Econ 102 Exam 3

The table above shows the exchange rates between various currencies and the U.S. dollar. Between 2007 and 2008, the Japanese yen ________ against the U.S dollar and the euro ________ against the U.S. dollar. A) depreciated; appreciated B) appreciated; appreciated C) depreciated; depreciated D) appreciated; depreciated

The demand curve for U.S. dollars slopes downward because as the dollar ________ U.S. goods become ________ expensive to foreign residents, so they purchase fewer U.S. goods, and the quantity of dollars demanded decreases. A) appreciates; more B) depreciates; more C) depreciates; less D) appreciates; less

The higher the exchange rate today, the A) smaller is the expected profit from buying foreign currency today and holding it. B) greater is the expected profit from buying U.S. dollars today and holding them. C) greater the quantity of U.S. dollars demanded in the foreign exchange market today. D) smaller is the expected profit from buying U.S. dollars today and holding them.

The ________ the exchange rate, the ________ are foreign-produced goods and hence the greater the quantity of dollars supplied. A) higher; more expensive B) lower; cheaper C) lower; more expensive D) higher; cheaper

Airbus is a European jet airline producer. Indian Airlines wants to buy 23 Airbus planes from Airbus, due to increased demand for world travel. As a result, the A) quantity demanded for euros increases as the euro/rupee exchange rate increases. B) demand curve for euros shifts leftward. C) demand curve for euros shifts rightward. D) quantity demand for euros decreases, on matter what the euro/rupee exchange rate is.

If the interest rate in the United States increases, then in the foreign exchange market the A) supply of U.S. dollars will increase. B) demand for U.S. dollars will increase. C) demand for U.S. dollars will decrease. D) demand for U.S. dollars will remain unchanged.

National saving is defined as the amount of A) business saving and household saving. B) private saving and government saving. C) household saving. D) business saving.

In the figure above, the shift in the supply curve for U.S. dollars from S0 to S2 could occur when A) the expected future exchange rate rises. B) foreign interest rates rise. C) the U.S. interest rate rises. D) the current exchange rate falls.

In the figure above, the shift in the demand curve for U.S. dollars from D0 to D2 could occur when A) the U.S. interest rate falls. B) people expect that the dollar will appreciate. C) the expected future exchange rate increases. D) foreign interest rates fall.

Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond A) falls from 10 percent to 6 percent. B) rises from 8 percent to 10 percent. C) falls from 10 percent to 8 percent. D) does not change because it is not affected by the price of the bond.

This year Pizza Hut makes a total investment of $1.3 billion in new stores. Its depreciation in this year is $300 million. Pizza Hut's gross investment is ________ and its net investment is ________. A) $1.3 billion; $1.0 billion B) $1.0 billion; $1.3 billion C) $1.3 billion; $1.6 billion D) $1.0 billion; $0.7 billion

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate ________ and the quantity of loanable funds ________. A) rises; decreases B) falls; decreases C) rises; increases D) falls; increases

When a government has a budget surplus, the surplus A) must be subtracted from private saving to get total saving. B) crowds-out private saving. C) increases the world real interest rate. D) helps finance investment.

The crowding out effect refers to A) government spending crowding out private investment. B) private saving crowding out government saving. C) government spending crowding out private spending. D) private investment crowding out government saving.

A decrease in the government budget deficit decreases the ________ loanable funds and an increase in the government budget surplus increases the ________ loanable funds. A) supply of; demand for B) demand for; supply of C) supply of; supply of D) demand for; demand for