1. A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise. *

a. surplus; contract

b. deficit; contract

c. deficit; expand

d. surplus; expand

e. none of the above

2. Which of the following would NOT be considered a typical BOP transaction? *

a. General Electric Inc. pays for a new manufacturing facility in Chile.

b. The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.

c. A U.S. tourist purchases gifts at a museum in London.

d. A foreign resident purchases a U.S. Treasury Bill.

e. All are example of BOP transactions.

3. Which of the following is NOT true regarding the market for foreign exchange? *

a. The market provides the physical and institutional structure through which the money of one country is exchanged for another.

b. The rate of exchange is determined in the market.

c. Foreign exchange transactions are physically completed in the foreign exchange market.

d. All of the above are true.

e. None of the above are true.

4. ________ make money on currency exchanges by the difference between the ________ price, or the price they offer to pay, and the ________ price, or the price at which they offer to sell the currency. *

a. Dealers; ask; bid

b. Dealers; bid; ask

c. Brokers; ask; bid

d. Brokers; bid; ask

e. None of the above