1. Which of the following would increase the total amount of trade in the world?
a. trade diversion
b.trade deflection
c.rules of origin
d.trade retention
2. when the value of exports exceed the value of imports then:
a. the country is running a trade deficit
b.international trade is in balance
c. the country is running a trade surplus
d. changes in productivity will occur
3. an increase in the value of a domestic currency in terms of other currencies is known as:
a. a discount rate
b. an appreciation
c. a flexible exchange rate
d. a depreciation
4. a nation's foreign echange reserves consists mainly of:
a. government securities of that nation
b. currencies of other nations
c. the legal currency of that nation
d. excess reserves held by its banks
5. suppose economic stability in the US increases. this will tend to cause which of the following to occur?
a. nothing will change in the foreign exchange market
b. the demand for euros will rise in the foreign exhange market
c. the demand for US dollars will rise in the foreign exchange market
d. the supply of US dollars will rise in the foreign exchange market
6. all of the following are deficit items in the balance of payments accounts except:
a. US tourists spending funds in europe
b. US purchases of foreign companies' stocks and bonds
c. exports of merchandise
d. US residents purchase of gold from foreign residents.