the foreign market in an ambiguous manor.

Which of the following statements is the most accurate?

Predictions about long-run movements in exchange rates are important even in the short run.

Predictions about long-run movements in exchange rates are not important the in short run.

Predictions about long-run movements in exchange rates are important only in the long run.

Predictions about long-run movements in exchange rates are often not important in the short run.

Which of the following statements is the most accurate? The law of one price states:

In competitive markets with free of transportation costs and official barrier to trade, identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.

In competitive markets free of transportation costs and official barrier to trade, identical goods sold in the same country must sell for the same price when their prices are expressed in terms of the same currency.

In competitive markets free of transportation costs and official barrier to trade, identical goods sold in different countries must sell for the same price.

Identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.

Which of the following statements is the most accurate?

The law of one price applies to individual commodities while PPP applies to the general price level.

The law of one price applies only to the general price level.

The law of one price applies to the general price level while PPP applies to individual commodities.

The law of one price applies to individual commodities while PPP applies to both the general price level and to individual commodities.

PPP applies only to individual commodities.

Which of the following statements is the most accurate?

If the law of one price holds true for every commodity, PPP must automatically hold as long as the reference baskets used to reckon different countries' price levels are the same.

If PPP holds true, then the law of one price holds true for every commodity as long as the reference baskets used to reckon different countries' price levels are the same.

If the law of one price holds true for every commodity, PPP must hold automatically.

If the law of one price does not hold true for every commodity, PPP cannot be true as long as the reference baskets used to reckon different countries' price levels are the same.

1234

Quiz

•

Other

•

University

•

Practice Problem

•

Hard

Trí Trọng

FREE Resource

minus receipts of factor income from the rest of the world.

plus net receipts of factor income from the rest of the world.

None of the above.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following expressions is the most accurate?

CA = EX - IM

CA = IM - EX

CA = EX = IM

CA = EX + IM

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The CA equals to

Y - (C - I + G)

Y + (C + I + G)

Y - (C + I + G)

Y - (C + I - G)

Y - (C + I + G) = -CA, (i.e., minus the CA)

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