International transactions fall into what two broad categories? A. Manufacturing trade and services trade.B. International trade and international asset transactions.C. Currency transactions and services trade.D. Newly created assets and preexisting assets.

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"International trade" refers to: A. purchasing or selling currently produced goods or services across an international border.B. any transaction across an international border.C. any financial transaction across an international border.D. buying or selling of preexisting assets across an international border
If a U.S. importer can purchase 10,000 British pounds for $20,000, the rate of exchange is: A. $1 = 2 British pounds in the United States.B. $2 = 1 British pound in the United States.C. $1 = 2 British pounds in Great Britain.D. $.5 = 1 British pound in Great Britain.
C. sale of real and financial assets to people living abroad minus its purchases of real and financial assets from foreigners.
The financial account balance is a nation"s: A. net investment income minus its net transfers.B. exports of goods and services minus its imports of goods and services.C. sale of real and financial assets to people living abroad minus its purchases of real and financial assets from foreigners.D. domestic investment spending minus domestic saving.
A nation"s official reserves: A. compensate for differences in the current and capital and financial accounts.B. consist of all domestic and foreign currency held by a nation"s central bank.C. are always zero.D. are always negative
If a nation has a current account surplus and it does not have to make any inpayments or outpayments of official reserves, it must have a: A. surplus in its capital and financial account.B. balance of payments deficit.C. balance of payments surplus.D. deficit in its capital and financial account.
Which of the following would contribute to a U.S. balance of payments deficit? A. Kawasaki builds a motorcycle manufacturing plant in Kansas City.B. U.S. tourists travel in large numbers to Europe.C. A wealthy Mexican citizen builds a mansion in Beverly Hills.D. Zaire pays interest on its debt to the United States.
Evidence of a chronic balance of payments deficit is: A. a decline in amount of the nation"s currency held by other nations.B. an excess of exports over imports.C. diminishing reserves of foreign currencies.D. an increase in the international value of the nation"s currency.
The following table contains hypothetical data for the 2012 U.S. balance of payments. Answer the question on the basis of this information. All figuresare in billions of dollars.Refer to the given data. The United States has a balance of goods: A. deficit of $10 billion.B. surplus of $30 billion.C. deficit of $30 billion.D. surplus of $20 billion.
It may be misleading to label a trade deficit as unfavorable or adverse because: A. the multiplier does not apply to a trade deficit.B. a trade deficit increases a nation"s aggregate output and employment.C. a nation"s consumers benefit from a trade deficit during the period it occurs.D. a trade deficit precludes inflation.
Which of the following is not included in the current account of a nation"s balance of payments? A. Its goods exports.B. Its goods imports.C. Its net investment income.D. Its purchases of real assets abroad.
A deficit on the current account: A. normally causes a surplus on the capital and financial account.B. normally causes a deficit on the capital and financial account.C. has no relationship to the capital and financial account.D. means that a nation is making international transfers.
The plus items below are "export-type" entries and the minus items are "import-type" entries in the balance of payments for the hypothetical country of Zippo.Refer to the given information. Zippo has a: A. current account deficit.B. capital account deficit.C. balance of payments deficit.D. trade surplus on goods and services
The plus items below are "export-type" entries and the minus items are "import-type" entries in the balance of payments for the hypothetical country of Zippo.Refer to the given information. Zippo has: A. a current account surplus.B. a financial account deficit.C. a trade surplus on goods and services.D. neither a balance of payments deficit nor a surplus
The plus items below are "export-type" entries and the minus items are "import-type" entries in the balance of payments for the hypothetical country of Zippo.Refer to the given information. On the basis of its balance of payments position, and other things equal, we can expect the international value of Zippo"s currency to: A. increase.B. decrease.C. remain constant.D. gyrate up and down
Suppose the balance on the financial account is -$300 billion and the balance on the capital account is +$5 billion. The size of the current account is: A. +$295 billion.B. -$295 billion.C. +$305 billion.D. +$5 billion.
Suppose the balance on the current account is +$100 billion and the balance on the capital account is -$1 billion. The balance on the financial account is: A. +$101 billion.B. -$100 billion.C. -$99 billion.D. -$101 billion.
Suppose the balance on the current account is +$50 billion and the balance on the capital account is +$1 billion. The balance on the financial account is: A. -$51 billion.B. -$50 billion.C. -$49 billion.D. +$51 billion.
The following are hypothetical exchange rates: 2 euros = 1 pound; $1 = 2 pounds. We can conclude that: A. $1 = 4 euros.B. $1 = .5 euro.C. 1 euro = $.50.D. 1 euro = $2.
If the rate of exchange for a pound is $4, the rate of exchange for the dollar is: A. ¼ pound.B. 4 pounds.C. $.25.D. $1.00.
In considering yen and dollars, when the dollar rate of exchange for the yen rises: A. the yen rate of exchange for the dollar will fall.B. the yen rate of exchange for the dollar will also rise.C. the yen rate of exchange for the dollar may either fall or rise.D. U.S. net exports to Japan will fall.
The U.S. supply of Japanese yen is: A. downsloping because a lower dollar price of yen means U.S. goods are cheaper to the Japanese.B. upsloping because a higher dollar price of yen means U.S. goods are cheaper to the Japanese.C. upsloping because a lower dollar price of yen means U.S. goods are cheaper to the Japanese.D. downsloping because a higher dollar price of yen means U.S. goods are cheaper to the Japanese.
A. downsloping because, at lower dollar prices for euros, Americans will want to buy more European goods and services.
The U.S. demand for euros is: A. downsloping because, at lower dollar prices for euros, Americans will want to buy more European goods and services.B. downsloping because, at higher dollar prices for euros, Americans will want to buy more European goods and services.C. downsloping because the dollar price of euros and the euro price of dollars are directly related.D. upsloping because a higher dollar price of euros makes European goods and services more attractive to Americans.
Which of the following will generate a demand for country X"s currency in the foreign exchange market? A. Travel by citizens of country X in other countries.B. The desire of foreigners to buy stocks and bonds of firms in country X.C. The imports of country X.D. Charitable contributions by country X"s citizens to citizens of developing nations.
Refer to the diagram. The initial demand for and supply of pesos are shown by D 1 and S 1. Suppose the United States reduces its imports of Mexicangoods, shifting its demand for pesos from D 1 to D 2. If the United States was operating under a system of exchange controls, the U.S. governmentA. find that, at the controlled exchange rate, pesos would be in surplus.B. be faced with deteriorating terms of trade.C. be faced with the problem of rationing BG pesos to U.S. importers, who want BF pesos.D. be faced with the problem of rationing BF pesos to U.S. importers, who want BG pesos.
Refer to the diagram. The initial demand for and supply of pesos are shown by D 1 and S 1. Suppose the United States reduces its imports of Mexicangoods, shifting its demand for pesos from D 1 to D 2. If the United States and Mexico were both on the international gold standard: A. gold would flow from Mexico to the United States.B. the exchange rate would rise from B dollars equals 1 peso to C dollars equals 1 peso.C. gold would flow from the United States to Mexico.D. the exchange rate would fall from B dollars equals 1 peso to A dollars equals 1 peso.
Refer to the diagram. The initial demand for and supply of pesos are shown by D 1 and S 1. Suppose the United States reduces its imports of Mexicangoods, shifting its demand for pesos from D 1 to D 2. Under a system of freely floating exchange rates: A. gold would flow from Mexico to the United States.B. the peso price of dollars would rise from B pesos equals $1 to A pesos equals $1.C. a problem of rationing a shortage of pesos would arise in the United States.D. the dollar price of pesos would increase to C dollars equals 1 peso.
A. Japan exported much more to the United States during this period than it imported from the United States.
Answer the question on the basis of the following information. In 1985, the exchange rate between the U.S. dollar and the Japanese yen was $1 = 262yen; in 2003, the rate was $1 = 110 yen.Refer to the given information. Which one of the following might be a plausible explanation for the change in the dollar-yen exchange rate from 1985 to 2003? A. Japan exported much more to the United States during this period than it imported from the United States.B. Japan greatly increased its purchases of military equipment from the United States during this period.C. Japan"s economy grew far faster than the U.S. economy during this period.D. Japan"s government devalued the yen during this period.
Under a system of freely floating exchange rates, an increase in the international value of a nation"s currency will: A. cause an international surplus of its currency.B. contribute to disequilibrium in its balance of payments.C. cause gold to flow into that country.D. cause its imports to rise.
A. a dollar, when converted to other currencies at the prevailing floating exchange rate, has the same purchasing power in various countries.
According to the purchasing power parity theory of exchange rates: A. a dollar, when converted to other currencies at the prevailing floating exchange rate, has the same purchasing power in various countries.B. in equilibrium, national currencies have equal value in terms of gold.C. the higher a nation"s price level in terms of its own currency, the greater is the amount of foreign exchange it can obtain for a unit of its currency.D. nominal currency values will tend to equalize (become 1 = 1) in the long run.
If the United States has full employment and the dollar dramatically depreciates in value, we can expect (other things equal): A. both U.S. imports and U.S. exports to rise.B. both U.S. imports and U.S. exports to fall.C. U.S. exports to fall and U.S. imports to increase.D. inflation to occur.

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Suppose interest rates fall sharply in the United States but are unchanged in Great Britain. Other things equal, under a system of freely floatingexchange rates, we can expect the demand for pounds in the United States to: A. decrease, the supply of pounds to increase, and the dollar to appreciate relative to the pound.B. increase, the supply of pounds to increase, and the dollar may either appreciate or depreciate relative to the pound.C. increase, the supply of pounds to decrease, and the dollar to depreciate relative to the pound.D. decrease, the supply of pounds to increase, and the dollar to depreciate relative to the pound.
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Essentials of Investments with S&P bind-in card (Irwin/McGraw-Hill Series in Finance)7th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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