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The dollar was granted a reprieve yesterday from its recent slide against the mark 



1. "Traders said the dollar will probably ____ if non-farm payrolls rose in August by anything less than 110,000, but if the gain was between 140,000 and 200,000 traders might expect a mild reaction. If the figure comes in above 200,000, it may reassure the market that the Fed won't need to cut rates." From the information available, if nonfarm payrolls rose by less than 110,000 we would expect 
a) the dollar and bond prices to fall b) the dollar and bond prices to rise 
c) the dollar to fall and bond prices to rise d) the dollar to rise and bond prices to fall 
2. "During the past two years, the Clinton Treasury, which calls the shots on intervention in consultation with the Federal Reserve, has bought dollars on only 18 days. Through June, it had spent $12.5 billion. In contrast, the Bush Treasury intervened on 97 of 260 business days and sold a record $19.5 billion of dollars in 1989 alone, in an attempt to restrain the dollar's ____ against the yen and mark." 
a) Both the Clinton and the Bush Treasuries were trying to push the dollar up 
b) Both the Clinton and the Bush Treasuries were trying to push the dollar down 
c) The Clinton Treasury was trying to lower the dollar and the Bush Treasury was trying to raise it 
d) The Clinton Treasury was trying to raise the dollar and the Bush Treasury was trying to lower it. 
3." Trade in services is harder to understand because you can't see it, and indeed it is sometimes called _____ trade. For example, if a company uses a consultant based in another country, the payment made to the foreign consultant is considered an _____ in the services account." The blanks are best filled with 
a) fictional; import b) fictional; export c) invisible; import d) invisible; export. 
4. "Last year Argentina experienced robust growth and fiscal restraint, but some analysts continue to worry about its current account deficit which today is 4% of GDP. But this worry is wrong-headed, because this deficit is the result of the confidence of foreign investors in Argentina's new economic system." This deficit most probably came about because 
a) Argentina has a low real interest rate b) of a low Argentine money growth rate 
c) foreign investors are importing consumer goods 
d) capital inflows have increased the value of the Argentine currency 
5. "The dollar was granted a reprieve yesterday from its recent slide against the mark as talk of a rise in German interest rates cooled. But market participants were jittery because a key piece of U.S. economic data was coming their way today: the Labor Department's 110 
report on non-farm payrolls for April." An unexpectedly high level of non-farm payrolls would cause the U.S. dollar to 
a) increase because the Fed would be expected to react by raising interest rates 
b) increase because U.S. agricultural exports would be expected to increase 
c) decrease because the Fed would be expected to react by lowering interest rates 
d) decrease because U.S. agricultural exports would be expected to decrease




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