Question 1

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Accepted Answer

A)   increase U.S. net capital outflow because Germans obtain U.S. assets.
B)   decrease U.S. net capital outflow because Germans 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) C) and D)
F) None of the above

Question 2

While vacationing in Agra, India, the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees. If the exchange rate was previously 55 rupees per dollar, what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

Accepted Answer

At an exchange rate of 55 rupees the roo...

Question 3

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

Accepted Answer

A)   .64 Canadian dollars per U.S. dollar
B)   1 Canadian dollar per U.S. dollar
C)   1.56 Canadian dollars per U.S. dollar
D)   None of the above is correct.E) A) and C)
F) C) and D)

Question 4

For an economy as a whole, net exports must equal minus one times net capital outflow.

Accepted Answer

A) True 
 B)False

Question 5

Colonial America had little industry and so had mostly raw materials to export. At the same time, there were many opportunities to purchase capital goods and earn a high rate of return because there was little existing capital so that the marginal product of capital was relatively high. What does this suggest about net exports and net capital outflow in colonial America?

Accepted Answer

Net exports were negative because the va...

Question 6

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India, the real exchange rate would be computed as how many Indian goods per U.S. goods?

Accepted Answer

A)   one
B)   the number of dollars needed to buy U.S. goods divided by the number of rupees needed to buy Indian goods
C)   the number of rupees needed to buy Indian goods divided by the number of dollars needed to buy U.S. goods
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 7

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price levels)  in

Accepted Answer

A)   foreign countries rise.
B)   the United States rises.
C)   all countries rise.
D)   all countries fall.E) A) and D)
F) All of the above

Question 8

During a hyperinflation the real domestic value of a country's currency

Accepted Answer

A)   falls and its nominal exchange rate depreciates.
B)   falls and its nominal exchange rate appreciates.
C)   rises and its nominal exchange rate depreciates.
D)   rises and its nominal exchange rate appreciates.E) C) and D)
F) B) and D)

Question 9

Which of the following is correct?

Accepted Answer

A)   U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade deficit.
B)   U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade surplus.
C)   U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit.
D)   U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade surplus.E) All of the above
F) C) and D)

Question 10

A German mutual fund sells euros to a U.S. bank for $20,000. The mutual fund then uses these dollars to purchase a bond issued by United Express, a U.S. delivery company. As a result of these two transactions, what happened to U.S. net capital outflow?

Accepted Answer

A)   It fell by $40,000.
B)   It fell by $20,000.
C)   It was unchanged.
D)   It rose by $20,000.E) B) and D)
F) A) and B)

Question 11

Table 31-2
 
-Refer to Table 31-2. Which currencyies)  isare)  have a higher nominal exchange rate than predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)   the bolivar and the pound
B)   the euro and the riyal
C)   the yen
D)   the poundE) B) and C)
F) A) and B)

Question 12

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

Accepted Answer

A)   increases U.S. net exports, and increases U.S. net capital outflow.
B)   increases U.S. net exports, and decreases U.S. net capital outflow.
C)   decreases U.S. net exports, and increases U.S. net capital outflow.
D)   decreases U.S. net exports, and decreases U.S. net capital outflow.E) B) and C)
F) None of the above

Question 13

A U.S. firm opens a factory that produces power tools in Korea.

Accepted Answer

A)   This increases U.S. net capital outflow and decreases Korean net capital outflow.
B)   This decreases U.S. net capital outflow and increases Korean net capital outflow.
C)   This increases only U.S. net capital outflow.
D)   This increases only Korean net capital outflow.E) A) and B)
F) C) and D)

Question 14

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

Accepted Answer

A)   the U.S. price is $2, the foreign price is 5 pesos, and the exchange rate is 3 pesos per dollar.
B)   the U.S. price is $3, the foreign price is 18 pesos, and the exchange rate is 5 pesos per dollar.
C)   the U.S. price is $5, the foreign price 12 pesos, and the exchange rate is 2 pesos per dollar.
D)   the U.S. price is $10, the foreign price is 3 pesos, and the exchange rate is 4 pesos per dollar.E) A) and D)
F) B) and C)

Question 15

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) All of the above
F) A) and B)

Question 16

If purchasing-power parity holds, when a country's central bank decreases the money supply, its

Accepted Answer

A)   price level rises and its currency appreciates relative to other currencies in the world.
B)   price level falls and its currency appreciates relative to other currencies in the world.
C)   price level rises and its currency depreciates relative to other currencies in the world.
D)   price level falls and its currency depreciates relative to other currencies in the world.E) B) and C)
F) B) and D)

Question 17

An open economy's GDP is always given by

Accepted Answer

A)   Y = C + I + G.
B)   Y = C + I + G + T.
C)   Y = C + I + G + S.
D)   Y = C + I + G + NX.E) All of the above
F) None of the above

Question 18

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Accepted Answer

A)   both a U.S. and Chinese export.
B)   both a U.S. and Chinese import.
C)   a U.S. import and a Chinese export.
D)   a U.S. export and a Chinese import.E) None of the above
F) B) and C)

Question 19

If a country's imports exceed its exports it has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 20

If a nation produces more than it spends what do we know about:
A. its net exports?
B. its net capital outflow?
C. its saving in relation to its domestic investment?

Accepted Answer

A. Its net exports are positiv...

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

Correct Answer
verified

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Correct Answer
verified

Correct Answer
verified
At an exchange rate of 55 rupees the roo...
View Answer

If a nation produces more than it spends what do we know about: A. its net exports? B. its net capital outflow? C. its saving in relation to its domestic investment?

Correct Answer
verified
A. Its net exports are positiv...
View Answer

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

Correct Answer
verified

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

Correct Answer
verified

An open economy's GDP is always given by

Correct Answer
verified

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price levels) in

Correct Answer
verified

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Correct Answer
verified

During a hyperinflation the real domestic value of a country's currency

Correct Answer
verified

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India, the real exchange rate would be computed as how many Indian goods per U.S. goods?

Correct Answer
verified

If purchasing-power parity holds, when a country's central bank decreases the money supply, its

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

For an economy as a whole, net exports must equal minus one times net capital outflow.

Correct Answer
verified

If a country's imports exceed its exports it has a trade surplus.

Correct Answer
verified

A U.S. firm opens a factory that produces power tools in Korea.

Correct Answer
verified

Correct Answer
verified
Net exports were negative because the va...
View Answer

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

Correct Answer
verified

A German mutual fund sells euros to a U.S. bank for $20,000. The mutual fund then uses these dollars to purchase a bond issued by United Express, a U.S. delivery company. As a result of these two transactions, what happened to U.S. net capital outflow?

Correct Answer
verified

Table 31-2 -Refer to Table 31-2. Which currencyies) isare) have a higher nominal exchange rate than predicted by the doctrine of purchasing-power parity?

Correct Answer
verified

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

Correct AnswerverifiedShow Answer

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAt an exchange rate of 55 rupees the roo...View AnswerShow Answer

If a nation produces more than it spends what do we know about: A. its net exports? B. its net capital outflow? C. its saving in relation to its domestic investment?

Correct AnswerverifiedA. Its net exports are positiv...View AnswerShow Answer

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

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

An open economy's GDP is always given by

Correct AnswerverifiedShow Answer

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price levels) in

Correct AnswerverifiedShow Answer

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Correct AnswerverifiedShow Answer

During a hyperinflation the real domestic value of a country's currency

Correct AnswerverifiedShow Answer

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India, the real exchange rate would be computed as how many Indian goods per U.S. goods?

Correct AnswerverifiedShow Answer

If purchasing-power parity holds, when a country's central bank decreases the money supply, its

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

For an economy as a whole, net exports must equal minus one times net capital outflow.

Correct AnswerverifiedShow Answer

If a country's imports exceed its exports it has a trade surplus.

Correct AnswerverifiedShow Answer

A U.S. firm opens a factory that produces power tools in Korea.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNet exports were negative because the va...View AnswerShow Answer

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

Correct AnswerverifiedShow Answer

A German mutual fund sells euros to a U.S. bank for $20,000. The mutual fund then uses these dollars to purchase a bond issued by United Express, a U.S. delivery company. As a result of these two transactions, what happened to U.S. net capital outflow?

Correct AnswerverifiedShow Answer

Table 31-2 -Refer to Table 31-2. Which currencyies) isare) have a higher nominal exchange rate than predicted by the doctrine of purchasing-power parity?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
At an exchange rate of 55 rupees the roo...
View Answer

Correct Answer
verified
A. Its net exports are positiv...
View Answer

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
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Net exports were negative because the va...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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