Principles of Economics International Edition 9th Edition By Michael Melvin – Test Bank
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Principles of Economics International Edition 9th Edition By Michael Melvin – Test Bank
Chapter 06 An Introduction to the Foreign Exchange Market and the Balance of Payments
MULTIPLE CHOICE
1.Markets in which the currencies of different countries across the world are traded are called:
|
a. |
stock markets. |
|
b. |
foreign exchange markets. |
|
c. |
loanable-funds markets. |
|
d. |
commodity markets. |
|
e. |
money markets. |
ANS: B DIF: Easy REF: 1 OBJ: ch. 06, 1
NAT:Analytic | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Knowledge
2.Which of the following correctly describes a foreign exchange market?
|
a. |
A place where foreign goods are bought and sold in any country. |
|
b. |
A market where foreign tourists can buy domestic goods. |
|
c. |
A global market where people exchange one currency for another. |
|
d. |
A bank in New York city that trades in gold certificates. |
|
e. |
The central banks of different countries that control the supply of currencies. |
ANS:CDIF:EasyOBJ:ch. 06, 1
NAT:Analytic | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Knowledge
3.Currency and bank deposits that are denominated in foreign money are called:
|
a. |
traveler’s checks. |
|
b. |
international fund. |
|
c. |
foreign exchange. |
|
d. |
real income. |
|
e. |
hard money. |
ANS: C DIF: Easy REF: 1 OBJ: ch. 06, 1
NAT: Analytic | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Knowledge
4.A majority of international transactions involve the buying and selling of _____.
|
a. |
bank deposits denominated in foreign currency |
|
b. |
currency notes |
|
c. |
traveler’s checks |
|
d. |
stocks denominated in foreign currency |
|
e. |
bills of exchange |
ANS: A DIF: Easy REF: 1 OBJ: ch. 06, 1
NAT: Analytic | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Knowledge
5. An exchange rate can be described as:
|
a. |
the price of a foreign currency as determined by the World Bank. |
|
b. |
the price of one country’s currency in terms of another country’s currency. |
|
c. |
the dollar value of imports and exports undertaken in the world economy during a year. |
|
d. |
the price of foreign currency as established by the relative amount of tourism. |
|
e. |
the dollar value of U.S. international trade. |
ANS: B DIF: Easy REF: 1. an OBJ: ch. 06, 1
NAT: Analytic | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Knowledge
6. On December 29, the cost of a skiing trip to Finse, Norway, was 6,500 krone. Two weeks later, the American dollar appreciated against the Norwegian krone. If the price of the trip in Norway remains the same:
|
a. |
an American skier living in Florida will now view this trip as cheaper. |
|
b. |
an American skier living in Florida will now view this trip as highly expensive. |
|
c. |
an American skier living in Florida will now view this trip as of the same value as before. |
|
d. |
an American skier living in Florida will now value this trip less. |
|
e. |
an American skier living in Florida will no longer take this trip. |
ANS: A DIF: Moderate REF: 1. an OBJ: ch. 06, 1
NAT: Reflective Thinking | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Application
7. If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be:
|
a. |
NZD 1.5709. |
|
b. |
NZD 1.75. |
|
c. |
$1.6711. |
|
d. |
0.5709. |
|
e. |
$1.75. |
ANS: B DIF: Moderate REF: 1. an OBJ: ch. 06, 1
NAT: Reflective Thinking | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Application
8. If one U.S. dollar = 11.76 Mexican pesos, then the reciprocal exchange rate equals:
|
a. |
$11.76. |
|
b. |
Ps 3.92. |
|
c. |
Ps 0.008. |
|
d. |
Ps 0.085. |
|
e. |
$0.085. |
ANS:EDIF:EasyOBJ: ch. 06, 1
NAT: Reflective Thinking | International Trade and Finance
TOP: The Foreign Exchange Market MSC: Application
MAECENAS IACULIS
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ADIPISCING CONVALLIS BULUM
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