8. When a Denver resident purchases a Coors beer (brewed and bottled in the USA)

Question

8. When a Denver resident purchases a Coors beer (brewed and bottled in the USA), this represents a a. Capital account transaction b. Direct foreign investment c. Current account transaction d. Domestic-only transaction 9. When a Denver resident purchases a shirt imported from China, this represents a: a. Capital account transaction b. Current account transaction c. Direct foreign investment d. Domestic-only transaction 10. When Nike develops a new production facility in China, this represents a a. Capital account transaction b. Domestic-only transaction c. Current account transactiorn d. Direct foreign investment 11. Assume the starting exchange rate equals $1 -1.06 and a year later equals $1-1.13. During this time period: The dollar and euro have both depreciated The dollar and euro have both appreciated The dollar has depreciated and euro has appreciated The dollar has appreciated and euro has depreciated a. b. c. d. 12. In January 2001, $1 was equal to 1.06 euro. By January 2012, S1 was worth 0.76 euro. As a result of the change in the value of the dollar a. The prices of imports from Europe decreased and the prices of U.S. exports to European consumers b. The prices of imports from Europe increased and the prices of U.S. exports to European consumers c. The prices of imports from Europe decreased and the prices of U.S. exports to European consumers d. The prices of imports from Europe increased and the prices of U.S. exports to European consumers increased decreased decreased ncreased 13. China pegs it currency to the dollar. As a result: a. The dollar is undervalued and this helps to lower the price of U.S. exports to China's consumers b. The dollar is overvalued and this lowers the price of China's exports to U.S. consumers c. The dollar is undervalued and this helps to increase the price of U.S. exports to China's consumers d. The dollar is overvalued and this increases the price of China's exports to U.S. consumers 14. If a country wishes to maintain a higher value of the US dollar in relation to its domestic currency than set in the spot market, the country will Do nothing more than declare the desired exchange rate b. a. Increase demand for the dollar in foreign exchange markets Increase demand for its domestic currency in foreign exchange markets c. d. Increase the supply the dollar in foreign exchange markets 15. The current account is equal to a. Exports minus imports b. Savings minus consumption c. Imports plus exports d. Savings plus exports

Explanation / Answer

8. Since Denver is in USA this is a Domesticonly transaction.

Thus the correct option is (d).

9. This is a current account transaction since current account takes into account the Physical goods and services transaction.

Thus the correct option is(b).

10. This is an FDI in China. Thus the correct option is (d)

11. More Euros required to purchase one dollar now. Or the other way round fewer dollars needed to purchase one dollar thus Dollar appreciated while Euro depreciated.

The correct option is (d)

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