AP Macro

Which of the following is the best example of foreign direct investment?

• The Chinese government buying United States Treasury bonds

• A business in the United States selling machinery to a company in Japan

• A United States citizen buying Mexican pesos.

• The United States sending earthquake relief aid to Haiti

• A Japanese software company buying a factory in the United States

If there is a large increase in the number of Europeans traveling to the United States while US citizens’ travel to Europe remains unchanged, which of the following is true

• The euro will depreciate because the demand for euros will decrease

• The euro will depreciate because the supply of euros will increase

• The euro will appreciate because the demand for euros will increase

• The dollar will appreciate because the demand of dollars will decrease

• The dollar will appreciate because the supply of dollars will increase

Assume the inflation rate in Mexico is significantly higher than its trading partners. Which of the following will occur to the demand, supply, and international value of the Mexican Peso?

• Demand Supply Value

  Increase Increase Depreciate

• Demand Supply Value

  Increase Decrease Appreciate

• Demand Supply Value

  Decrease Increase Appreciate

• Demand Supply Value

  Decrease Increase Depreciate

• Demand Supply Value

  Decrease Decrease Depreciate

Assume the real interest rate in country X increases relative to other countries. What will happen to the value of the currency and net exports in country X?

• Value of Currency Net exports

  Appreciate Decrease

• Value of Currency Net exports

  Depreciate Increase

• Value of Currency Net exports

  Stay the Same Stay the Same

• Value of Currency Net exports

  Appreciate Increase

• Value of Currency Net exports

  Depreciate Decrease

If the reserve requirement is 10%, this bank can increase the money supply by increasing

• securities by $20.

• loans by $100

• loans by $320

• securities by $100

• loans by $32

Based on the Required Reserves that Reserve Ratio must be

• 5%

• 10%

• 20%

• 19%

• none of the above

If the reserve requirement is 10%, this bank could create _______ in loans.

• $1900

• $8100

• $900

• $9000

• not enough information.

If this bank were to purchase securities from the Fed, it could currently purchase _______ in securities.

• $810

• $1710

• $1900

• $190

• $90

If the reserve requirement is 10%, this bank has _______ in excess reserves

• $52

• $100

• $47

• $48

• $32

This bank has a reserve requirement of

• 9%

• 4.5%

• 10%

• 20%

• 7%