ECO 2013 Exam 3 COMPLETE EXAM LATEST
VERSION 2026-2027 QUESTIONS AND ANSWERS
Which of the following is NOT an effect from a change in the federal funds rate?
A. change in the quantity of money
B. change in investment
C. change in government expenditures
D. change in aggregate demand
E. change in the real interest rate - answer>>C. change in government expenditures
If the Fed buys U.S. government securities, A.
the federal funds rate will fall.
B. bank reserves will decrease.
C. the discount rate will fall
D. the discount rate will rise.
E. the federal funds rate will rise. - answer>>A. the federal funds rate will fall.
The capital and financial account is the record of _____ minus US investment abroad.
A. foreign investment in the United States
B. foreign exchange reserves in the United States
C. official lending to foreign countries
D. interests and transfers to foreign countries - answer>>A. foreign investment in the United States
When the U.S. dollar rises in value relative to the Mexican peso, the dollar has ________ and when the
dollar falls in value, it has ________.
A. grown; shrunk
B. appreciated; depreciated
C. been bullish; been bearish
,D. depreciated; appreciated
E. grown; shrunken - answer>>B. appreciated; depreciated
________ increases the supply of dollars in the foreign exchange market.
A. A fall in the interest rate in the U.S. relative to the interest rate in other countries
B. A rise in the interest rate in the U.S. relative to the interest rate in other countries
C. A rise in the expected future exchange rate
D. A decrease in the exchange rate
E. An increase in the exchange rate - answer>>A. A fall in the interest rate in the U.S. relative to the
interest rate in other countries
The exchange rate between the United States and Japan A.
fluctuates, sometimes rising and sometimes falling.
B. does not exist.
C. consistently increases over time.
D. consistently decreases over time.
E. is fixed so it does not change. - answer>>A. fluctuates, sometimes rising and sometimes falling.
If the U.S. interest rate differential falls, then the exchange rate ________.
A. definitely rises
B. rises only if it was the foreign interest rate that changed
C. definitely falls
D. does not change
E. falls only if it was the U.S. interest rate that changed - answer>>C. definitely falls
What is a fixed exchange rate and how is its value fixed?
A fixed exchange rate is one that _______. A fixed exchange rate is achieved _______.
A. is set by the government or the central bank; by central bank intervention in the
foreign exchange market
, B. is determined by demand and supply in the foreign exchange
market; with no direct intervention by the central bank
C. follows a path determined by the government or the central bank;
by the central bank buying or selling domestic currency in the foreign
exchange market D. is set by the government or the central bank;
by the intervention of market traders in the foreign exchange market - answer>>A. is set by the
government or the central bank; by central bank intervention in the foreign exchange market
What is a flexible exchange rate and how does it work?
A flexible exchange rate is one that _______. It works _______.
A. is determined by demand and supply in the foreign exchange market;
with no direct intervention by the central bank unless the exchange rate falls below or rises above a
target value
B. is determined by demand and supply in the foreign exchange market; with no direct intervention by
the central bank
C. sets the exchange rate by decision of the government or the central bank;
by central bank intervention in the foreign exchange market to block the unregulated forces of demand
and supply
D. follows a path determined by a decision of the government or the central bank;
by central bank intervention in the foreign exchange market - answer>>B. is determined by demand and
supply in the foreign exchange market; with no direct intervention by the central bank
The current account is the record of receipts from _____ other countries, minus _____ other countries,
plus the net amount of _____ received from and paid to other countries.
A. payments for goods and services bought from; the sale of goods and services to other countries;
wages and transfers
B. record of foreign investment in; transfer payments to; capital
C. the sale of goods and services to other countries; payments for goods and services bought from;
interest and transfers
D. official lending to; record of foreign investment in;
VERSION 2026-2027 QUESTIONS AND ANSWERS
Which of the following is NOT an effect from a change in the federal funds rate?
A. change in the quantity of money
B. change in investment
C. change in government expenditures
D. change in aggregate demand
E. change in the real interest rate - answer>>C. change in government expenditures
If the Fed buys U.S. government securities, A.
the federal funds rate will fall.
B. bank reserves will decrease.
C. the discount rate will fall
D. the discount rate will rise.
E. the federal funds rate will rise. - answer>>A. the federal funds rate will fall.
The capital and financial account is the record of _____ minus US investment abroad.
A. foreign investment in the United States
B. foreign exchange reserves in the United States
C. official lending to foreign countries
D. interests and transfers to foreign countries - answer>>A. foreign investment in the United States
When the U.S. dollar rises in value relative to the Mexican peso, the dollar has ________ and when the
dollar falls in value, it has ________.
A. grown; shrunk
B. appreciated; depreciated
C. been bullish; been bearish
,D. depreciated; appreciated
E. grown; shrunken - answer>>B. appreciated; depreciated
________ increases the supply of dollars in the foreign exchange market.
A. A fall in the interest rate in the U.S. relative to the interest rate in other countries
B. A rise in the interest rate in the U.S. relative to the interest rate in other countries
C. A rise in the expected future exchange rate
D. A decrease in the exchange rate
E. An increase in the exchange rate - answer>>A. A fall in the interest rate in the U.S. relative to the
interest rate in other countries
The exchange rate between the United States and Japan A.
fluctuates, sometimes rising and sometimes falling.
B. does not exist.
C. consistently increases over time.
D. consistently decreases over time.
E. is fixed so it does not change. - answer>>A. fluctuates, sometimes rising and sometimes falling.
If the U.S. interest rate differential falls, then the exchange rate ________.
A. definitely rises
B. rises only if it was the foreign interest rate that changed
C. definitely falls
D. does not change
E. falls only if it was the U.S. interest rate that changed - answer>>C. definitely falls
What is a fixed exchange rate and how is its value fixed?
A fixed exchange rate is one that _______. A fixed exchange rate is achieved _______.
A. is set by the government or the central bank; by central bank intervention in the
foreign exchange market
, B. is determined by demand and supply in the foreign exchange
market; with no direct intervention by the central bank
C. follows a path determined by the government or the central bank;
by the central bank buying or selling domestic currency in the foreign
exchange market D. is set by the government or the central bank;
by the intervention of market traders in the foreign exchange market - answer>>A. is set by the
government or the central bank; by central bank intervention in the foreign exchange market
What is a flexible exchange rate and how does it work?
A flexible exchange rate is one that _______. It works _______.
A. is determined by demand and supply in the foreign exchange market;
with no direct intervention by the central bank unless the exchange rate falls below or rises above a
target value
B. is determined by demand and supply in the foreign exchange market; with no direct intervention by
the central bank
C. sets the exchange rate by decision of the government or the central bank;
by central bank intervention in the foreign exchange market to block the unregulated forces of demand
and supply
D. follows a path determined by a decision of the government or the central bank;
by central bank intervention in the foreign exchange market - answer>>B. is determined by demand and
supply in the foreign exchange market; with no direct intervention by the central bank
The current account is the record of receipts from _____ other countries, minus _____ other countries,
plus the net amount of _____ received from and paid to other countries.
A. payments for goods and services bought from; the sale of goods and services to other countries;
wages and transfers
B. record of foreign investment in; transfer payments to; capital
C. the sale of goods and services to other countries; payments for goods and services bought from;
interest and transfers
D. official lending to; record of foreign investment in;
