AP Macro Unit 6

All of the following are counted in a nation's current account (CA) except

• $50,000 car imported from Italy

• $500 of cheese exported from France

• A $50 million Chinese factory purchased by a Canadian

• $1 million donated in first aid supplies to Indonesia

• $1,000 sent to Russia from a Russian working in the US

Which of the following would decrease the U.S. capital and financial account (CFA)?

• A boat purchased by a British investment banker in Florida

• A ski chateau purchased in Switzerland by an American entrepreneur

• An American earns $1000 in the Japanese stock market

• The purchase of $1000 of US Treasury bonds by a Chinese investor

• The purchase of a foreign car by an American diplomat living in Costa Rica

Which of the following are included in a nation's balance of payments accounts?

I. International trading

II. International lending

III. Domestic investment

• I, II, and III only

• I and II only

• I and III only

• II and III only

• I only

Which of the following is true regarding international trade

• A country that exports more than it imports has a trade deficit

• A country that exports more than 30% of their GDP has a trade surplus

• A deficit in the current account is offset by a surplus in the capital and financial account

• A country that exports more than it imports will have a financial account surplus

• A country with a trade deficit will have a current account surplus

An increase in Korea’s demand for U.S. goods would cause the US dollar to

• Depreciate because of inflation

• Depreciate because the U.S. would be selling more dollars to Korea

• Depreciate because the U.S. money supply would increase as exports rise

• Appreciate because Korea would be buying more U.S. dollars

• Appreciate because Korea would be selling more U.S. dollars

If the demand for the British Pound increases relative to the U.S. dollar, then the

• US dollar would appreciate

• Supply of US dollars would decrease

• Quantity supplied of Pounds would decrease

• British pound would appreciate

• British pound will depreciate

Suppose incomes fall in the United States, but not in Japan. Which of the following will occur?

• The US dollar will appreciate and the Japanese Yen will depreciate

• The US dollar will appreciate and the Japanese Yen will appreciate

• US imports from Japan will increase

• The US dollar will depreciate and the Japanese Yen will appreciate

• Japanese exports to the US will increase

Suppose price level increases more in the United States than it does in Indonesia. What is the short-run impact on U.S. net exports, the value of the U.S. dollar, and the value of the Indonesian rupee?

• Net Exports / U.S. dollar / Indonesian rupee

  Increase / depreciate / depreciate

• Net Exports / U.S. dollar / Indonesian rupee

  Decrease / depreciate / appreciate

• Net Exports / U.S. dollar / Indonesian rupee

  Increase / depreciate / appreciate

• Net Exports / U.S. dollar / Indonesian rupee

  Decrease / appreciate / depreciate

• Net Exports / U.S. dollar / Indonesian rupee

  Increase / appreciate / depreciate

Suppose interest rates fall in the United States, but they don't fall in Mexico. What is the short-run impact on the value of the U.S. dollar (USD) and the value of the Mexican Peso (Peso)?

• USD / Peso

  Appreciate / appreciate

• USD / Peso

  Appreciate / depreciate

• USD / Peso

  Depreciate / depreciate

• USD / Peso

  Depreciate / appreciate

• USD / Peso

  Depreciate / no change

An increase in a country’s interest rate relative to other country’s interest rate will most likely cause which of the following?

• An decrease in the demand for the country’s currency

• An increase in the supply of the country’s currency

• The depreciation of the country’s currency

• An increase in the amount of domestic investment

• Capital inflow into the country to exceed capital outflow