Macro Unit 6 Review

The depreciation of a nation's currency relative to foreign currencies will

• Increase the nation's exports.

• Decrease the nation's exports

• Decrease the nation's exports and imports

• Decrease tariffs

• Cut taxes

A "strong dollar" hurts

• The British traveling to America

• An American traveling to the United Kingdom

• Businesses that import foreign goods

• The fixed exchange rate

• Competition among foreign competitors

If inflation is higher in India than the United States, then

• the exchange rate will not be affected.

• the value of the dollar will depreciate.

• the value of the dollar will appreciate.

• exchange rates will be affected but not the value of the dollar.

• the supply of U.S. dollars in the FOREX will decrease

Which of the following transactions is counted in the U.S. current account?

• A French importer buys American cars.

• An American living in California deposits her paycheck.

• An American buys a bond from a Japanese company.

• An American buys a new factory in Bolivia.

• A British company buys an office building in the United States

Which of the following will occur in the foreign exchange market as a result of capital inflow to the United States?

• a decrease in demand for dollars

• a decrease in the dollar exchange rate

• an increase in the supply of dollars

• appreciation of the dollar

• a decrease in the quantity of dollars exchanged

Which of the following is included in the capital and financial account?

• An American sends half of their paycheck to a family member in Zimbabwe.

• A Canadian investor buys a hotel in the United States

• Americans buy cars from Germany

• The Irish import toys from America.

• South Korea buys steel from the United States

Which of the following will decrease the supply of U.S. dollars in the foreign exchange market?

• U.S. residents increase their travel abroad

• U.S. consumers demand fewer imports.

• Foreigners increase their demand for U.S. goods

• Foreigners increase their travel to the United States

• Foreign investors see increased investment opportunities in the United States

If a company in the Dominican Republic sells boats to the United States, it would be recorded as _______.

• Current account; credit

• Current account; debit

• Capital & Financial account; credit

• Capital & Financial account; debit

• Current account; inflow

Which of the following best describes why a trade deficit would exist?

• Exports exceed imports

• Imports exceed exports

• It has high tariffs and quotas

• The government spends more than it receives in tax revenue

• A country can produce its own necessities

Assume the real interest rate in the United States increases compared to Canada. This will cause:

• the demand for U.S. dollars to increase and the dollar will appreciate

• the demand for U.S. dollars will decrease and the dollar will appreciate

• the demand for U.S. dollars will decrease and the dollar will depreciate

• the demand for U.S. dollars will increase and the dollar will depreciate

• the demand for U.S. dollars to decrease and the dollar to not change.