Answer True or False for each of the following. 1. High spending and low savings

ID: 1196374 • Letter: A

Question

Answer True or False for each of the following.

1. High spending and low savings in the U.S. helps cause our balance of payments issues.

2. President Carter took us off the gold exchange standard.

3. Most economists support a return to fixed exchange rates, such as the gold standard.

4. If the U.S. government wanted the dollar to rise it needs to sell dollars.

5. The gold standard pushed up interest rates in the late 1800s harming farmers.

6. An increase in the demand for the dollar can occur alone with no other currency changing.

7. The British pound was the central currency of the Bretton Woods system.

8. Speculators buy currencies not to use them but because they hope sell them later for a profit.

9. Semi-fixed exchange rate systems are when the government establishes a trading range for their currency rather than a set value.

10. If the yen rises in value relative to the dollar it makes Japanese goods cheaper to U.S. buyers.

1. True. Higher spending of US leads to more imports and thus balance of payment issues

2. False. President Nixon took us off the gold exchange standard.

3. False. Flexible exchange rate is generally promoted by economists

4. True. If the supply of dollars in market will increase, currency will appreciate

6. False

7. False. central curreny was US dollars

8. True. They hedge against the rise or fall in currency value in future

9. True

10. False, If Yen appreciates, it means the goods valued in Yen have got costlier. Thus Japanese goods will become costlier to US buyers

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