Unit 6 check
Unit 6 check: Open Economy—International Trade and Finance
10 questions from 6 lessons in Unit 6. Answer each one, and if you miss, follow the link back to where it is taught, then try again. Your score counts first tries.
Question 1 · from 6.1 · Match
Each transaction is recorded in Mirovia's current account. Tap a part of the current account, then tap the transaction that belongs in it.
Question 2 · from 6.2 · Calculate
A ceramics studio in Portugal prices a hand-painted serving bowl at 40 euros. The exchange rate is 1.25 U.S. dollars per euro. What does the bowl cost a buyer in the United States, in dollars?
Question 3 · from 6.3 · Fill the statement
Tap a blank, then tap a phrase.
On a correctly labeled graph of the foreign exchange market for Thai baht, traded against the U.S. dollar, the vertical axis is and the horizontal axis is . The equilibrium exchange rate is the rate at which .
Question 4 · from 6.4 · Decide and justify
Solvany has a flexible exchange rate. The escudo, Solvany's currency, trades against the shilling of its main trading partner and has appreciated sharply, and Solvany's central bank wants to push its value back down by trading in the foreign exchange market. Should it buy escudos or sell escudos?
Which reason supports your choice?
Setup for question 5
Mendra, a fictional country, trades with the United States under a flexible exchange rate. Mendra's statistics office reported these figures for two years. Each price is what the seller charges in its own currency.
| Measure | Year 1 | Year 2 |
|---|---|---|
| Exchange rate (Mendran rials per U.S. dollar) | 40 | 50 |
| Price of a Mendran wool rug (rials) | 20,000 | 20,000 |
| Price of a U.S.-made farm drone (dollars) | 1,500 | 1,500 |
Question 5 · from 6.5 · Calculate
Using Mendra's table, by how many U.S. dollars does the price of a Mendran wool rug fall for a buyer in the United States from Year 1 to Year 2?
Question 6 · from 6.6 · Spot the error
Real interest rates in Torvald rise while real rates in other countries do not change. A student explained what follows. Tap the first line with a mistake.
Question 7 · from 6.1 · Sort it
Each transaction is recorded in Mirovia's balance of payments. Tap a transaction, then tap where Mirovia records it.
Current account credit
Current account debit
Capital and financial account credit
Capital and financial account debit
Question 8 · from 6.2 · Multiple choice
The U.S. dollar appreciates against the Japanese yen. Which of these must be true?
Question 9 · from 6.3 · Calculate
Ostavia, a fictional country, uses a currency called the ducat, and its exchange rate with the U.S. dollar is flexible. In the market for ducats, quantity demanded is Qd = 1,500 - 250e and quantity supplied is Qs = 250e - 500, where e is the exchange rate in dollars per ducat and both quantities are in millions of ducats a day. The equilibrium rate is 4 dollars per ducat. Suppose the rate is 4.80 dollars per ducat for a moment. How large is the surplus of ducats, in millions?
Setup for question 10
Duvessa, a fictional country with a flexible exchange rate, sharply raised government spending in Year 2 and borrowed to pay for it. Its currency is the pound. In the countries Duvessa trades with, price levels, incomes and real interest rates did not change. Duvessa's statistics agency reported:
| Measure | Year 1 | Year 2 |
|---|---|---|
| Real GDP (billions of base-year pounds) | 640 | 662 |
| Price level (Year 1 = 100) | 100 | 104 |
| Real interest rate | 2.0% | 3.4% |
Question 10 · from 6.4 · Decide and justify
Based solely on the change in Duvessa's real interest rate from Year 1 to Year 2, what happens to the value of the pound in the foreign exchange market?
Which reason supports your choice?
0 of 10 answered.