Question 1

In the balance of payment accounting, transactions that bring in money are treated as debit and the transactions that take away money are treated as credits.

Accepted Answer

A) True 
 B)False

Question 2

If the U.S. dollar price of the New Zealand dollar (NZD)  is $0.5709, then the NZD price of one U.S. dollar will be:

Accepted Answer

A)   NZD 1.5709.
B)   NZD 1.75.
C)   $1.6711.
D)   0.5709.
E)   $1.75.F) A) and E)
G) B) and C)

Question 3

If the price of a digital SLR camera in Japan is ¥55,000, and the exchange rate is 93¥/$, calculate the dollar price of the digital SLR camera in Japan.

Accepted Answer

A)   $603.29
B)   $397.48
C)   $886.82
D)   $591.40
E)   $101F) A) and B)
G) C) and D)

Question 4

If the price in U.S. dollars for one Singapore dollar is 0.625 U.S. dollars, then the price in Singapore dollars for one U.S. dollar is:

Accepted Answer

A)   1.0 Singapore dollars.
B)   0.625 Singapore dollar.
C)   1.6 Singapore dollars.
D)   0.375 Singapore dollar.
E)   2.66 Singapore dollars.F) A) and D)
G) A) and C)

Question 5

Assume that the exchange rate moves from $1 = €1.2 to $1 = €0.97. This exchange rate change indicates that:

Accepted Answer

A)   the euro has depreciated in value.
B)   the price of a holiday in Europe has become less expensive for U.S. residents.
C)   the U.S. dollar price of European chocolate has fallen.
D)   the U.S. dollar has appreciated in value.
E)   the euro has appreciated in value.F) B) and D)
G) A) and B)

Question 6

The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714. What does this mean?

Accepted Answer

A)   The Canadian dollar price of one U.S. dollar is $0.714.
B)   The Canadian dollar price of one U.S. dollar is C$0.714.
C)   The U.S. dollar price of one Canadian dollar is C$1.40.
D)   The U.S. dollar price of one Canadian dollar is $1.40
E)   The U.S. dollar price of one Canadian dollar is $0.714.F) C) and D)
G) A) and E)

Question 7

If the exchange rate between the Canadian dollar (C$)  and the U.S. dollar ($)  changes from 1C$ = $1.30 to 1C$ = $1.05 we can say that:

Accepted Answer

A)   the U.S. dollar has depreciated with respect to all the currencies across the world.
B)   the Canadian dollar has appreciated with respect to the U.S. dollar.
C)   the U.S. dollar has appreciated with respect to the Canadian dollar.
D)   the Canadian dollar has depreciated with respect to all the currencies across the world.
E)   the Canadian dollar has appreciated with respect to all the currencies across the world.F) A) and D)
G) C) and E)

Question 8

An appreciation of the dollar on the foreign exchange market would result in all of the following, except:

Accepted Answer

A)   a decrease in the dollar prices paid by U.S. importers.
B)   an increase in the cost of vacations in Hawaii for Japanese tourists.
C)   foreign holidays for U.S. residents to be less expensive.
D)   an increase in the foreign currency prices paid for U.S. exports.
E)   a decrease in the demand for U.S. exports.F) B) and E)
G) A) and E)

Question 9

The balance of payments is an accounting statement known as a:

Accepted Answer

A)   trial balance.
B)   depreciation account.
C)   balance sheet.
D)   single-entry bookkeeping system.
E)   reconciliation statement.F) A) and C)
G) A) and E)

Question 10

Double-entry bookkeeping is a system of accounting in which:

Accepted Answer

A)   it is ideal for credits to be greater than debits.
B)   it is ideal for debits to be greater than credits.
C)   each transaction is recorded in the same account twice.
D)   only foreign and domestic accounts are used.
E)   the debit total must equal the credit total for the transactions as a whole.F) None of the above
G) A) and D)

Question 11

A rise in the value of a currency in relation to another currency in the international market is called:

Accepted Answer

A)   appreciation.
B)   depreciation.
C)   devaluation.
D)   conservation.
E)   redenomination.F) C) and D)
G) A) and E)

Question 12

When economists talk about a balance of payments "deficit," they refer to:

Accepted Answer

A)   a net balance in the balance of payments that is less than zero.
B)   a condition in which total debits exceed total credits in the balance of payments.
C)   a deficit in one of the sub-accounts of the balance of payments.
D)   a disequilibrium in the foreign exchange market.
E)   a net loss in the trade of international goods and services.F) A) and E)
G) C) and D)

Question 13

The euro is a common currency of all European countries.

Accepted Answer

A) True 
 B)False

Question 14

If the U.S. dollar price of one Japanese yen was $0.009 in 1997 and $0.011 in 2001, then the reciprocal exchange rate adjusted from $1 = ¥111.1 in 1997 to $1 = ¥90.9 in 2001. This implies that over this time period, the U.S. dollar experienced a depreciation relative to the Japanese yen.

Accepted Answer

A) True 
 B)False

Question 15

Assume that the Danish krone price of one British pound is DKr10.5. If it costs 45 pounds per day to rent a car in London and DKr480.5 to do so in Copenhagen, which of the following is true?

Accepted Answer

A)   The cost of renting a car is the same in both cities.
B)   The cost of renting a car is DKr8 less in London.
C)   The cost of renting a car is DKr45.76 less in London.
D)   The cost of renting a car is DKr10.67 more in Copenhagen.
E)   The cost of renting a car is DKr4.28 less in London.F) A) and B)
G) C) and E)

Question 16

A U.S. citizen's income from investment in foreign countries is _____ in the U.S. current account.

Accepted Answer

A)   recorded as a deficit
B)   recorded as a surplus
C)   recorded as a debit
D)   recorded as a credit
E)   not recordedF) C) and D)
G) None of the above

Question 17

The table given below reports the value of various international transactions in Germany for the year 2011. The negative sign denotes the outflow of euros from Germany.
Table 6.1
   German 2010 Transactions  Millions of Euros  Capital Inflows €1,420 Exports of Goods €750 Imports of Services −€430 Investment Income Receipts €400 Investment Income Payments €670 Unilateral Transfers −€470 Exports of Services €340 Imports of Goods −€790 Capital Outflows −€920\begin{array}{|l|c|}\hline 	ext { German 2010 Transactions } & 	ext { Millions of Euros } \\hline 	ext { Capital Inflows } & € 1,420 \\hline 	ext { Exports of Goods } & € 750 \\hline 	ext { Imports of Services } & -€ 430 \\hline 	ext { Investment Income Receipts } & € 400 \\hline 	ext { Investment Income Payments } & € 670 \\hline 	ext { Unilateral Transfers } & -€ 470 \\hline 	ext { Exports of Services } & € 340 \\hline 	ext { Imports of Goods } & -€ 790 \\hline 	ext { Capital Outflows } & -€ 920 \\hline\end{array} German 2010 Transactions  Capital Inflows  Exports of Goods  Imports of Services  Investment Income Receipts  Investment Income Payments  Unilateral Transfers  Exports of Services  Imports of Goods  Capital Outflows ​ Millions of Euros €1,420€750−€430€400€670−€470€340−€790−€920​​ 
-Refer to Table 6.1. The statistical discrepancy in the balance of payments accounts for Germany in the year 2011 is:

Accepted Answer

A)   €525.
B)   -€800.
C)   €250.
D)   -€125.
E)   -€370. F) None of the above
G) B) and E)

Question 18

Which of the following is true of the balance of payments accounts?

Accepted Answer

A)   It records only the trade in tangible assets between any two nations.
B)   It is a record of a country's merchandise trade.
C)   It records the total external debt used to finance government budget deficits.
D)   It is recorded biannually in most developed countries.
E)   It records a country's trade in goods, services, and financial assets with the rest of the world.F) A) and C)
G) B) and E)

Question 19

If a U.S. resident buys a $25,000 car from a Japanese car maker, this transaction will:

Accepted Answer

A)   have a negative effect on Japan's balance of trade in merchandise.
B)   have a negative effect on the U.S. balance of trade in merchandise.
C)   have a positive effect on the U.S. balance of trade in merchandise.
D)   bring money into the United States.
E)   have no effect on Japan's balance of trade in merchandise.F) A) and D)
G) A) and E)

Question 20

The four main components of the current account are:

Accepted Answer

A)   services, financial assets, unilateral transfers, and debits.
B)   net exports, unilateral transfers, services, and domestic bank deposits abroad.
C)   government asset holdings abroad, foreign official assets, private bank deposits abroad, and merchandise.
D)   unilateral transfers, merchandise, services, and investment income.
E)   capital exports, services, merchandise, and royalties.F) A) and B)
G) All of the above

Exam 6: An Introduction to the Foreign Exchange Market and the Balance of Payments

If the exchange rate between the Canadian dollar (C$) and the U.S. dollar ($) changes from 1C$ = $1.30 to 1C$ = $1.05 we can say that:

Correct Answer
verified

The four main components of the current account are:

Correct Answer
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Assume that the exchange rate moves from $1 = €1.2 to $1 = €0.97. This exchange rate change indicates that:

Correct Answer
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An appreciation of the dollar on the foreign exchange market would result in all of the following, except:

Correct Answer
verified

Assume that the Danish krone price of one British pound is DKr10.5. If it costs 45 pounds per day to rent a car in London and DKr480.5 to do so in Copenhagen, which of the following is true?

Correct Answer
verified

In the balance of payment accounting, transactions that bring in money are treated as debit and the transactions that take away money are treated as credits.

Correct Answer
verified

A rise in the value of a currency in relation to another currency in the international market is called:

Correct Answer
verified

A U.S. citizen's income from investment in foreign countries is _____ in the U.S. current account.

Correct Answer
verified

Double-entry bookkeeping is a system of accounting in which:

Correct Answer
verified

If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be:

Correct Answer
verified

When economists talk about a balance of payments "deficit," they refer to:

Correct Answer
verified

If the price in U.S. dollars for one Singapore dollar is 0.625 U.S. dollars, then the price in Singapore dollars for one U.S. dollar is:

Correct Answer
verified

Which of the following is true of the balance of payments accounts?

Correct Answer
verified

The balance of payments is an accounting statement known as a:

Correct Answer
verified

If the U.S. dollar price of one Japanese yen was $0.009 in 1997 and $0.011 in 2001, then the reciprocal exchange rate adjusted from $1 = ¥111.1 in 1997 to $1 = ¥90.9 in 2001. This implies that over this time period, the U.S. dollar experienced a depreciation relative to the Japanese yen.

Correct Answer
verified

If the price of a digital SLR camera in Japan is ¥55,000, and the exchange rate is 93¥/$, calculate the dollar price of the digital SLR camera in Japan.

Correct Answer
verified

The euro is a common currency of all European countries.

Correct Answer
verified

Correct Answer
verified

The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714. What does this mean?

Correct Answer
verified

If a U.S. resident buys a $25,000 car from a Japanese car maker, this transaction will:

Correct Answer
verified

Exam 6: An Introduction to the Foreign Exchange Market and the Balance of Payments

If the exchange rate between the Canadian dollar (C$) and the U.S. dollar ($) changes from 1C$ = $1.30 to 1C$ = $1.05 we can say that:

Correct AnswerverifiedShow Answer

The four main components of the current account are:

Correct AnswerverifiedShow Answer

Assume that the exchange rate moves from $1 = €1.2 to $1 = €0.97. This exchange rate change indicates that:

Correct AnswerverifiedShow Answer

An appreciation of the dollar on the foreign exchange market would result in all of the following, except:

Correct AnswerverifiedShow Answer

Assume that the Danish krone price of one British pound is DKr10.5. If it costs 45 pounds per day to rent a car in London and DKr480.5 to do so in Copenhagen, which of the following is true?

Correct AnswerverifiedShow Answer

In the balance of payment accounting, transactions that bring in money are treated as debit and the transactions that take away money are treated as credits.

Correct AnswerverifiedShow Answer

A rise in the value of a currency in relation to another currency in the international market is called:

Correct AnswerverifiedShow Answer

A U.S. citizen's income from investment in foreign countries is _____ in the U.S. current account.

Correct AnswerverifiedShow Answer

Double-entry bookkeeping is a system of accounting in which:

Correct AnswerverifiedShow Answer

If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be:

Correct AnswerverifiedShow Answer

When economists talk about a balance of payments "deficit," they refer to:

Correct AnswerverifiedShow Answer

If the price in U.S. dollars for one Singapore dollar is 0.625 U.S. dollars, then the price in Singapore dollars for one U.S. dollar is:

Correct AnswerverifiedShow Answer

Which of the following is true of the balance of payments accounts?

Correct AnswerverifiedShow Answer

The balance of payments is an accounting statement known as a:

Correct AnswerverifiedShow Answer

If the U.S. dollar price of one Japanese yen was $0.009 in 1997 and $0.011 in 2001, then the reciprocal exchange rate adjusted from $1 = ¥111.1 in 1997 to $1 = ¥90.9 in 2001. This implies that over this time period, the U.S. dollar experienced a depreciation relative to the Japanese yen.

Correct AnswerverifiedShow Answer

If the price of a digital SLR camera in Japan is ¥55,000, and the exchange rate is 93¥/$, calculate the dollar price of the digital SLR camera in Japan.

Correct AnswerverifiedShow Answer

The euro is a common currency of all European countries.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714. What does this mean?

Correct AnswerverifiedShow Answer

If a U.S. resident buys a $25,000 car from a Japanese car maker, this transaction will:

Correct AnswerverifiedShow Answer

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