exchange rates - test 2

International trade refers to

Purchasing or selling currently produced goods or services across an international border

a government may be able to reduce the international value of its currency by

selling its currency in the foreign exchange market

according to the purchasing power parity theory of exchange rates

a dollar, when converted to other currencies at the prevailing floating exchange rate, has the same purchasing power in various countries

in a nation’s balance of payments what is always recorded as a positive entry?

exports of services

in the US balance of payments, US purchases of assets abroad are

US dollar outflow

In the US balance of payments, foreign purchases of assets in the United States are a

Foreign currency flow

US goods imports are recorded as a

Current account entry

The US demand for euros is

Downsloping because at lower dollar prices for euros, Americans want to buy more European goods and services

What exchange rate is used by industrially advanced nations?

The managed float

What has contributed to large US trade deficits in recent years?

china fixing its exchange rate

International transactions fall into what two broad categories?

International trade and international asset transactions

When real interest rates in other countries rise relative to that in the US, we would expect the US dollar to-

Depreciate

In international financial transactions what are the only two things that individuals and firms can exchange

Assets and currently produced goods and services

What would call for out payments from the United States?

The United States purchases assets abroad.

If the exchange rate changes so that more Mexican pesos are required to buy a dollar then

Americans will buy more Mexican goods and services (dollars up pesos down)