1.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.

2.In Switzerland, the price of a domestically produced wristwatch is 100 Swiss francs. If an American tourist can purchase the same watch in Switzerland for $120, what must be the exchange rate between the two countries? (3 points)

	$0.20 per Swiss franc
	$0.83 per Swiss franc
	$1.20 per Swiss franc
	$5 per Swiss franc
	$6 per Swiss franc

3.If the U.S. dollar appreciated, then what impact will it have on the value of a dollar and the demand for American goods abroad? (3 points)

Value of U.S. dollars	Demand for American goods abroad
Increases	Decreases

Value of U.S. dollars	Demand for American goods abroad
Decreases	Decreases

Value of U.S. dollars	Demand for American goods abroad
Remains unaffected	Decreases

Value of U.S. dollars	Demand for American goods abroad
Increases	Increases

Value of U.S. dollars	Demand for American goods abroad
Decreases	Remains unaffected

4.Foreigners' demand for which of the following drives the demand for U.S. currency in the foreign exchange market? (3 points)

1. U.S. goods
2. U.S. services
3. U.S. financial assets

	I only
	II only
	III only
	I and II
	I, II, and III

5.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

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

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