Question 1

Other things the same,which of the following would both make Americans more willing to buy Italian goods?

Accepted Answer

A)   the nominal exchange rate falls,the price of goods in Italy falls
B)   the nominal exchange rate falls,the price of goods in Italy rises
C)   the nominal exchange rate rises,the price of goods in Italy falls
D)   the nominal exchange rate rises,the price of goods in Italy risesE) B) and C)
F) A) and D)

Question 2

If U.S.consumers increase their demand for apples from New Zealand,then other things the same New Zealand's

Accepted Answer

A)   imports and net exports rise.
B)   imports rise and net exports fall.
C)   exports and net exports rise.
D)   exports rise and net exports fall.E) B) and C)
F) A) and B)

Question 3

Suppose that purchases of Irish assets by foreigners exceed Irish purchase of foreign assets.Ireland has

Accepted Answer

A)   positive net capital outflow and a trade surplus.
B)   positive net capital outflow and a trade deficit.
C)   negative net capital outflow and a trade surplus.
D)   negative net capital outflow and a trade deficit.E) None of the above
F) A) and C)

Question 4

A Big Mac in Japan costs 240 yen while it costs $3 in the U.S..The nominal exchange rate is 100 yen per dollar.Which of the following would both make the real exchange rate move towards purchasing-power parity?

Accepted Answer

A)   the price of Big Macs in the U.S.falls,the nominal exchange rate falls
B)   the price of Big Macs in the U.S.falls,the nominal exchange rate rises
C)   the price of Big Macs in the U.S.rises,the nominal exchange rate falls
D)   the price of Big Macs in the U.S.rises,the nominal exchange rate risesE) B) and D)
F) C) and D)

Question 5

After 1980 in the United States,

Accepted Answer

A)   national saving fell below investment and net capital outflow was a large positive number.
B)   national saving fell below investment and net capital outflow was a large negative number.
C)   investment fell below saving and net capital outflow was a large positive number.
D)   investment fell below saving,so net capital outflow was a large negative number.E) B) and D)
F) All of the above

Question 6

If the real exchange rate is less than 1,then the

Accepted Answer

A)   nominal exchange rate x U.S.price > foreign price.The dollars required to purchase a good in the U.S.would buy more then enough foreign currency to buy the same good overseas.
B)   nominal exchange rate x U.S.price > foreign price.The dollars required to purchase a good in the U.S.would not buy enough foregoing currency to buy the same good overseas.
C)   nominal exchange rate x U.S.price 
D)   nominal exchange rate x U.S.price < foreign price.The dollars required to purchase a good in the U.S.would not buy enough foreign currency to buy the same good overseas.E) A) and D)
F) All of the above

Question 7

When a company from Germany builds an automobile factory in the United States,the German firm has engaged in foreign direct investment.

Accepted Answer

A) True 
 B)False

Question 8

If a country changes its corporate tax laws so that foreign businesses build and manage more business in that country,then that net capital outflow of that country

Accepted Answer

A)   and the net capital outflow of other countries rise.
B)   rises and the net capital outflow of other countries fall.
C)   falls and the net capital outflow of other countries rise.
D)   None of the above are correct.E) C) and D)
F) A) and C)

Question 9

If Thailand has a trade surplus,then

Accepted Answer

A)   foreign countries purchase more Thai assets than Thailand purchases from them.This makes Thai saving greater than Thai domestic investment.
B)   foreign countries purchase more Thai assets than Thailand purchases from them.This makes Thai saving smaller then Thai domestic investment
C)   foreign countries purchase fewer Thai assets than Thailand purchases from them.This makes Thai saving greater than Thai domestic investment.
D)   foreign countries purchase fewer Thai assets than Thailand purchases from them.This makes Thai saving greater than Thai domestic investment .E) A) and D)
F) B) and C)

Question 10

A country has $50 million of domestic investment and net capital outflow of $15 million.What is saving?

Accepted Answer

A)   $65 million.
B)   -$65 million.
C)   $35 million.
D)   -$35 million.E) None of the above
F) A) and B)

Question 11

One year a country has negative net exports.The next year it still has negative net exports and imports have risen more than exports.

Accepted Answer

A)   its trade surplus fell.
B)   its trade surplus rose.
C)   its trade deficit fell.
D)   its trade deficit roseE) A) and B)
F) None of the above

Question 12

Other things the same,a country could move from having a trade deficit to having a trade surplus if either

Accepted Answer

A)   saving rose or domestic investment rose.
B)   saving rose or domestic investment fell.
C)   saving fell or domestic investment rose.
D)   saving fell or domestic investment fell.E) All of the above
F) A) and C)

Question 13

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund,U.S.net capital outflow

Accepted Answer

A)   increases because an American company makes a portfolio investment in Germany.
B)   declines because an American company makes a portfolio investment in Germany.
C)   increases because an American company makes a direct investment in Germany.
D)   declines because an American company makes a direct investment in Germany.E) B) and C)
F) A) and C)

Question 14

Over the past five decades,the U.S.economy has become

Accepted Answer

A)   more closed.
B)   more open.
C)   less trade-oriented.
D)   more self-sufficient.E) B) and C)
F) None of the above

Question 15

In the U.S.a digital camera costs $150.The same camera in London sells for 60 pounds.If the exchange rate is .50 pounds per dollar,then which of the following is correct?

Accepted Answer

A)   The real exchange rate is greater than 1.A person in London with $150 could exchange them for pounds and have more than enough to buy the camera there.
B)   The real exchange rate is greater than 1.A person in London with $150 could exchange them for pounds but then wouldn't have enough to buy the camera there.
C)   The real exchange rate is less than 1.A person in London with $150 could exchange them for pounds and have more than enough to buy the camera there.
D)   The real exchange rate is less than 1.A person in London with $150 could exchange them for pounds but then wouldn't have enough to buy the camera.E) A) and D)
F) A) and B)

Question 16

In which period was most of the change in U.S.net capital outflow due to an increase in investment in the U.S.?

Accepted Answer

A)   1980-1987
B)   1991-2000
C)   2000-2006
D)   None of the above are correct.E) B) and C)
F) B) and D)

Question 17

If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos,then the forecast is given in

Accepted Answer

A)   real terms and implies the dollar will appreciate.
B)   real terms and implies the dollar will depreciate.
C)   nominal terms and implies the dollar will appreciate.
D)   nominal terms and implies the dollar will depreciate.E) B) and D)
F) A) and C)

Question 18

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate?

Accepted Answer

A)   a decrease in the quantity of Kenyan currency that can be purchased with a dollar
B)   a decrease in the price of U.S.baskets of goods
C)   a decrease in the price in Kenyan currency of Kenyan goods.
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 19

Perhaps the most dramatic change in the U.S.economy over the past four decades has been the increasing relative importance of international trade and finance.

Accepted Answer

A) True 
 B)False

Question 20

In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

Accepted Answer

A)   $280 billion
B)   $780 billion
C)   $890 billion
D)   $1,170 billionE) C) and D)
F) None of the above

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Over the past five decades,the U.S.economy has become

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In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

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If a country changes its corporate tax laws so that foreign businesses build and manage more business in that country,then that net capital outflow of that country

Correct AnswerverifiedShow Answer

In the U.S.a digital camera costs $150.The same camera in London sells for 60 pounds.If the exchange rate is .50 pounds per dollar,then which of the following is correct?

Correct AnswerverifiedShow Answer

Other things the same,a country could move from having a trade deficit to having a trade surplus if either

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A country has $50 million of domestic investment and net capital outflow of $15 million.What is saving?

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Suppose that purchases of Irish assets by foreigners exceed Irish purchase of foreign assets.Ireland has

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If Thailand has a trade surplus,then

Correct AnswerverifiedShow Answer

One year a country has negative net exports.The next year it still has negative net exports and imports have risen more than exports.

Correct AnswerverifiedShow Answer

When a company from Germany builds an automobile factory in the United States,the German firm has engaged in foreign direct investment.

Correct AnswerverifiedShow Answer

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate?

Correct AnswerverifiedShow Answer

After 1980 in the United States,

Correct AnswerverifiedShow Answer

Other things the same,which of the following would both make Americans more willing to buy Italian goods?

Correct AnswerverifiedShow Answer

A Big Mac in Japan costs 240 yen while it costs $3 in the U.S..The nominal exchange rate is 100 yen per dollar.Which of the following would both make the real exchange rate move towards purchasing-power parity?

Correct AnswerverifiedShow Answer

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund,U.S.net capital outflow

Correct AnswerverifiedShow Answer

In which period was most of the change in U.S.net capital outflow due to an increase in investment in the U.S.?

Correct AnswerverifiedShow Answer

If U.S.consumers increase their demand for apples from New Zealand,then other things the same New Zealand's

Correct AnswerverifiedShow Answer

If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos,then the forecast is given in

Correct AnswerverifiedShow Answer

Perhaps the most dramatic change in the U.S.economy over the past four decades has been the increasing relative importance of international trade and finance.

Correct AnswerverifiedShow Answer

If the real exchange rate is less than 1,then the

Correct AnswerverifiedShow Answer

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