Answer the following statements true (T) or false (F)
1. When U.S. citizens travel on United Airlines to Japan, this constitutes a debit in the U.S. balance of payments.
2. The financial account includes income earned on investments made in prior years.
3. When a U.S. citizen buys goods from a foreign merchant, the goods are usually paid for by having the U.S. citizen send a personal check or dollars directly to the exporter.
4. Although prices in the United States and France may be stable, changes in the exchange rate between dollars and euros can make the actual cost of trade more expensive for one or the other.
5. As the price of foreign exchange increases in terms of the U.S. dollar, U.S. products become cheaper for foreigners to buy.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
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If the price elasticity of demand for a product is 2.5, then a price increase of 1.5 percent decreases the quantity demanded by
A) 1.55 percent. B) 3.50 percent. C) 5.00 percent. D) 3.75 percent. E) 1.00 percent.
In the long run, if the money supply increases: a. most of the resulting rise in nominal GDP will be a result of increases in the exchange rate. b. most of the resulting rise in nominal GDP will be a result of increases in the price level. c. most of the resulting rise in real GDP will be a result of increases in the price level
d. most of the resulting rise in real GDP will be a result of increases in the interest rate. e. most of the resulting rise in real GDP will be a result of increases in aggregate expenditure.