Question 25 of 50

What are the two principal types of international financial transactions?

What does a nation's balance of payments statement summarize?

Based on the 2007 U.S. Balance of Payments data, what was the balance on goods?

In the balance of payments, how are U.S. exports and U.S. imports recorded?

What is the relationship between the current account and the capital and financial account in the balance of payments?

What defines a balance-of-payments deficit?

Under a flexible-exchange-rate system, what happens if the demand for British pounds by Americans increases?

What is meant by the term 'appreciation' of the U.S. dollar?

Which factor is a determinant that can shift the demand or supply of a currency and alter its exchange rate?

What is the primary method for a government to maintain a fixed exchange rate when there is a shortage of the foreign currency?

What is the core feature of the managed floating exchange rate system used by most major nations since 1971?

A U.S. trade deficit can be best described as a situation where:

One of the causes cited for the large U.S. trade deficits is a rapidly declining U.S. saving rate. How does this contribute to the trade deficit?

What is the primary role of speculators in currency markets, according to the 'Last Word' section?

If an American company hires an Indian call center to answer its phones, this transaction would be recorded in the U.S. balance of payments as a:

If the U.S. has a current account deficit of $739 billion, what must be the balance on its capital and financial account?

Suppose a U.S. importer contracts to buy 10 British cars for £150,000 when the exchange rate is $2 = £1. If the rate shifts to $3 = £1 before payment is made, what is the new dollar cost for the importer?

Which of the following is NOT a method a country can use to maintain a fixed exchange rate when its currency is overvalued?

In 2007, U.S. net investment income was a positive $74 billion. What does this figure represent?

Why might currency speculators who expect the U.S. dollar to depreciate sell dollars and buy pounds?

Which transaction is recorded in the capital and financial account of the U.S. balance of payments?

What is a major objection to using exchange controls to maintain a fixed exchange rate?

If a U.S. recession leads to a decrease in the U.S. demand for Mexican pesos, what is the likely outcome in a flexible-exchange-rate system?

In the balance of payments, net transfers include items like:

In 2007, what was the value of the U.S. balance on services?

How could a major recession in the United States affect the exchange rate between the U.S. dollar and the British pound?

Why is a country's trade deficit considered a 'mixed blessing'?

What does it mean for a currency speculator to engage in 'hedging'?

In 2007, what was the balance on the U.S. financial account?

The demand curve for a foreign currency, such as the British pound, is downward-sloping because:

The supply curve for a foreign currency, such as the British pound, is upward-sloping because:

If U.S. real interest rates rise significantly while they remain constant in Europe, what is the likely effect on the dollar-euro exchange rate?

Why does a country that is maintaining a fixed exchange rate need a stock of official reserves?

In the context of international trade, what are 'exchange controls'?

How might a government use domestic macroeconomic adjustments to maintain a fixed exchange rate during a payments deficit?

One of the criticisms of the managed float system mentioned in the text is that:

A key reason for China's large trade surplus with the United States is that:

A current account deficit implies that a nation:

If a country's currency appreciates, what is the likely impact on its net exports?

In the balance of payments, what is recorded in the capital account (as distinct from the financial account)?

A major benefit of a U.S. trade deficit is that it:

If speculators widely believe that the euro is going to appreciate against the dollar, their actions in the currency market would:

In 2007, foreign purchases of assets in the United States totaled $1905 billion, while U.S. purchases of assets abroad totaled $1164 billion. This resulted in a:

The text states that a flexible-exchange-rate system may cause instability in the domestic economy because:

If a nation is in a deep recession, which policy under a fixed-exchange-rate system would be particularly problematic?

A key benefit of a large surplus on the U.S. capital and financial account is that it:

If the equilibrium exchange rate is $2 equals £1, what is the pound price of one dollar?

Which of the following would most likely increase the demand for U.S. dollars in the foreign exchange market?

The text suggests that a long-run consequence of persistent U.S. trade deficits is that the U.S. may have to: