.

(06.01 LC) Among other international transactions, a country's capital and financial account will include the (3 points)

	purchase of bonds from abroad
	net factor payments
	exported goods
	trade in services
	imported goods

2.

(06.01 MC) Use the data table to answer the question that follows.

Exports	$700 billion
Imports	$300 billion
Financial capital inflow	$200 billion
Bonds purchased from abroad	$600 billion

From the data given in the table, which one of the following statements is true? (3 points)

	The country's financial account is positive.
	The country has a balance of trade deficit.
	The country has a balance of trade surplus.
	The country's balance of payments is in disequilibrium.
	The country's current account balance is zero.

3.

(06.01 LC) Which of the following statements regarding the balance of payments accounting system for a country is accurate with market determined exchange rates? (3 points)

	The current account will always be balanced.
	The capital and financial accounts will always be balanced.
	Net unilateral transfers are excluded from the current account.
	Money that flows into a country is a debit and out of a country is a credit.
	The sum of the current accounts and the capital and financial accounts should be zero.

4.

(06.02 MC) If a smartphone costs $5,000 in the United States, and if it costs 4,000 euros in France (assuming there to be no taxes), then what is the exchange rate for 1 U.S. dollar in terms of euros? (3 points)

	0.80 euro
	1.20 euros
	1 euro
	0.20 euro
	2.20 euros

5.

(06.02 MC) Assume the dollar price of one euro increases from $1.20 to $1.50. What is happening to the dollar, and what will happen to European exports to the United States, ceteris paribus? (3 points)

U.S. Dollar	European Exports to the United States
Depreciation	Decrease

U.S. Dollar	European Exports to the United States
Depreciation	Increase

U.S. Dollar	European Exports to the United States
Appreciation	Decrease

U.S. Dollar	European Exports to the United States
Appreciation	Increase

U.S. Dollar	European Exports to the United States
Appreciation	No change

6.

(06.03 MC) Which of the following explains the reason for a downward-sloping demand curve for U.S. dollars in the foreign exchange market? (3 points)

1. The exports of the United States become less expensive when the price of the dollar falls, so more exports from the U.S. are demanded.
2. When the price of a dollar falls, people buy more dollars for travel to the United States.
3. As the price of the dollar increases, people wish to import more goods from the United States.

	I only
	II only
	III only
	I & III
	I & II

7.

(06.03 LC) Equilibrium in the foreign exchange market for euros occurs when (3 points)

	the quantity demanded of U.S. dollars is less than the quantity of euros supplied in the market
	the quantity demanded of euros is equal to the quantity of euros supplied in the market
	the quantity demanded of euros is less than the quantity of euros supplied in the market
	the quantity demand of U.S. dollars is equal to the quantity of U.S. dollars supplied in the market
	the quantity demanded of euros is more than the quantity of U.S. dollars supplied in the market

8.