Macro Economics Unit 6

An appreciation of the United States dollar on the foreign exchange market could be caused by a decrease in which of the following?

• United States interest rates

• The United States consumer price index

• exports from the US

• The tariff on goods imported into the US

In a flexible system of exchange rates, an open market sale of bonds by the Federal Reserve will most likely change the money supply, the interest rate, and the value of the United States dollar in which of the following ways?

• Money Supply: Increase

  Interest Rate: Decrease

  Value of the dollar: Decrease

• Money Supply: Increase

  Interest Rate: Decrease

  Value of the dollar: Decrease

• Money Supply: Decrease

  Interest Rate: Decrease

  Value of the dollar: Decrease

• Money Supply: Decrease

  Interest Rate: Increase

  Value of the dollar: Increase

Following a decrease in the real interest rate, there is an increase in financial capital outflows from Country A. The increase in capital outflows will most likely have which of the following effects on Country A's net export and aggregate demand?

• Net export: decrease

  Aggregate Demand: Decrease

• Net exports: Decrease

  Aggregate Demand: No change

• Net exports: Increase

  Aggregate Demand: Increase

• Mark Cavendish

Assuming fixed exchange rates, if country Z's rate of inflation increases relative to it trading partners, Country Z's imports and exports will most likely change in which of the following ways?

• Imports: Decrease

  Exports: Decrease

• Imports: Decrease

  Exports: Increase

• Imports: Increase

  Exports Decrease

• Imports: Increase

  Exports: Decrease

If the Federal Reserve undertakes a policy to reduce interest rates, international capital flows will be affected in which of the following ways?

• Long run capital outflows from the US will decrease

• Long-run capital inflows to the US will increase

• Short run capital outflows from the US will decrease

• Short run capital inflows to the US will decrease

If a French firm buys computers from the US, there would be an increase in which of the following in the foreign exchange market?

• Demand for US dollars and supply of euros

• Demand for both US dollars and Euros

• Supply of US dollars and demand for euros

• Supply of both US dollars and euros

The purchase of US government bonds by Japanese investors will be included in Japan's

• current account

• financial account (formerly called capital account)

• trade deficit

• imports

Which of the following will increase the US trade deficit?

• US firms buying technologically advanced computers from Germany

• European citizens traveling in large numbers to the United States

• A US company being hired to build a production plant in another country

• GDP in a poor French accent

If Mexicans increase their investment in the United States, the supply of Mexican pesos to the foreign exchange market and the dollar price of the peso will most likely change in which of the following ways?

• supply of pesos: increase

  Dollar price of Peso: increase

• Supply of Pesos: Increase

  Dollar price of Peso: Decrease

• Supply of Pesos: Decrease

  Dollar price of peso: increase

• Supply of Pesos: decrease

  Dollar price of peso:

  decrease

The equilibrium real interest rate in Britain increases to 8 percent while the equilibrium real interest rate in Australia remains at 4 percent. As a result, finacial capital will flow from

• Britain to Australia, increasing the interest rate in Britain and decreasing the interest rate in Australia

• Britain to Australia, decreasing the interest rate in Britain and increasing the interest rate in Australia

• Australia to Britain, decreasing the interest rate in Britain and decreasing the interest rate in Australia

• Australia and Britain, decreasing the interest rate in Britain and increasing the interest rate in Australia