1. Factor income sent from country X and received by residents of country Z will be recorded in Country X's (3 points)

	financial account
	national savings
	gross domestic product
	capital inflows
	current account

2. Use the data table to answer the question that follows.

Exports	$300 billion
Imports	$200 billion
Net income from foreign markets	?$200 billion
Net unilateral transfers	$20 billion

Based on the data above, which of the following describes this nation's balance of payments? (3 points)

	The current account is in surplus, and the capital and financial account must be in surplus.
	The current account is in surplus, and the capital and financial account must be in deficit.
	The current account is in deficit, and the capital and financial account must be in surplus.
	The current account is in deficit, and the capital and financial account must be in deficit.
	The current account is in surplus, and the capital and financial account will be indeterminate.

3. Which of the following statements regarding the component of the current account appearing in the balance of payments is true? (3 points)

	Export of goods appears on the debit side of the current account.
	Purchase of foreign securities appears on the credit side of the current account.
	Import of goods appears on the debit side of the current account.
	Foreign direct investment appears on the debit side of the current account.
	Sale of foreign securities appears on the credit side of the current account.

4. 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. If the euro price per dollar falls, what impact will this change have on the European demand for U.S. goods and the cost of U.S. goods to Europeans? (3 points)

European demand for U.S. goods	Cost of U.S. goods to Europeans
Increases	Increases

European demand for U.S. goods	Cost of U.S. goods to Europeans
Decreases	Increases

European demand for U.S. goods	Cost of U.S. goods to Europeans
Decreases	Decreases

European demand for U.S. goods	Cost of U.S. goods to Europeans
Decreases	Remains unaffected

European demand for U.S. goods	Cost of U.S. goods to Europeans
Increases	Decreases

6. Which of the following affects the supply of the U.S. dollar in the foreign exchange market? (3 points)

1. Exports from the United States increase due to depreciation of the U.S. dollar
2. U.S. citizens invest in foreign firms and assets
3. Demand for imports from abroad by U.S. citizens

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

7. The equilibrium exchange rate in the foreign exchange market is determined when (3 points)

	the supply of foreign exchange remains constant
	the demand for foreign exchange remains constant
	the demand for foreign exchange becomes equal to the supply of foreign exchange
	the demand for foreign exchange is greater than the supply of foreign exchange
	the demand for foreign exchange is less than the supply of foreign exchange

8. Use the graph to answer the question that follows.

\fReal interest S rate r' D' D q q' Quantity of loanable funds