If the United States exports military hardware, what is the effect in the exchange market?
a. It will increase the supply of U.S. dollars.
b. It will decrease the supply of U.S. dollars.
c. It will increase the demand for U.S. dollars.
d. It will decrease the demand for U.S. dollars.
Question 2The unemployment rate measures the number of unemployed people expressed as a percentage of the total population.
a. True
b. False
Indicate whether the statement is true or false
Question 3If you receive a dollar return of 6 percent on a one-year Korean bond that yields 10 percent annually, this means that between the purchase date and the time of maturity:
a. the Korean won (KRW) has depreciated 4 percent against the U.S. dollar.
b. the dollar price of the Korean won (KRW) has risen by 10 percent.
c. the percentage change in the dollar per Korean won exchange rate is 6 percent.
d. the dollar proceeds from the Korean bond are 4 percent higher than the initial dollar investment.
e. the dollar has depreciated 16 percent against the Korean won.
Question 4Which of the following will create a demand for or a supply of currencies?
a. Trade in goods
b. Trade in services
c. Trade in financial instruments
d. Any of the above.
Question 5The Employment Act of 1946 dictated the U.S. goal of maintaining high employment through high economic growth but did not specify any goals with regard to the price level.
a. True
b. False
Indicate whether the statement is true or false
Question 6Suppose a Japanese investor purchases a dollar deposit that yields 5 percent interest at the end of a year. What will be the approximate return in terms of yen at maturity if the exchange rate moves from 1 = 100 to 1 = 105 during the year?
a. 1 percent
b. 5 percent
c. 10 percent
d. 20 percent
e. 0 percent
Question 7On January 12, 2011, the U.S. dollar was worth 76.89 Japanese yen. Roughly how many U.S. dollars did it take to buy 50 yen?
a. 0.01
b. 0.65
c. 1.86
d. 3845
Question 8Nearly every society desires to achieve the macroeconomic goals of high employment, a stable price level, and high economic growth.
a. True
b. False
Indicate whether the statement is true or false
Question 9Suppose a U.S. citizen invests 1,000 to purchase a one-year Japanese bond that has an interest yield of 10 percent. If the dollar appreciates 20 percent against the Japanese yen by the maturity date, the dollar value of the proceeds is _____.
a. 900
b. 1,100
c. 1,300
d. 1,500
e. 1,200
Question 10On January 12, 2011, one U.S. dollar was worth 0.78 euros. How many U.S. dollars did it take to buy one euro?
a. 0.78
b. 1.28
c. 1.43
d. 1.70
Question 11Why might voters tend to be relatively uninformed about political issues?
Question 12An Australian investor buys a U.S. Treasury bond that has a price of 10,000 . pays 5 percent interest, and matures in a year. Between the purchase date and the maturity date, the exchange rate changes from 1 = AUD 5.0 to 1= AUD 5.2 . What will be the Australian investor's rate of return from the U.S. bond?
a. 4 percent
b. 7 percent
c. 9.2 percent
d. 12 percent
e. 25 percent
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