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.Management Sciences
Category: Exchange-Rate Adjustments And The Balance of
If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?
A. should increase the dollar value of exports
B. should not have any effect on the dollar value of U.S imports
C. must increase the balance of trade
D. All of the above
Because of the J curve effect and partial currency pass through, a depreciation of the domestic currency tends to increase the size of a ?
A. trade surplus in the short run
B. trade surplus in the long run
C. trade deficit in the short run
D. trade deficit in the long run
According to the Marshall-Lerner condition if a country’s currency depreciates its trade balance will worsen if ?
A. elasticity of demand for exports = 0.9; elasticity of demand for imports = 0.4
B. elasticity of demand for exports = 0.7; elasticity of demand for imports = 0.3
C. elasticity of demand for exports = 0.5; elasticity of demand for imports = 0.7
D. elasticity of demand for exports = 0.3; elasticity of demand for imports = 0.6
The shorter the ______ pass through period the ______ the desirable BOT effects of evaluation on quantities traded will appear ?
A. sooner
B. longer
C. bigger
D. smaller
The balance of trade can only worsen if income ____ relative to absorption ?
A. increases
B. decreases
C. does not change
D. None of the above
Complete currency pass through arises when a 10 percent depreciation in the value of the dollar causes U.S?
A. import prices to fall by 10 percent
B. import prices to rise by 10 percent
C. export prices to rise by 10 percent
D. export prices to fall by 10 percent
Empirical evidence regarding in the effects of currency depreciation on the balance of trade indicates that?
A. depreciation generally improves the trade balance
B. depreciation generally hurts the trade balance
C. no strong generalization is possible
D. depreciation has no effect on the trade balance
If foreign manufacturing costs and profit margins in response to a depreciation in the U.S dollar the effect of these actions is to ?
A. shorten the amount of time in which the depreciation leads to smaller trade deficit
B. shorten the amount of time in which the depreciation leads to smaller trade surplus
C. lengthen the amount of time in which the depreciation leads to smaller trade deficit
D. lengthen the amount of time in which the depreciation leads to smaller trade surplus
The analysis considers the ability of domestic and foreign price of adjust to devaluation in the short run ?
A. pass through
B. absorption
C. adjustment mechanism
D. currency contract period
The extent to which a change in the exchange rate leads to changes in import and export prices is known as the ?
A. J Curve effect
B. Marshall Lerner effect
C. absorption effect
D. pass through effect
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