Question 1

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Accepted Answer

A)   larger positive number.
B)   smaller positive number.
C)   larger negative number.
D)   smaller negative number.E) A) and C)
F) B) and C)

Question 2

If Germany purchased more goods and services abroad than it sold abroad last year, then it had

Accepted Answer

A)   positive net exports which is a trade surplus.
B)   positive net exports which is a trade deficit.
C)   negative net exports which is a trade surplus.
D)   negative net exports which is a trade deficit.E) B) and C)
F) All of the above

Question 3

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States. If the exchange rate is .80 euros per dollar, what is the real exchange rate?

Accepted Answer

The real exchange rate = nomin...

Question 4

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

Accepted Answer

A)   the foreign price is 4 dinars and the exchange rate is 1/2 dinars per dollar
B)   the foreign price is 5 dinars and the exchange rate is 2.5 dinars per dollar
C)   the foreign price is 4 dinars and the exchange rate is 2 dinars per dollar
D)   the foreign price is 5 dinars and the exchange rate is 2/5 dinars per dollarE) B) and C)
F) C) and D)

Question 5

A U.S. firm exchanges dollars for yen and then uses them to buy Japanese goods. Overall as a result of these transactions

Accepted Answer

A)   both U.S. net capital outflow and U.S. net exports rise.
B)   both U.S. net capital outflow and U.S. net exports fall.
C)   U.S. net capital outflow rises and U.S. net exports fall.
D)   U.S. net capital outflow falls and U.S. net exports rise.E) A) and B)
F) None of the above

Question 6

Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard. This exchange

Accepted Answer

A)   decreases U.S. net capital outflow.
B)   increases U.S. net capital outflow by more than the value of the bond.
C)   increases U.S. net capital outflow by the value of the bond.
D)   does not change U.S. net capital outflow.E) A) and C)
F) A) and B)

Question 7

If purchasing-power parity holds, when a country's central bank increases the money supply, a unit of money

Accepted Answer

A)   gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.
B)   gains value in terms of the domestic goods and services it can buy, but loses value in terms of the foreign currency it can buy.
C)   loses value in terms of the domestic goods and services it can buy, but gains value in terms of the foreign currency it can buy.
D)   loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.E) None of the above
F) A) and D)

Question 8

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase

Accepted Answer

A)   increases U.S. imports by $1,000 and increases U.S. net exports by $1,000.
B)   increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.
C)   increases U.S. exports by $1,000 and increases U.S. net exports by $1,000.
D)   increases U.S. exports by $1,000 and decreases U.S. net exports by $1,000.E) C) and D)
F) B) and C)

Question 9

From 1980 to 1987

Accepted Answer

A)   foreigners were buying more assets from the United States than Americans were buying abroad. The United States was going into debt.
B)   Americans were buying more assets abroad than foreigners were buying from the United States. The United States was going into debt.
C)   foreigners were buying more assets from the United States than Americans were buying abroad. The United States was moving into surplus.
D)   Americans were buying more assets abroad than foreigners were buying from the United States. The United States was moving into surplus.E) A) and B)
F) None of the above

Question 10

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

Accepted Answer

A)   investment for Mark and U.S. foreign direct investment.
B)   investment for Mark and U.S. foreign portfolio investment.
C)   saving for Mark and U.S. foreign direct investment.
D)   saving for Mark and U.S. foreign portfolio investment.E) B) and D)
F) All of the above

Question 11

Reductions in transportation costs help explain the increase in U.S. trade flows.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that U.S. citizens purchase more cars made in Korea, and Koreans purchase more bonds issued by U.S. corporations. Other things the same, these actions

Accepted Answer

A)   raise both U.S. net exports and U.S. net capital outflows.
B)   raise U.S. net exports and lower U.S. net capital outflows.
C)   lower both U.S. net exports and U.S. net capital outflows.
D)   lower U.S. net exports and raise U.S. net capital outflows.E) B) and C)
F) None of the above

Question 13

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) A) and C)

Question 14

How do we find the real exchange rate from the nominal exchange rate?

Accepted Answer

Real Exchange Rate =...

Question 15

According to purchasing-power parity what should the nominal exchange rate between the U.S. and another country be equal to?

Accepted Answer

A)   1
B)   the real exchange rate between the U.S. and that country
C)   the price level in the U.S. divided by the price level in the other country
D)   the price level in the other country divided by the price level in the U.S.E) A) and B)
F) A) and C)

Question 16

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Accepted Answer

A)   foreign portfolio investment that increase U.S. net capital outflow.
B)   foreign portfolio investment that decrease U.S. net capital outflow.
C)   foreign direct investment that increase U.S. net capital outflow.
D)   foreign direct investment that decrease U.S. net capital outflow.E) C) and D)
F) A) and C)

Question 17

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Accepted Answer

A) True 
 B)False

Question 18

A U.S. grocery store chain bought $800,000 worth of Kenyan currency from a bank in Kenya. It then used these funds to buy $800,000 worth of coffee from Kenyan coffee growers.
As a result of this exchange, by how much and in which direction did:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 19

According to purchasing-power parity, if the price of a basket of goods in the U.S. rose from $2,000 to $2,104 and the price of the same basket of goods rose from 800 units to 832 units of some other country's currency, then the

Accepted Answer

A)   nominal exchange rate would appreciate.
B)   nominal exchange rate would depreciate.
C)   real exchange rate would appreciate.
D)   real exchange rate would depreciate.E) A) and D)
F) B) and C)

Question 20

An American retailer sells dollars to obtain euros. It then uses the euros to buy ready-to-assemble furniture from Sweden. These transactions

Accepted Answer

A)   increase U.S. net capital outflow because foreigners obtain U.S. assets.
B)   decrease U.S. net capital outflow because foreigners obtain U.S. assets.
C)   increase U.S. net capital outflow because the U.S. buys capital goods.
D)   decrease U.S. net capital outflow because the U.S. buys capital goods.E) A) and D)
F) A) and C)

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Correct Answer
verified

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States. If the exchange rate is .80 euros per dollar, what is the real exchange rate?

Correct Answer
verified
The real exchange rate = nomin...
View Answer

Suppose that U.S. citizens purchase more cars made in Korea, and Koreans purchase more bonds issued by U.S. corporations. Other things the same, these actions

Correct Answer
verified

From 1980 to 1987

Correct Answer
verified

Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard. This exchange

Correct Answer
verified

If purchasing-power parity holds, when a country's central bank increases the money supply, a unit of money

Correct Answer
verified

According to purchasing-power parity, if the price of a basket of goods in the U.S. rose from $2,000 to $2,104 and the price of the same basket of goods rose from 800 units to 832 units of some other country's currency, then the

Correct Answer
verified

A U.S. firm exchanges dollars for yen and then uses them to buy Japanese goods. Overall as a result of these transactions

Correct Answer
verified

How do we find the real exchange rate from the nominal exchange rate?

Correct Answer
verified
Real Exchange Rate =...
View Answer

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

Correct Answer
verified

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 Answer
verified

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct Answer
verified

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct Answer
verified

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase

Correct Answer
verified

If Germany purchased more goods and services abroad than it sold abroad last year, then it had

Correct Answer
verified

Reductions in transportation costs help explain the increase in U.S. trade flows.

Correct Answer
verified

An American retailer sells dollars to obtain euros. It then uses the euros to buy ready-to-assemble furniture from Sweden. These transactions

Correct Answer
verified

According to purchasing-power parity what should the nominal exchange rate between the U.S. and another country be equal to?

Correct Answer
verified

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

Correct Answer
verified

Correct Answer
verified
A. U.S. net exports ...
View Answer

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Correct AnswerverifiedShow Answer

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States. If the exchange rate is .80 euros per dollar, what is the real exchange rate?

Correct AnswerverifiedThe real exchange rate = nomin...View AnswerShow Answer

Suppose that U.S. citizens purchase more cars made in Korea, and Koreans purchase more bonds issued by U.S. corporations. Other things the same, these actions

Correct AnswerverifiedShow Answer

From 1980 to 1987

Correct AnswerverifiedShow Answer

Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard. This exchange

Correct AnswerverifiedShow Answer

If purchasing-power parity holds, when a country's central bank increases the money supply, a unit of money

Correct AnswerverifiedShow Answer

According to purchasing-power parity, if the price of a basket of goods in the U.S. rose from $2,000 to $2,104 and the price of the same basket of goods rose from 800 units to 832 units of some other country's currency, then the

Correct AnswerverifiedShow Answer

A U.S. firm exchanges dollars for yen and then uses them to buy Japanese goods. Overall as a result of these transactions

Correct AnswerverifiedShow Answer

How do we find the real exchange rate from the nominal exchange rate?

Correct AnswerverifiedReal Exchange Rate =...View AnswerShow Answer

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

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

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct AnswerverifiedShow Answer

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase

Correct AnswerverifiedShow Answer

If Germany purchased more goods and services abroad than it sold abroad last year, then it had

Correct AnswerverifiedShow Answer

Reductions in transportation costs help explain the increase in U.S. trade flows.

Correct AnswerverifiedShow Answer

An American retailer sells dollars to obtain euros. It then uses the euros to buy ready-to-assemble furniture from Sweden. These transactions

Correct AnswerverifiedShow Answer

According to purchasing-power parity what should the nominal exchange rate between the U.S. and another country be equal to?

Correct AnswerverifiedShow Answer

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA. U.S. net exports ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
The real exchange rate = nomin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Real Exchange Rate =...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A. U.S. net exports ...
View Answer