Question 16

Suppose researchers discover that Swiss beer in moderation adds 1-2 years to a person's life expectance. This finding would likely result in a (an):

Increase in the demand for Swiss francs

Decrease in the demand for Swiss francs

Increase in the supply of Swiss francs

Decrease in the supply of Swiss francs

Question 17

The exchange rate is kept the same in all parts of the market by:

Exchange speculation

Exchange arbitrage

Forward cover

Hedging

Question 18

Bumper grain crops in countries that usually buy large amounts of grain from the United States would likely result in a/an:

Reduced the demand for dollars

Increased the demand for dollars

Reduced the supply of dollars

Increased the supply of dollars

Question 19

Under a system of floating exchange rates, the Swiss franc would depreciate in value if which of the following occurs?

Price inflation in France

An increase in U.S. real income

A decrease in the Swiss money supply

Falling interest rates in Switzerland

Question 20

Most foreign exchange trading occurs between banks and:

National governments

Other banks

Corporations

Household investors

Question 21

The current account of the U.S. balance of payments does not include:

Investment income

Merchandise exports and imports

The sale of securities to foreigners

Unilateral transfers

Question 22

The U.S. has a balance of trade deficit when its:

Merchandise exports exceed its merchandise imports

Merchandise imports exceed its merchandise exports

Goods and services exports exceed its goods and services imports

Goods and services imports exceed its goods and services exports

Question 23

Which of the following tends to cause the U.S. dollar to appreciate in value?

An increase in U.S. prices above foreign prices

Rapid economic growth in foreign countries

A fall in U.S. interest rates below foreign levels

An increase in the level of U.S. income

Question 24

When the dollar depreciates

U.S. exporters tend to sell more goods in foreign markets

U.S. consumers travel abroad more cheaply

More foreign tourists can afford to visit the United States

both a and c

Question 25

If wheat costs $4 per bushel in the United States and 2 pounds per bushel in Great Britain, then in the presence of purchasing-power parity the exchange rate should be:

$.50 per pound

$1.00 per pound

$2.00 per pound

$8.00 per pound