Question

QUESTION 21

An appreciation is

	A.	an increase in the trade surplus.
	B.	an increase in the value of currency.
	C.	a decrease in the value of currency.
	D.	a decrease in the trade deficit.

4 points   

QUESTION 22

If the dollar depreciates against the British pound, U.S. goods sold in ________ would become less expensive and British goods sold in ________ would become more expensive.

	A.	the United States; the United States
	B.	Great Britain; Great Britain
	C.	Great Britain; the United States
	D.	the United States; Great Britain

4 points   

QUESTION 23

The exchange rate between currencies of different countries is controlled primarily by ________ in currency markets.

	A.	the outsourcing agreements
	B.	tariff rates
	C.	supply and demand
	D.	diplomatic relations

4 points   

QUESTION 24

According to the law of one price

	A.	the price of gold should differ between nations.
	B.	interest rates across nations should be the same when adjusted for exchange rates.
	C.	a company can only charge one price for a product, no matter which nation the product is sold in.
	D.	goods that are easily tradable across nations should sell for the same price expressed in a common currency.

4 points   

QUESTION 25

In the first quarter of 2009, the United States trade deficit fell to its lowest level in a decade. This means that

	A.	the United States exported more to foreign countries than it imported from the rest of the world.
	B.	foreign countries exported more to the United States than they imported from the rest of the world.
	C.	the United States imported more from the rest of the world than it exported to the rest of the world.
	D.	foreign countries imported more from the United States than they exported to the United States.

Answer 1

Solution 21

B. Increase in value of currency

Solution 22

C. Us goods sold in Britain would become less expensive and British Goods in US would become more expensive.

Solution 23

C. Exchange rate is controlled by supply and demand.

Solution 24

D. According to law of one price goods that are easiky tradeable across nations should sell for same price expressed in common currency.

Solution 25

A. US trade deficit fell to lowest level means, US exported more to foreign countries than they imported from rest of World.