The major difference between the balance of payments and the foreign exchange market is that:
a. Actually, there is no difference. All sources of funds in the balance of payments are demands for foreign exchange and all uses of funds in the balance of payments are supplies of foreign exchange.
b. Actually, there is no difference. All sources of funds in the balance of payments are supplies of foreign exchange and all uses of funds in the balance of payments are demands of foreign exchange.
c. The balance of payments includes many more transactions than are included in the foreign exchange market.
d. The foreign exchange market includes many more transactions than are in the balance of payments.
.C
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Indicate whether the statement is true or false
If the United States looks more economically and politically stable relative to the rest of the world, this will
A) decrease the demand for dollars. B) increase the demand for dollars. C) have no effect on the demand for dollars. D) stop all trading between the currencies of the United States and other countries.
If the economy in the graph shown were at point B, and the government wished to bring the economy back to its long-run equilibrium, it might:
A. increase income tax. B. decrease tax credits. C. increase government spending. D. All of these would move the economy to its potential GDP from point B.
Answer the following questions true (T) or false (F)
1. Mortgage-backed securities are groups of mortgages that are bundled together and sold to investors. 2. Economies cannot function without money. 3. If gold is used as money in an economy, the money supply is easy to control.