AP Macro Unit 6

Front

Which of the following is recorded in a country’s balance of payments accounts?
The monthly payments by the country’s residents on domestic loans,
Financial capital flows between the country and the rest of the world,
The value added by each industry in the country at each stage of production,
The aggregate spending of the country’s residents on consumer goods,
Changes in the required reserve ratio determined by the country’s central bank

Back

Financial capital flows between the country and the rest of the world

Front

Which of the following transactions is recorded as a credit entry in the country’s current account?
Imports of capital goods,
Exports of consumer goods,
Purchases of foreign government bonds,
Sales of domestic financial assets to foreign investors,
Income transfers from the country’s residents to recipients abroad

Back

Exports of consumer goods

Front

The table shows some of Country X’s balance of payments data for 2018. Which of the following is true about Country X’s current account balance and financial capital flows?

Back

Country X has a current account deficit of $60 million and has net financial capital inflows.

Front

What is the price in dollars of a B600 souvenir if the exchange rate is B1 = $0.05?

Back

$30

Front

The table shows the exchange rate for the British pound (£) against the dollar ($) and the euro (€) in 2015 and 2018. Which of the following is true?

Back

The British pound has depreciated against the dollar.

Front

The exchange rate for one Qatari riyal was 0.5 Turkish lira in 2012, and it increased to 1.25 Turkish lira in 2018. Which of the following is true about the value of the Turkish lira in 2018?

Back

1 Turkish lira = 0.8 Qatari riyal, and the Turkish lira depreciated.

Front

If the current exchange rate for one Swiss franc is 0.84 euro and the equilibrium exchange rate for one Swiss franc is 0.88 euro, what will occur in the flexible exchange market for the Swiss franc?

Back

The Swiss franc will appreciate.

Front

The graph shows the foreign exchange market for the British pound (GBP). If the exchange rate is $1.70, which of the following is true?

Back

The surplus of British pounds will cause the British pound to depreciate.

Front

Assuming the government of a country imposes a tariff on its imports of foreign goods, what is the likely effect on the country’s currency in foreign exchange markets?

Back

The supply of the currency will decrease and the currency will appreciate.

Front

Assume Country X’s economy is experiencing high rates of inflation. Which policy will control inflation, and what is the consequent effect on the value of Country X’s currency in foreign exchange markets? Options: a contractionary monetary policy will increase interest rates, which will cause the currency to appreciate; an expansionary monetary policy will decrease interest rates, which will cause the currency to appreciate; an expansionary monetary policy will decrease interest rates, which will cause the currency to depreciate; an expansionary monetary policy will increase interest rates, which will cause the currency to depreciate; a contractionary monetary policy will increase interest rates, which will cause the currency to depreciate.

Back

A contractionary monetary policy will increase interest rates, which will cause the currency to appreciate.