Macro

What will happen to the supply of dollars if there is an increase in United States consumers' preference for Japanese automobiles?

The supply of dollars will increase.

Who benefits from an increase in the international value of the United States dollar?

Retired United States citizens living overseas on their social security checks.

What is the effect on money supply, interest rate, and currency value following an open market sale of bonds in a country with a flexible exchange rate?

Money Supply: Decrease, Interest Rate: Increase, Value of the Currency: Increase.

What happens to the British pound if real interest rates in the United States fall relative to Great Britain?

The British pound will appreciate relative to the dollar.

What describes the current account and capital and financial account balance when the current account is in deficit?

The current account is in deficit and the capital and financial account is in surplus.

What is the trade balance of the nation based on the provided data?

$100 million.

Give an example of a current account transaction.

A United States firm sells $500 million of its products to a Chinese company.

What event would cause a shift in the supply of dollars in the exchange market from SusD to Susp?

Americans increase their demand for vacations in Mexico.

What happens to the yen and the cost of Swedish goods if the price of the Swedish krona changes from 12 to 13 Japanese yen?

Yen depreciates; change in cost of Swedish goods: increase.

Which transaction would increase the current account surplus in Japan's balance of payments?

A Japan-based company sells roasted coffee to Canada.

What occurs in the foreign exchange market when Country A is experiencing high inflation relative to Country B?

A depreciation of Country A's currency.

What happens to the international value of the dollar, United States imports, and exports under contractionary monetary policy?

International value: increase, US imports: decrease, Exports: increase.

If England's currency depreciates relative to France's euro, what will happen?

Aggregate demand will increase in England.

What is the balance on the current account for the period?

+70 billion dollars.

What is true of a current account deficit?

It is financed by a surplus in the financial (capital) account.

What happens when Country X's government increases spending without raising taxes?

Real interest rates increase and net exports decrease.

How is the price of one nation's currency expressed in terms of another's—what is this called?

Exchange rate.

What occurs if a French firm buys computers from the United States?

There would be an increase in demand for United States dollars and supply of euros.

What is likely to result in an inflow of financial capital to Country R?

An increase in administered interest rates by the central bank of Country R.

What happens to the international value of the United States dollar if real interest rates rise relative to other countries?

Value of dollar: appreciation, Net exports: decrease.

Which transaction is included in the financial account of Country X's balance of payments?

An individual in Country X buys new government bonds issued by Country E.

What effect does an increase in Japan's demand for United States goods have on the dollar?

The value of the dollar will appreciate.

Where will the purchase of United States government bonds by Japanese investors be recorded?

In Japan's financial account.

What is recorded in a country's current account?

The value of consumer goods produced abroad and purchased by the country's residents.

If the United States current account balance is zero and the dollar appreciates against the yen, what will happen to the demand for United States exports?

Demand for United States exports will decrease and result in a surplus in the United States financial account.