Forex

The term __________ is used to describe what those in one country buy from those in other countries.

• A. exports
• B. imports
• C. trade
• D. surplus

Which of the following would most likely be included in the negative side of the current account balance?

• A. money earned by Canadian firms in the U.S.
• B. money spent by Canadian tourists in the U.S.
• C. returns paid to U.S. investors in Southeast Asia
• D. European aid sent to the U.S. to fund the Iraq war

Only one of the following statements about trade surplus and capital flow is correct. Which one is it?

• A. a trade surplus means that there is a net inflow of capital
• B. a trade surplus means that there is a net outflow of capital
• C. a trade surplus exists if there is a net inflow of capital excluding foreign borrowing and lending
• D. a trade surplus exists if there is a net outflow of capital excluding foreign borrowing and lending

Which of the following represents a financial inflow to the U.S. economy?

• A. returns paid on U.S. financial investments in Switzerland
• B. computer chip imports from Israel
• C. oil imports from Canada
• D. foreign aid from the U.S. to Ethiopia

A recession tends to make a _____________________.

• A. trade surplus smaller
• B. trade deficit smaller
• C. trade deficit larger
• D. both a and b above

When Mataeo buys Euros through _________________________, he will use his U.S. dollars to pay for them.

• A. the foreign exchange market
• B. the currency exchange market
• C. a floating exchange market
• D. foreign currency market

A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies.

• A. strengthening; more
• B. weakening; less
• C. a problem for exporters; less
• D. beneficial to importers; more

If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then;

• A. the U.S. dollar appreciated against the Canadian dollar.
• B. the Canadian dollar weakened against the Canadian dollar.
• C. the U.S. dollar strengthened against the Canadian dollar.
• D. the Canadian dollar appreciated against the U.S. dollar.

From a macroeconomic point of view, increases in ____________ are an addition to aggregate demand, while increases in ___________ are a subtraction from aggregate demand.

• A. rates of return; exchange rates
• B. exchange rates; rates of return
• C. exports; imports 
• D. imports; exports

If the U.S. government uses an expansionary monetary policy to reduce interest rates, then it will: 

• A. lead to higher imports and lower exports.
• B. cause the exchange rate for U.S. currency to depreciate.
• C. lower levels of consumption and investment.
• D. cause the exchange rate for U.S. currency to appreciate.