1. When a U.S. citizen buys goods from a foreign merchant, the goods are usually paid for by having the U.S. citizen send a personal check or dollars directly to the exporter.
True or False
2. Foreign exchange refers to
a. trade with other countries
b. the currencies of other countries
c. the goods and services of other countries
d. the excess of exports over imports
3. Under a system of floating exchange rates, increased demand of U.S. citizens for Japanese goods will cause
a. the Japanese yen to depreciate against the U.S. dollar
b. the U.S. dollar to appreciate against the Japanese yen
c. the Japanese yen to appreciate against the U.S. dollar
d. the exchange rate between the Japanese yen and the U.S. dollar to remain unchanged
4. Meetings among the leaders of the Group of Seven nations have directed the course of international monetary policy in the last decade.
True or False
5. Under the gold standard, a nation’s domestic economic policy
a. was subordinate to balance-of-payments adjustments
b. controlled balance-of-payments adjustments
c. was unrelated to balance-of-payments adjustments
d. was controlled by the World Bank
6. Which of the following would cause a credit to the U.S. balance of payments?
a. a group of U.S. citizens goes to New Zealand for a vacation
b. General Motors pays a dividend to a citizen of Brazil
c. Lloyd’s of London makes an insurance payment to a U.S. resident
d. Russia cancels its purchases of U.S. wheat and buys wheat from Argentina
7. A nation on the gold standard would convert its currency into gold on demand.
True or False
8. There is a correlation between the level of economic development of a nation and the status of its balance of trade.
True or False
9. The IMF was
a. created during the Great Depression to regenerate trade
b. created during the Kennedy round of GATT negotiations in the 1960s
c. created at Bretton Woods to facilitate international exchange
d. abolished by President Nixon in the early 1970s
10.As the price of foreign exchange increases in terms of the U.S. dollar, U.S. products become cheaper for foreigners to buy.
True or False