A nation's currency depreciates when:

There is an increase in the supply of its currency in the FOREX

If the dollar price of rupee rises, then:

The dollar depreciates relative to the rupee

If the dollar depreciates relative to the South Korean Won, the Won:

Will appreciate relative to the dollar.

A deficit on the current account:

Normally causes a surplus on the capital and financial account.

If the demand for British pounds in the United States rises, then:

The U.S. dollar price of the British pound increases.

A country with a trade deficit will experience which of the following regarding its currency in the FOREX?

Depreciation due to increased demand for foreign currencies.

A rightward shift of a nation’s long-run aggregate supply curve is equivalent to:

an outward shift of the nation’s production possibilities curve.

Travel by U.S. citizens within Europe creates a:

Demand for euros and a supply of dollars.

The current account in the nation’s balance of payments includes:

Goods and Services exported and imported

A country's Balance of Payments will experience a surplus when:

Credits in the current account exceed debits.

Which of the following will generate a demand for country X’s currency in the foreign exchange market?

The desire of foreigners to buy stocks and bonds of firms in country X

What would cause the movement from D1 to D2?

Higher interest rates in America

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AP Econ Unit 7&8

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Questions 15

Answers

1
If the exchange rate between the US dollar and the British pound changes from 1 USD = 0.75 GBP to 1 USD = 0.80 GBP,shows
Appreciation of the USD.
Depreciation of the GBP.
Appreciation of the GBP.
Depreciation of the USD.
2
A nation's currency depreciates when:
Its inflation rates are lower than its trading partners.
There is an increase in the supply of its currency in the FOREX
Its exports increase while imports decrease.
Its interest rates rise
3
If the dollar price of rupee rises, then:
The dollar depreciates relative to the rupee
The rupee price of dollars also rises.
The rupee depreciates relative to the dollar.
The dollar will buy fewer U.S. goods.
4
If the dollar depreciates relative to the South Korean Won, the Won:
Will appreciate relative to the dollar.
May either appreciate or depreciate relative to the dollar.
Will depreciate relative to the dollar.
Will be less expensive to Americans.
5
A deficit on the current account:
Means that a nation is making international transfers.
Normally causes a surplus on the capital and financial account.
Has no relationship to the capital and financial account.
Normally causes a deficit on the capital and financial account.
6
If the demand for British pounds in the United States rises, then:
The supply of dollars decreases.
The U.S. dollar price of the British pound increases.
The U.S. dollar appreciates.
The pound depreciates.
7
A country with a trade deficit will experience which of the following regarding its currency in the FOREX?
Appreciation due to increased supply of foreign currencies.
Depreciation due to increased supply of its currency.
Appreciation due to increased demand for its currency.
Depreciation due to increased demand for foreign currencies.
8
A rightward shift of a nation’s long-run aggregate supply curve is equivalent to:
a rightward shift of the nation’s investment demand curve.
a rightward shift of the nation’s aggregate demand curve.
a downward shift of the nation’s aggregate expenditures curve
an outward shift of the nation’s production possibilities curve.
9
Travel by U.S. citizens within Europe creates a:
Demand for dollars and a supply of euros.
Demand for euros and a supply of dollars.
Both a supply of dollars and a demand for dollars.
Supply of euros and a demand for dollars.
10
Which of the following would call for outpayments from the United States?
Foreign tourists spend money in the United States
U.S. purchases assets abroad
U.S. exports computer software
Foreigners purchase assets in the United States
11
The current account in the nation’s balance of payments includes:
Capital
Goods and Services exported and imported
The current production expectation of that economy
Financial Assets
12
A country's Balance of Payments will experience a surplus when:
Capital outflows exceed capital inflows.
Imports exceed exports.
The financial account has a deficit.
Credits in the current account exceed debits.
13
When a Icelandic investor buys stock in Wilson Sports, which of the following balance of payments accounts is affected?
Balance of trade account
Current Account
Financial Account
Foreign Exchange Account
14
Which of the following will generate a demand for country X’s currency in the foreign exchange market?
Travel by citizens of country X in other countries
Charitable contributions by country X’s to citizens of developing nations
The desire of foreigners to buy stocks and bonds of firms in country X
The imports of country X
15
What would cause the movement from D1 to D2?
Higher interest rates in Europe
European goods become more popular in America
Low interest rates in America
Higher interest rates in America

AP Econ Unit 7&8 Flashcards | StudBud