Unit 6: Open Economy: International Trade and Finance

If the United States dollar appreciates relative to the euro,

If real interest rates in the United States increase relative to real interest rates in Japan, which of the following will occur?

A current account deficit in the balance of payments means that

If the United States has a current account deficit, it must have

Under a flexible (floating) exchange rate system, which of the following would cause the U.S. dollar to depreciate?

An increase in the U.S. inflation rate relative to other countries will cause

Which of the following would be recorded in the financial account of the U.S. balance of payments?

Expansionary monetary policy in the U.S. will tend to cause which of the following in the foreign exchange market?

A tariff on imported goods will most likely result in

Free trade between nations is based on the concept of

Country A has a floating exchange rate. If Country A experiences higher economic growth than its trading partners, what is the most likely effect on its currency and trade balance?

In the foreign exchange market, the supply of U.S. dollars comes from

If Canada imposes tariffs on its imports from the United States, what will happen to the Canadian dollar and the U.S. dollar in the foreign exchange market?

Which of the following would cause the demand for the Japanese yen to increase in the foreign exchange market?

In the context of fiscal and monetary policy in an open economy, contractionary fiscal policy in the U.S. will tend to

A country with a trade deficit must be

Under a fixed exchange rate system, if a country's currency is overvalued relative to its equilibrium level, the government must

If the European Central Bank raises interest rates while the Federal Reserve keeps U.S. interest rates unchanged, what will happen in the euro-dollar exchange market?

Which of the following is an argument in favor of free trade?

If the United States has a comparative advantage in producing airplanes and Brazil has a comparative advantage in producing coffee, free trade will