AP MACROECONOMICS Scoring Guide

Unit 6 Progress Check: MCQ

1. Which of the following is recorded in a country’s balance of payments accounts?

(A) The monthly payments by the country’s residents on domestic loans
(B) Financial capital flows between the country and the rest of the world
(C) The value added by each industry in the country at each stage of production
(D) The aggregate spending of the country’s residents on consumer goods
(E) Changes in the required reserve ratio determined by the country’s central bank

2. Which of the following transactions is recorded as a credit entry in the country’s current account?
(A) Imports of capital goods
(B) Exports of consumer goods
(C) Purchases of foreign government bonds
(D) Sales of domestic financial assets to foreign investors
(E) Income transfers from the country’s residents to recipients abroad

3.
Country X’s International Transactions, In Millions of
2018 Dollars
Exports 235
Imports 300
Net Income from Abroad 20
Net Unilateral Transfers

The table shows some of Country X’s balance of payments data for 2018. Which of the following is true about
Country X’s current account balance and financial capital flows?
(A) Country X has a current account deficit of million and has net financial capital inflows.
(B) Country X has a current account surplus of $65 million and has net financial capital outflows.
(C) Country X has a current account deficit of million and has net financial capital inflows.
(D) Country X has a current account surplus of $60 million and has net financial capital outflows.
(E) Country X has a current account surplus of $5 million and has net financial capital inflows.

4. Suppose that the exchange rate between the United States dollar ($) and the Thai currency, baht ฿ , is
฿ . Leticia wants to buy a ฿ souvenir from Thailand. What is the souvenir’s price in dollars?

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Unit 6 Progress Check: MCQ

(A)
(B)
(C)
(D)
(E)

5.
Year €
2015
2018

The table shows the exchange rate for the British pound against the dollar and the euro € in 2015 and
2018. Which of the following is true?
(A) The dollar has depreciated against the British pound.
(B) The British pound has depreciated against the dollar.
(C) The British pound has appreciated against the dollar.
(D) The British pound has depreciated against the euro.
(E) The euro has appreciated against the British pound.

6. The exchange rate for one Qatari riyal was 0.5 Turkish lira in 2012, and it increased to 1.25 Turkish lira in 2018.
Which of the following is true about the value of the Turkish lira in 2018 ?
(A) 1 Turkish lira 2 Qatari riyal, and the Turkish lira appreciated.
(B) 1 Turkish lira 1.75 Qatari riyal, and the Turkish lira appreciated.
(C) 1 Turkish lira 1.25 Qatari riyal, and the Turkish lira depreciated.
(D) 1 Turkish lira 0.8 Qatari riyal, and the Turkish lira depreciated.
(E) 1 Turkish lira 0.75 Qatari riyal, and the Turkish lira depreciated.

7. If the current exchange rate for one Swiss franc is 0.84 euro and the equilibrium exchange rate for one Swiss franc
is 0.88 euro, which of the following will occur in the flexible exchange market for the Swiss franc?
(A) There will be a shortage of euros.
(B) There will be a surplus of Swiss francs.
(C) The euro will appreciate.
(D) The Swiss franc will depreciate.
(E) The Swiss franc will appreciate.

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Unit 6 Progress Check: MCQ

8.

The graph shows the foreign exchange market for the British pound . If the exchange rate is $1.70, which of
the following is true?
(A) The British pound is in equilibrium.
(B) The surplus of British pounds will cause the British pound to depreciate.
(C) The shortage of British pounds will cause the British pound to depreciate.
(D) The surplus of British pounds will cause the British pound to appreciate.
(E) The shortage of British pounds will cause the British pound to appreciate.

9. Which of the following graphs correctly illustrates the foreign exchange market for the krone with an equilibrium
exchange rate of 1 Swedish krone Mexican peso?

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Unit 6 Progress Check: MCQ

(A)

(B)

(C)

(D)

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Unit 6 Progress Check: MCQ

(E)

10. Assuming the government of a country imposes a tariff on its imports of foreign goods, what is the likely effect on
the country’s currency in foreign exchange markets?
(A) The supply of the currency will increase and the currency will depreciate.
(B) The supply of the currency will increase and the currency will appreciate.
(C) The supply of the currency will decrease and the currency will appreciate.
(D) The demand for the currency will decrease and the currency will appreciate.
(E) The demand for the currency will increase and the currency will depreciate.

11. Assume Country X’s economy is experiencing high rates of inflation. Which of the following policies will control
the problem of inflation, and what is the consequent effect on the value of Country X’s currency in foreign
exchange markets?
A contractionary monetary policy will increase interest rates, which will cause the currency to
(A)
depreciate.
A contractionary monetary policy will increase interest rates, which will cause the currency to
(B)
appreciate.
An expansionary monetary policy will decrease interest rates, which will cause the currency to
(C)
appreciate.
An expansionary monetary policy will decrease interest rates, which will cause the currency to
(D)
depreciate.
An expansionary monetary policy will increase interest rates, which will cause the currency to
(E)
depreciate.

12. Assume that a nation’s government uses an expansionary fiscal policy to restore full employment. What effect will
the resulting change in the price level have on the supply and demand of the nation’s currency in the foreign
exchange market?
(A) The supply and demand will both increase.
(B) The supply and demand will both decrease.
(C) The supply will increase and the demand will decrease.
(D) The supply will decrease and the demand will increase.
(E) The supply will not change and the demand will decrease.

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Unit 6 Progress Check: MCQ

13. Which of the following will happen to aggregate demand in the United States if the United States dollar appreciates
in foreign exchange markets?
(A) Aggregate demand will decrease because net exports will decrease.
(B) Aggregate demand will decrease because imports will decrease.
(C) Aggregate demand will increase because exports will increase.
(D) Aggregate demand will increase because imports will decrease.
(E) Aggregate demand will increase because exports will decrease.

14. Japan and the United States are trading partners with flexible exchange rates. The currency of the United States is
the dollar, and the currency of Japan is the yen. Which of the following changes in the United States will most likely
increase aggregate demand in Japan?
(A) A decrease in the United States real gross domestic product
(B) A decrease in the United States price level
(C) A quota imposed by the United States on goods imported from Japan
(D) An appreciation of the United States dollar relative to the yen
(E) An increase in the demand for Japanese financial assets by American investors

15. Suppose that Angola’s economy is booming, resulting in an increase in the income of domestic residents. How will
the increase in income most likely affect Angolan net exports and the foreign exchange value of the Angolan
currency, the kwanza?
(A) Net exports will increase and the kwanza will appreciate.
(B) Net exports will decrease and the kwanza will appreciate.
(C) Net exports will increase and the kwanza will depreciate.
(D) Net exports will decrease and the kwanza will depreciate.
(E) Net exports will not change and the kwanza will depreciate.

16. How will an increase in private savings in the United States most likely affect financial capital flows and the value
of the dollar in foreign exchange markets?
(A) The United States will experience financial capital inflows, and the dollar will appreciate.
(B) The United States will experience financial capital inflows, and the dollar will depreciate.
(C) The United States will experience financial capital outflows, and the dollar will appreciate.
(D) The United States will experience financial capital outflows, and the dollar will depreciate.
The United States will experience no change in financial capital flows, and the value of the dollar will
(E)
not change.

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Unit 6 Progress Check: MCQ

17.

The loanable funds markets in Japan and Australia are in equilibrium, as shown in the graphs above. Which of the
following is most likely to happen?
(A) There will be financial capital outflows from Australia to Japan, and the Japanese yen will depreciate.
(B) There will be financial capital outflows from Australia to Japan, and the Japanese yen will appreciate.
There will be financial capital outflows from Japan to Australia, and the Australian dollar will
(C)
depreciate.
There will be financial capital outflows from Japan to Australia, and the Australian dollar will
(D)
appreciate.
There will be no change in financial capital flows between Australia and Japan, keeping the foreign
(E)
exchange rate unchanged.

18. Which of the following will most likely cause an inflow of financial capital to Canada?

(A) An increase in the Canadian federal budget deficit

(B) An increase in the Canadian money supply
(C) An increase in private savings in Canada
(D) An increase in taxes on investment in plant and equipment
(E) An increase in the real interest rates of Canada’s trading partners

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