basic definitions
forex graphs
credit/debit
random mcq
For-exShifters
100
Imports involve
A. Goods in, money in, positive in Current Account
B. Goods in, money out, negative in Current Account
C. Goods in, money in, positive in Financial Account
D. Goods in, money out, negative in Financial Account
B. Goods in, money out, negative in Current Account
100
The shift in the graph would cause
A. a US trade deficit.
B. an increase in American tariffs.
C. speculators demanding more pesos.
D. an appreciation of the dollar.
E. inflation in the US.
D. an appreciation of the dollar.
100
Will the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
The U.S. increase imports of tractor wheels from Canada.
A. current account; debit.
100
An increase in price level in the U.S. relative it its trading partners will cause the U.S. dollar to __________ on the foreign exchange market, and Americans will __________ the purchase of foreign made goods.
A. appreciate, increase
B. appreciate, decrease
C. depreciate, decrease
D. depreciate, increase
D. depreciate, increase
100
American decide they hate England and all flights are canceled.
Changes in Taste
200
What is a 'Fixed Exchange Rate'
A. the government/central bank entirely or predominantly determines the exchange rate.
B. the forex market entirely or predominantly determines the exchange rate.
C. the trading partners entirely or predominantly determines the exchange rate.
D. the importing countries entirely or predominantly determines the rate.
A. the government/central bank entirely or predominantly determines the exchange rate.
200
All of the following could cause the shift in the graphs for the Japanese Yen and US Dollar except:
A. an increase in interest rates in the US.
B. the release of hot new video game console by Japanese producer Nintendo.
C. speculators desiring Japanese currency.
D. inflation in the US.
E. an increase in GDP in the US.
A. an increase in interest rates in the US.
200
Will the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
A Ukrainian businesswoman buys a majority share of ownership in a U.S. clothing company.
capital account; credit.
200
If Americans want to purchase more South Korean cars, the supply of dollars in the foreign exchange market will __________ and demand for the Won, the South Korean currency, will __________.
A. increase, decrease
B. increase, increase
C. decrease, decrease
D. decrease, increase
B. increase, increase
200
The Chinese government significantly decreases personal income tax.
Changes in relative income
300
Financial Account transactions include items such as
A. Imports
B. Exports
C. Transfers & Remittances
D. Purchase and sale of stocks and bonds
D. Purchase and sale of stocks and bonds
300
An increase in interest rates in the US would cause
A. D for the $ to increase and D for the Real to increase
B. D for the $ to increase and S for the Real to increase.
C. S for the $ to increase and D for the Real to increase.
D. S for the $ to increase and S for the Real to increase.
B. D for the $ to increase and S for the Real to increase.
300
Will the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
An American working in Saudi Arabia sends his wife, who lives in Atlanta, money so she can buy a new car.
current account; credit.
300
An increase in stock market profits in Europe will cause the dollar to ______________ and the euro, the currency of the European Union, to __________.
A. depreciate, depreciate
B. depreciate, appreciate
C. appreciate, appreciate
D. appreciate, depreciate
D. appreciate, depreciate
300
Japan has a sudden steel shortage making most exports more expensive
Price Level
400
What are the three major components of the current account? Of the financial account?
Current: income investment, net exports, net transfers
Financial: assets, bonds, and stocks
400
Real incomes rise in the US, we expect
A. D for the $ to increase and D for the Real to increase
B. D for the $ to increase and S for the Real to increase.
C. S for the $ to increase and D for the Real to increase.
D. S for the $ to increase and S for the Real to increase.
C. S for the $ to increase and D for the Real to increase.
400
Will the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
An American receives quarterly dividend payments (profits) from stock she owns in a German company.
current account; credit.
400
An increase in US deficit spending will cause a(n) __________ in domestic U.S. business investment and a(n) __________ of the U.S. dollar in foreign exchange markets.
A. increase, appreciation
B. decrease, depreciation
C. decrease, appreciation
D. increase, depreciation
C. decrease, appreciation
400
The US Federal Reserve sells bonds at high-interest rates.
Interest Rates
500
What are the downsides of free-trade?
Free trade: loss of jobs within our own country, more imports are puchased
500
A large increase in the value of real estate occurs in Brazil making Brazilians feel wealthier. We expect
A. D for the $ to increase and D for the Real to increase
B. D for the $ to increase and S for the Real to increase.
C. S for the $ to increase and D for the Real to increase.
D. S for the $ to increase and S for the Real to increase.
B. D for the $ to increase and S for the Real to increase.
500
The US buys thirty million dollars of apples from Georgia and sells them to China.
Current account, 30 million dollars credit
500
The sale of U.S. treasury bonds on the open market will cause a(n) __________ in the U.S. price level and a(n) __________ of the U.S. dollar in the foreign exchange market.
A. decrease, appreciation
B. decrease, depreciation
C. increase, appreciation
D. increase, depreciation
A. decrease, appreciation
500
Inflation in China rises significantly faster than in the US.
Price Level