PS7 - Economics 102 Introductory Macroeconomics Spring 2004...

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I. Multiple Choice 1. Which one of the following decreases the price of the US dollar relative to the British pound? A) An increase in the supply of dollars. B) An increase in the demand for pounds. C) A decrease in the demand for dollars. D) All of the above. 2. Any transaction that causes foreign exchange to leave a country is a A) credit item in that country’s balance of trade. B) debit item in that country’s balance of payments. C) credit item in that country’s balance of payments. D) debit item in that country’s balance of trade. 3. A tariff imposed on imported shoes will cause the domestic price of shoes to __________ and the domestic production of shoes to ____________. A) increase; increase. B) increase; decrease. C) decrease; increase. D) decrease; decrease. 4. An increase in US imports from Mexico will __________ the supply of dollars and __________ the demand for pesos A) decrease; decrease. B) increase; increase. C) increase; decrease. D) decrease; increase. 5. Japan imports over 90% of its consumption of oil. If the price of oil increases, Japan’s A) aggregate demand curve shifts to the right. B) aggregate supply curve shifts to the right. C) aggregate supply curve shifts to the left. D) aggregate planed expenditures increase. 6. A US firm builds a factory in South Africa. This will be entered as A) debit in the US capital account. B) debit in the US current account. C) credit in the US capital account. D) credit in the US current account. Economics 102 Introductory Macroeconomics Spring 2004, Professor J. Wissink Problem Set 7 Due on May 6 no later than noon (that is, 12:00pm) DROP IN THE BOXES OUTSIDE THE DOORS OF YOUR TA’S OFFICES.
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II. Short Questions 1. Explain how the following situations affect the United States' balance of payments. a. A U.S. defense contractor sells its consulting services to a company in France. b.
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PS7 - Economics 102 Introductory Macroeconomics Spring 2004...

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