Unit 2 AP Macro Review

An increase in the international value of the dollar (appreciation) would most likely benefit who the most?

• domestic producers who export
• citizens traveling or living abroad from the United States
• German citizens vacation in the U.S.
• Canadian citizen looking to buy property in the U.S.

If the U.S. dollar depreciates relative to another currency, which of the following is most likely to occur?

• U.S. exports will increase to that country
• U.S. government will increase the tariff on goods from that country
• U.S. trade deficit will become larger to that country
• U.S. tourists will visit that country in greater numbers

An increase in U.S. imports will result in which of the following in foreign exchange markets?

• increased foreign demand for U.S. dollars
• Decreased supply of U.S. dollars
• Increased U.S. demand for foreign currency
• a decrease in the value of foreign currency

Which of the following is most likely to cause an increase in the international value of the dollar?

• Higher U.S. interest rates
• lower U.S. government spending
• higher real interest rates abroad
• expansionary monetary policy in the U.S.

Which of the following would lead to depreciation of a nation's currency?

• lower inflation in that nation relative to the world
• higher required reserve ratios in that nation relative to the rest of the world
• decreased interest rates in that nation relative to the rest of the world
• increased demand for that nation's currency

Suppose country A is experiencing high levels of inflation relative to country B. Which of the following occurs in the foreign exchange market?

• increased demand for country A's currency
• increase supply of country B's currency
• a decrease in the supply of country A's currency
• depreciation of country A's currency

The current account shows ...

• international movement of goods and services
• international movement of capital
• foreign exchange market
• international movement of investments

An increase in government spending only leads to an increase in the Demand for Loanable Funds when

• the spending is on infrastructure.
• the spending is on education.
• the spending is deficit spending.
• the spending leads to a surplus.

The shift in the graph could be caused by

• government deficit spending.
• the crowding out effect.
• an increase in wealth.
• an increase in personal savings.

The shift in the graph could be caused by

• a government budget deficit.
• a government budget surplus.
• an increase in consumer wealth.
• a new technological innovation.