FAC1602 ASSIGNMENT 5 EXAM SCRIPT 2026
QUESTIONS WITH COMPLETE ANSWERS
GRADED A+
◉ The graph above depicts supply and demand for U.S. dollars
during a trading day, where the quantity is millions of dollars. In
order to support a fixed exchange rate of 0.30 pounds per dollar, the
U.S. central bank must. Answer: sell 0.8 million dollars per trading
day.
◉ In an open economy, expansionary monetary policy will cause.
Answer: consumption, investment, and net exports to rise.
◉ Contractionary monetary policy should increase foreign financial
investment in the United States.. Answer: False
◉ Fiscal policy has a greater impact in a closed economy than it does
in an open economy.. Answer: True
◉ Ceteris paribus, an increase in the government budget deficit
increases interest rates in the United States and causes a real
appreciation of the dollar.. Answer: False
, ◉ If net exports are equal to net foreign investment,. Answer: ...
◉ In an open economy, the current account balance equals ________.
(Assume that the capital account is zero and net transfers are zero.).
Answer: net foreign investment
◉ Public saving equals taxes minus government spending minus
transfer payments.. Answer: True
◉ Refer to Figure 18-1. The appreciation of the dollar is represented
as a movement from. Answer: D to C.
◉ Ceteris paribus, a real depreciation of the dollar will decrease net
exports in the United States.. Answer: False
◉ Which of the following functions of money would be violated if
inflation were high?. Answer: store of value
◉ Which of the following information about fiat money is false? Fiat
money. Answer: is backed by gold.
◉ Gold is an example of. Answer: commodity money
◉ Fiat money. Answer: has no or very little value except as money.
QUESTIONS WITH COMPLETE ANSWERS
GRADED A+
◉ The graph above depicts supply and demand for U.S. dollars
during a trading day, where the quantity is millions of dollars. In
order to support a fixed exchange rate of 0.30 pounds per dollar, the
U.S. central bank must. Answer: sell 0.8 million dollars per trading
day.
◉ In an open economy, expansionary monetary policy will cause.
Answer: consumption, investment, and net exports to rise.
◉ Contractionary monetary policy should increase foreign financial
investment in the United States.. Answer: False
◉ Fiscal policy has a greater impact in a closed economy than it does
in an open economy.. Answer: True
◉ Ceteris paribus, an increase in the government budget deficit
increases interest rates in the United States and causes a real
appreciation of the dollar.. Answer: False
, ◉ If net exports are equal to net foreign investment,. Answer: ...
◉ In an open economy, the current account balance equals ________.
(Assume that the capital account is zero and net transfers are zero.).
Answer: net foreign investment
◉ Public saving equals taxes minus government spending minus
transfer payments.. Answer: True
◉ Refer to Figure 18-1. The appreciation of the dollar is represented
as a movement from. Answer: D to C.
◉ Ceteris paribus, a real depreciation of the dollar will decrease net
exports in the United States.. Answer: False
◉ Which of the following functions of money would be violated if
inflation were high?. Answer: store of value
◉ Which of the following information about fiat money is false? Fiat
money. Answer: is backed by gold.
◉ Gold is an example of. Answer: commodity money
◉ Fiat money. Answer: has no or very little value except as money.
