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WorksheetsAP Macro Topic 6.1-6.6 Quiz
Total questions: 15
Worksheet time: 8mins
Which of the following is recorded in a country’s current account?
(A) The value of goods produced and consumed in the country
(B) The value of domestic financial assets sold to foreign investors
(C) The value of foreign bonds purchased by the country’s residents
(D) The value of goods produced abroad and purchased by the country’s residents
(E) The value of the country’s government bonds purchased by the country’s central bank
Which of the following transactions in the balance of payments is recorded as a credit entry in a nation’s capital and financial account?
(A) The sale of common stock to foreign households
(B) Imports of computers used by domestic businesses
(C) The interest earned by the nation on foreign financial assets
(D) The nation’s purchases of consumer goods from foreign firms
(E) The nation’s purchases of accounting services from foreign firms
If a country has a current account deficit, which of the following must be true?
(A) It must also show a deficit in its capital and financial account.
(B) It must show a surplus in its capital and financial account.
(C) It must increase the purchases of foreign goods and services.
(D) It must increase the domestic interest rates on its bonds.
(E) It must limit the flow of foreign capital investment.
Which of the following will increase the United States trade deficit?
(A) United States firms buying technologically advanced computers from Germany
(B) European citizens traveling in large numbers to the United States
(C) A United States company being hired to build a production plant in another country
(D) The United States dollar depreciating in the foreign exchange market
(E) The United States selling one million tons of wheat to China
The price of a Japanese-made pen in Japan is ¥500. If at the current exchange rate a German buyer can buy the pen in Japan for €100, then which of the following is the exchange rate between the two currencies?
(A) €5/¥
(B) €500/¥
(C) ¥0.2/€
(D) ¥5/€
(E) ¥20/€
The price of one nation’s currency expressed in terms of another nation’s currency is called
(A) the world price
(B) the exchange rate
(C) the law of one price
(D) terms of trade
(E) purchasing-power parity
If the current exchange rate of the Mexican peso and the Brazilian real is 0.20 real per peso, and the equilibrium exchange rate is 0.18 real per peso, which of the following describes the foreign exchange market for the Mexican peso?
(A) There is a shortage of pesos and the peso will appreciate.
(B) There is a shortage of pesos and the peso will depreciate.
(C) There is a surplus of pesos and the peso will appreciate.
(D) There is a surplus of pesos and the peso will depreciate.
(E) There is a surplus of pesos and the real will depreciate.
Suppose that Country A is experiencing high inflation relative to Country B, which is enjoying steady growth with a stable price level. Which of the following would occur in the foreign exchange market?
(A) An increase in the demand for Country A’s currency
(B) An increase in the supply of Country B’s currency
(C) A decrease in the supply of Country A’s currency
(D) A decrease in the demand for Country B’s currency
(E) A depreciation of Country A’s currency
Which of the following would cause the United States dollar to increase in value compared to the Japanese yen?
(A) An increase in the money supply in the United States
(B) An increase in interest rates in the United States
(C) An increase in the United States trade deficit with Japan
(D) The United States purchase of gold on the open market
(E) The sale of $2 billion dollars worth of Japanese television sets to the United States
Which of the following will lead to an increase in United States net exports?
(A) An increase in United States real gross domestic product
(B) Appreciation of the United States dollar on the foreign exchange market
(C) Depreciation of the United States dollar on the foreign exchange market
(D) An increase in government expenditures in the United States
(E) A decrease in income tax rates in the United States
Which of the following is likely to cause the currency of Country Z to appreciate in the short run?
(A) Country Z decreases its interest rates.
(B) Country Z pursues an expansionary monetary policy.
(C) Country Z’s price level increases.
(D) Country W, a neighboring country, increases its real interest rates.
(E) Country G’s residents increase their demand for Country Z’s goods.
If higher United States interest rates cause foreign demand for the dollar to increase, which of the following will occur to the international value of the dollar and to United States exports?
(A) International Value of the Dollar Increase; Exports Increase
(B) International Value of the Dollar Increase; Exports Decrease
(C) International Value of the Dollar Increase; Exports No change
(D) International Value of the Dollar Decrease; Exports Increase
(E) International Value of the Dollar Decrease; Exports Decrease
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?
(A) Supply of Pesos Increase; Dollar Price of Peso Increase
(B) Supply of Pesos Increase; Dollar Price of Peso Decrease
(C) Supply of Pesos Decrease; Dollar Price of Peso Increase
(D) Supply of Pesos Decrease; Dollar Price of Peso Decrease
(E) Supply of Pesos Decrease; Dollar Price of Peso No Change
An increase in Japan's demand for United States goods would cause the value of the dollar to
(A) depreciate because of inflation
(B) depreciate because the United States would be selling more dollars to Japan
(C) depreciate because the United States money supply would increase as exports rise
(D) appreciate because Japan would be buying more United Stated dollars
(E) appreciate because Japan would be selling more United States dollars
A depreciation of the United States dollar in foreign exchange markets will result in which of the following?
(A) A decrease in aggregate demand because net exports will increase.
(B) A decrease in aggregate demand because imports will decrease.
(C) A decrease in aggregate demand because exports will increase.
(D) An increase in aggregate demand because exports will increase.
(E) An increase in aggregate demand because exports will decrease.
