DQuestion 3 1 pts The following table contains hypothetical data for the U.S. ba

Question

DQuestion 3 1 pts The following table contains hypothetical data for the U.S. balance of payments in a particular year. Answer the next question on the basis of this information. 1. Balance on goods and services: $379 billion 2. Balance on financial account 3. Balance on capital account: Refer to the above data. The U.S. balance on capital and financial account is: $3 billion $430 billion O a deficit of $48 billion. O deficit of $382 billion O surplus of $427 billion. O surplus of $433 billion. D Question l pies If the dollar price of one euro is increased from $1-1 to $1.5-1, then we can say: O The dollar has appreciated relative to the euro. O The dollar has depreciated relative to the euro. O The euro has depreciated relative to the dollar. The euro price of dollar has increased.

Explanation / Answer

(Question 3) Option (3)

Balance on capital and financial account ($ Billion) = 430 - 3 = 427

Since the balance is positive, there is a surplus.

(Question 4) Option (2)

With initial exchange rate, 1 euro could buy 1 dollar, but with new exchange rate, 1 euro can buy 1.5 dollars, which means that euro has gained in value (appreciated), therefore dollar has depreciated relative to euro.

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