FINAL EXAM ANSWERS
Updated: Aug 17, 2022
The table shows the supply and demand schedules for the European euro. If European governments decided to fix the price of a euro at $0.80, they would have to
buy 286 euros.
buy 114 euros.
C. sell 114 euros.
D. sell 286 euros.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
Under a fixed exchange-rate system, which of the following will not occur if the demand for the local currency rises?
The central bank will accumulate foreign-exchange reserves.
The domestic money supply will increase.
C. As a result of the central bank’s actions to maintain the peg, a positive item appears in the balance-of-payments statement.
D. The economy will experience an increase in inflationary pressure.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
A declining amount of foreign-exchange reserves resulting from maintaining a pegged exchange rate would have which of the following effects?
a decrease in domestic money supply
a negative item entry in the balance of payments statement
rising inflationary pressure
an increase in the supply of local currency coming from this nation’s central bank
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
Under a fixed exchange-rate system, if the equilibrium exchange rate is continually and substantially below the fixed rate, that means that the local currency is overvalued relative to equilibrium. In this case, which of the following will not be a result of the central bank’s actions to maintain the peg?
The nation’s FX reserves will increase.
Domestic money supply will increase.
Inflationary pressure will increase.
D. The value of the local currency is artificially forced down.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
Under a fixed exchange-rate system, if the equilibrium exchange rate is continually and substantially below the fixed rate, that means that the local currency is overvalued relative to equilibrium. In this case, the central bank’s FX reserves will rise, and in response it has the following options, except
reset the peg lower.
abandon the peg altogether.
counterbalance the inflationary effects with sterilization operations.
D. allow and wait for the value of the local currency to rise.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
Under a fixed exchange-rate system, which of the following statements is true?
An overvalued currency at the pegged rate will tend to be inflationary.
B. A peg that overvalues the local currency is harder to maintain than one that undervalues it.
A fixed rate that undervalues the local currency (relative to equilibrium) will drain the nation’s FX reserves.
A nation’s central bank has exactly the same capacity to increase the value of its currency as it does to decrease it.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
To maintain a fixed exchange rate under a shortage of FX reserves, the government has the following options, except
encourage foreign investment inflows, and restrict foreign investment outflows.
B. encourage imports, and discourage exports.
impose exchange controls or capital controls.
use monetary or fiscal policies to reduce domestic spending.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
If China maintains a pegged exchange rate with the U.S. dollar, and the consequence is rising inflation, then the pegged value of the Chinese yuan must be
above the equilibrium $/yuan value.
discouraging Chinese exports in the world markets.
C. causing China to accumulate FX reserves.
D. exposing Chinese exporters and investors to the vagaries of the foreign exchange markets.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
When the nation’s FX reserves are rising, some would call it a "balance of payments surplus." This could happen as a result of any of the following except
the nation giving up assets to other nations.
the nation sending more products abroad than it brought in.
C. the economy becoming tremendously fortunate and strong.
D. other nations investing more in this nation than this nation is investing in others.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
The current monetary system for conducting international trade is usually described as a system of
fixed exchange rates.
freely floating exchange rates.
a managed gold standard.
D. managed floating exchange rates.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
Which system would be accompanied by occasional currency interventions by central banks to stabilize or alter rates to avoid persistent balance of payments deficits or surpluses?
the gold standard
fixed exchange rates
flexible exchange rates
D. managed floating exchange rates
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
The basic type of intervention by central banks under the managed floating exchange rate system is to readjust the peg for exchange rates.
B. buy and sell currencies to influence supply and demand for foreign exchange.
renegotiate the rate at which foreign currencies can be converted into gold.
make pronouncements but then do nothing and let the market set the exchange rate.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
Which of the following statements is not true in the current exchange-rate system?
Major currencies like the U.S. dollar, euro, pound, and yen operate mostly in a flexible system responding to supply and demand forces.
Some developing nations peg their currencies to the dollar and allow their currencies to fluctuate with it relative to other currencies.
C. Each country uses its own unique currency; for example, only the U.S. uses the U.S. dollar as its currency.
D. Many nations peg their currencies to a "basket," or group, of other currencies, rather than to a single other currency.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
Proponents of the managed floating exchange rate system argue that it has
added the volatility needed by the exchange rate market.
been effective because it is a "nonsystem" without fixed rules.
C. been sufficiently flexible to weather major economic turbulence.
D. resolved major problems in balance of payments surpluses and deficits.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
Critics of the managed floating exchange rate system argue that it
is dominated by G-8 nations.
B. is a "nonsystem" with unclear rules.
increased the growth in world trade at too fast a rate.
puts too much reliance on the adjustable-peg mechanism for stabilizing exchange rates.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
During the period 2002–2009, U.S. trade deficits
increased from 2002 to 2006 and increased even faster in the recession of 2007–2009.
initially decreased, but then increased significantly in the recession of 2007–2009.
C. increased from 2002 to 2006, but then decreased in the recession of 2007–2009.
D. decreased throughout the entire decade.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
As the economy recovers from a recession, economists expect its
imports to grow, and therefore its trade deficit would also grow.
exports to grow, and therefore its trade deficit would shrink.
imports and exports to grow at roughly the same rate, so its trade deficit will stay constant.
imports and exports to start declining. Therefore, its trade deficit will also decline a little bit.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
What are the effects on U.S. imports and exports when the U.S. experiences economic growth stronger than its major trading partners?
U.S. imports will increase more than U.S. exports.
U.S. exports will increase more than U.S. imports.
U.S. imports will decrease, but U.S. exports will increase.
There will be no effect on U.S. imports and exports.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Which one of the following is not a major factor that contributed to large trade deficits in the United States in the period 2002–2007?
a declining saving rate coupled with a rising investment rate in the U.S.
a U.S. economy growing faster than its trading partners
large trade deficits with OPEC economies
D. flexible exchange rate between the U.S. dollar and the Chinese yuan
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
What are two major outcomes from the large U.S. trade deficits?
an increase in domestic consumption and U.S. indebtedness
a decrease in domestic consumption and U.S. indebtedness
an increase in domestic consumption and a decrease in U.S. indebtedness
a decrease in domestic consumption and an increase in U.S. indebtedness
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
A trade deficit for the United States is generally financed by
lending to the federal government.
borrowing from the federal government.
buying securities or assets from other nations.
D. selling securities or assets to other nations.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
If the United States wants to regain ownership of domestic assets sold to foreigners, it will have to
increase domestic consumption.
increase its national debt.
C. export more than it imports.
D. import more than it exports.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Which of the following factors has helped maintain the large U.S. trade deficits over the years?
a decline in investment
B. capital and financial account surpluses
a decrease in economic growth
an increase in U.S. net exports
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
The trade deficit has had the effect of
decreasing the Federal budget deficit.
increasing economic growth in less-developed nations.
C. increasing direct foreign investment in the United States.
D. decreasing protectionist pressure among U.S. businesses.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
An inflow of investment funds into the United States from overseas is likely to result from a(n)
decline in expectations for economic growth in the United States.
growing belief among investors that the U.S. dollar ($) is overvalued.
C. rise in U.S. interest rates relative to world interest rates.
D. increase in the U.S. inflation rate.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
280.
The table shows the supply and demand schedules for the European euro. If the U.S. government decided to fix or peg the price of the euro at $1.00, it would have to
A. buy 100 euros.
buy 360 euros.
sell 160 euros.
sell 360 euros.
Comparing what the United States owes to other nations against what other nations owe to the United States, the United States is currently a(n)
net creditor.
B. net debtor.
international banking asset.
international banking liability.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Which of the following was not something that several European nations did or experienced when they became members of the eurozone?
They eliminated their own local currencies and adopted a single common currency.
They in essence fixed their exchange rates with one another, at a 1-to-1 peg.
C. Cross-border trade among members suffered a huge decline.
D. They gave up control of their own individual monetary policy.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
If several nations decide to adopt and use a common currency, then each of these nations would lose the following, except
the ability to set its own interest rates.
B. the ability to set its own tax rates.
control of its own exchange rate.
the use of "external adjustment" tools to deal with current-account balance problems.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
True / False Questions
U.S. exports to Japan create a supply of dollars and a demand for yen in the foreign exchange market.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-01 Explain how currencies of different nations are exchanged when international transactions take place.
Test Bank: II Topic: International Financial Transactions
People will have to exchange their currency for another only when they do exporting or importing.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-01 Explain how currencies of different nations are exchanged when international transactions take place.
Test Bank: II Topic: International Financial Transactions
The current account portion of a nation's balance of payments statement includes net investment income.
TRUE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
The U.S. often has a significant surplus in services trade, even though it has a deficit in goods trade.
TRUE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
The flow of payments for purchases and sale of financial assets is included in the current account balance of a nation.
FALSE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
In the balance of payments statement, a current account deficit is always matched by a capital and financial accounts surplus.
TRUE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
When a nation is experiencing a balance-of-payments deficit, its treasury or central bank will engage in a net sale of its official reserves.
TRUE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
The purchase of a foreign hotel by a U.S. company is recorded as a credit in the financial account of the U.S. balance-of-payments statement.
FALSE
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 21-02 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
Test Bank: II Topic: The Balance of Payments
In the dollar/yen market, if the supply of yen increases, other things being equal, the dollar will appreciate.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-03 Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
Test Bank: II Topic: Flexible Exchange Rates
Relatively high rates of U.S. inflation compared to other countries will increase the supply of, and decrease the demand for, dollars in foreign exchange markets.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-03 Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
Test Bank: II Topic: Flexible Exchange Rates
The purchasing-power-parity theory holds that exchange rates should equalize the inflation rates among the trading nations.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-03 Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
Test Bank: II Topic: Flexible Exchange Rates
The expectations of speculators in the United States that the exchange rate for the euro will fall in the future will increase the supply of euros in the foreign exchange market and decrease the exchange rate for the euros.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-03 Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
Test Bank: II Topic: Flexible Exchange Rates
If a nation has a balance of payments deficit and exchange rates are flexible, the price or value of that nation's currency in the foreign exchange markets will rise.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-03 Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
Test Bank: II Topic: Flexible Exchange Rates
Fixed exchange rates usually provide more certainty to those engaged in international trade.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
To keep the exchange rate constant, an increase in the demand for a country's currency should be matched by a corresponding increase in supply to be administered by the government.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
If nations adopt a gold standard where various countries' money supply is tied to gold, then there will in effect be a fixed exchange-rate system.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-04 Describe the differences between flexible and fixed exchange rates, including how changes in foreign exchange reserves bring about automatic changes in the domestic money supply under a fixed exchange rate.
Test Bank: II Topic: Fixed Exchange Rates
The exchange-rate system that we now have for major currencies like the U.S. dollar, yen, and euro is a "managed-floating" system.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
Several countries in the world today peg their currencies to the U.S. dollar, causing those currencies' values to fluctuate as the U.S. dollar fluctuates.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 21-05 Explain the current system of managed floating exchange rates.
Test Bank: II Topic: The Current Exchange Rate System: The Managed Float
One of the causes of the rising trade deficits of the past decade has been a declining saving rate in the United States.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
At the time when a trade deficit is occurring, U.S. consumers benefit from having more goods and services available.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Improved economic growth in the major trading partners of the United States would reduce its trade deficit.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Faster economic growth in the United States relative to other nations tends to worsen the U.S. trade deficit.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 21-06 Identify the causes and consequences of recent U.S. trade deficits.
Test Bank: II Topic: Recent U.S. Trade Deficits
Chapter 22 The Economics of Developing Countries Answer Key
Multiple Choice Questions
According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?
24 percent
38 percent
60 percent
D. 75 percent
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 22-01 Describe how the World Bank distinguishes between industrially advanced countries and developing countries.
Test Bank: I Topic: The Rich and the Poor
Approximately what percentage of the world's income is received by the poorest one-fifth of the world's population?
A. 2
5
7
10
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 22-01 Describe how the World Bank distinguishes between industrially advanced countries and developing countries.
Test Bank: I Topic: The Rich and the Poor
3.
Which of the given nations would be low-income developing countries (DVCs), according to the World Bank?
A. country A only
countries A, D, and E
countries A and E
countries A, B, D, and E
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 22-01 Describe how the World Bank distinguishes between industrially advanced countries and developing countries.
Test Bank: I Topic: The Rich and the Poor
Type: Table
4.
Which of the given nations would be middle-income developing countries (DVCs), according to the World Bank?
country E only
countries A, D, and E
C. countries D and E
D. country D only
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 22-01 Describe how the World Bank distinguishes between industrially advanced countries and developing countries.
Test Bank: I Topic: The Rich and the Poor
Type: Table
5.
Which of the given nations would be high-income countries (IACs), according to the World Bank?
country C only
countries B, C, and D
countries B, C, D, and E
D. countries B and C
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 22-01 Describe how the World Bank distinguishes between industrially advanced countries and developing countries.
Test Bank: I Topic: The Rich and the Poor
Type: Table