1. Which of the following appears as a positive item on the balance of payments account for the United States?
U.S. government sending aid to natural disaster victims in Asia
American tourists spending money in the other countries
Buying of U.S. Treasury bonds by a foreign bank
Payment of stock dividends by U.S. firms to foreign shareholders
2. If the United States wants to regain ownership of domestic assets sold to foreigners, it will have to
increase domestic consumption.
increase its national debt.
export more than it imports.
import more than it exports.
3. If an American can purchase 40,000 British pounds for $90,000, the dollar rate of exchange for the pound is
$0.44.
$0.23.
$2.25.
$2.00.
4. If the exchange rate is $1 = 0.7841 euro, then a French DVD priced at 20 euros would cost an American buyer (excluding taxes and other fees)
$15.68.
$20.78.
$25.51.
$27.84.
5. Which system would be accompanied by occasional currency interventions by central banks to stabilize or alter rates to avoid persistent balance of payments deficits or surpluses?
Gold standard
Fixed exchange rates
Flexible exchange rates
Managed floating exchange rates
6. a) Define the four basic types of trade barriers. b) Who gains and who loses from a protective tariff? Explain.
7. a) Explain the tools used to pursue expansionary and contractionary fiscal policy. During which phases of the business cycle would each be appropriate? b) Explain what is meant by a built-in stabilizer and give two examples.