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CHAPTER 38 Exchange Rates, the Balance of Payments, and Trade Deficits Topic Question numbers ___________________________________________________________________________________________________ 1. Financing international trade 1-6 2. Balance of payments 7-55 3. Exchange rates 56-69 4. Floating exchange rates; fixed exchange rates 70-104 5. Gold standard 105-111 6. Bretton Woods system 112-114 7. Managed float 115-122 8. U.S. trade deficits 123-128 Last Word 129-131 True-False 132-149 ___________________________________________________________________________________________________ Multiple Choice Questions Financing international trade 1. U.S. export transactions create: A) a U.S. demand for foreign monies and the satisfaction of this demand decreases the supplies of dollars held by foreign banks. B) a U.S. demand for foreign monies and the satisfaction of this demand increases the supplies of dollars held by foreign banks. C) a foreign demand for dollars and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. D) a foreign demand for dollars and the satisfaction of this demand increases the supplies of foreign monies held by U.S. banks. 2. U.S. import transactions create: A) a foreign demand for dollars and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. B) a foreign demand for dollars and the satisfaction of this demand increases the supplies of foreign monies held by U.S. banks. C) a U.S. demand for foreign monies and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. D) a U.S. demand for foreign monies and the satisfaction of this demand increases the supplies of dollars held by foreign banks. Page 1 3. If a U.S. importer can purchase 10,000 pounds for $20,000, the rate of exchange is: A) $1 = 2 pounds in the United States. B) $2 = 1 pound in the United States. C) $1 = 2 pounds in Great Britain. D) $.5 = 1 pound in Great Britain. 4. Which of the following creates a supply of Canadian dollars in foreign exchange markets? A) a Frenchman redeems a bond issued by a Canadian manufacturer B) a Canadian exporter buys insurance from a U.S. firm C) an American student takes a summer trip to Canada D) a U.S. importer buys 500 cases of Canadian maple syrup 5. Other things equal, the financing of a U.S. export transaction: A) reduces U.S. interest rates. B) decreases the supplies of foreign currency held by United States banks. C) decreases GDP in the United States. D) increases the supplies of foreign currency held by U.S. banks. 6. Other things equal, the financing of a U.S. import transaction: A) increases the supplies of foreign currency held by United States banks. ... View Full Document

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