Question

30. When the dollar value of the Swiss franc was very high following the financial crisis in 2008: O the Swiss National Bank sold Swiss francs to increase its value. O Swiss exports were less expensive in the United States. O Swiss exports were more expensive in the United States. O the Swiss National Bank bought francs to decrease its value. 31. Which asset would be included in the U.S. current account? O a bond issued by a firm in Japan sold to someone in the United States a factory in Japan purchased by a firm in the United States O a dividend on stock in a U.S. company paid to someone in Japan O stock in a U.S. company sold to someone in Japan 32. If a country has a positive balance of payments on the current account, then it must: have a deficit on the financial account. be exporting too much. be importing too much. O have a surplus on the financial account. 37. Scenario: Japan and the United States Suppose that the interest rate in the United States is 4%, in Japan it is 7%, and financial assets in the two countries are equal in risk. Assuming that loans in Japan and the United States carry equal risk, this implies that: Japanese lenders will lend to U.S. borrowers. O U.S. lenders will lend to borrowers in Japan. the interest rate in Japan will increase further as compared to the U.S. interest rate. O the central bank of Japan has adopted a more expansionary monetary policy.

Answer 1

30. (c) Swiss exports were more expensive in the United States

EXPLANATION - If the dollar value of Swiss franc goes high, the dollar depreciates. Hence the demand of US dollars decrease , which increases the relative prices of Swiss goods and services in the US. Hence, Swiss exports would be more expensive in the US.