Question 1

A country has a trade deficit. Its

Accepted Answer

A)   net capital outflow must be positive, and saving is larger than investment.
B)   net capital outflow must be positive and saving is smaller than investment.
C)   net capital outflow must be negative and saving is larger than investment.
D)   net capital outflow must be negative and saving is smaller than investment.E) A) and D)
F) All of the above

Question 2

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 millionE) A) and B)
F) A) and C)

Question 3

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company.
As a result of these transactions, 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 4

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

Accepted Answer

A)   sells more overseas then it buys from overseas; it has a trade deficit.
B)   sells more overseas then it buys from overseas; it has a trade surplus.
C)   buys more from overseas then it sells overseas; it has a trade deficit.
D)   buys more from overseas then it sells overseas; it has a trade surplus.E) B) and C)
F) All of the above

Question 5

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Accepted Answer

A) True 
 B)False

Question 6

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale

Accepted Answer

A)   increases U.S. net exports and decreases German net exports.
B)   decreases U.S. net exports and increases German net exports.
C)   increases U.S. and German net exports.
D)   decreases U.S. and German net exports.E) A) and B)
F) C) and D)

Question 7

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Accepted Answer

The real exchange rate = 8/5 =...

Question 8

A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

Accepted Answer

Foreigners purchased...

Question 9

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

Accepted Answer

A)   increase U.S. net exports and have no effect on Mexican net exports.
B)   increase U.S. net exports and decrease Mexican net exports.
C)   decrease U.S. net exports and have no effect on Mexican net exports.
D)   decrease U.S. net exports and increase Mexican net exports.E) A) and B)
F) None of the above

Question 10

A country has $60 million of saving and domestic investment of $40 million. Net exports are

Accepted Answer

A)   $20 million.
B)   -$20 million.
C)   $100 million.
D)   -$100 million.E) A) and B)
F) A) and C)

Question 11

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) C) and D)
F) A) and B)

Question 12

A department store chain in Japan uses yen to purchase 500,000 U.S. dollars from a U.S. bank. It then uses these dollars to buy DVDs from a U.S. filmmaker. As a result of these transactions:
A. By how much and in what direction did U.S. net exports change?
B. By how much and in which direction did U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 13

An Italian company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in its stores in Rome. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations. At this point

Accepted Answer

A)   both U.S. net exports and U.S. net capital outflows have risen.
B)   both U.S. net exports and U.S. net capital outflow have fallen.
C)   U.S. net exports have risen and U.S. net capital outflow have fallen.
D)   U.S. net exports have fallen and U.S. net capital outflow have risen.E) C) and D)
F) B) and C)

Question 14

U.S. international trade has

Accepted Answer

A)   decreased because of a decrease in the trade of goods with a high value per pound.
B)   decreased because of an increase in the trade of goods with a high value per pound.
C)   increased because of a decrease in trade of goods with a high value per pound.
D)   increased because of an increase in trade of goods with a high value per pound.E) B) and D)
F) C) and D)

Question 15

If business opportunities in a country become relatively less attractive relative to those of other countries, then

Accepted Answer

A)   both its net exports and net capital outflows fall.
B)   both its net exports and net capital outflows rise.
C)   its net exports fall and its net capital outflows fall.
D)   its net exports rise and its net capital outflows fallE) None of the above
F) C) and D)

Question 16

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

Accepted Answer

A)   -$1 billion
B)   -$2 billion
C)   $1 billion
D)   $2 billionE) C) and D)
F) B) and C)

Question 17

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Accepted Answer

A)   small but always positive.
B)   small and sometimes negative and sometimes positive.
C)   large and positive.
D)   large but sometimes negative and sometimes positive.E) None of the above
F) All of the above

Question 18

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

Accepted Answer

A)   depreciates which causes U.S. net exports to increase.
B)   depreciates which causes U.S. net exports to decrease.
C)   appreciates which causes U.S. net exports to increase.
D)   appreciates, which causes U.S. net exports to decrease.E) B) and C)
F) C) and D)

Question 19

A country recently had saving of 250 billion euro and domestic investment of 400 billion euro. What was the value of this country's net exports? Show your work.

Accepted Answer

saving = investment + net capital outflo...

Question 20

Other things the same, an increase in domestic prices raises the real exchange rate.

Accepted Answer

A) True 
 B)False

Exam 18: Open-Economy Macroeconomics: Basic Concepts

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

Correct Answer
verified

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

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

An Italian company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in its stores in Rome. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations. At this point

Correct Answer
verified

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

Correct Answer
verified

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale

Correct Answer
verified

A country has a trade deficit. Its

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

Correct Answer
verified

U.S. international trade has

Correct Answer
verified

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Correct Answer
verified

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

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

Correct Answer
verified

A country has $60 million of saving and domestic investment of $40 million. Net exports are

Correct Answer
verified

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Correct Answer
verified
The real exchange rate = 8/5 =...
View Answer

Other things the same, an increase in domestic prices raises the real exchange rate.

Correct Answer
verified

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Correct Answer
verified

If business opportunities in a country become relatively less attractive relative to those of other countries, then

Correct Answer
verified

A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

Correct Answer
verified
Foreigners purchased...
View Answer

A country recently had saving of 250 billion euro and domestic investment of 400 billion euro. What was the value of this country's net exports? Show your work.

Correct Answer
verified
saving = investment + net capital outflo...
View Answer

Exam 18: Open-Economy Macroeconomics: Basic Concepts

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

Correct AnswerverifiedShow Answer

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

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

An Italian company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in its stores in Rome. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations. At this point

Correct AnswerverifiedShow Answer

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

Correct AnswerverifiedShow Answer

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale

Correct AnswerverifiedShow Answer

A country has a trade deficit. Its

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

Correct AnswerverifiedShow Answer

U.S. international trade has

Correct AnswerverifiedShow Answer

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Correct AnswerverifiedShow Answer

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

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

Correct AnswerverifiedShow Answer

A country has $60 million of saving and domestic investment of $40 million. Net exports are

Correct AnswerverifiedShow Answer

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Correct AnswerverifiedThe real exchange rate = 8/5 =...View AnswerShow Answer

Other things the same, an increase in domestic prices raises the real exchange rate.

Correct AnswerverifiedShow Answer

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Correct AnswerverifiedShow Answer

If business opportunities in a country become relatively less attractive relative to those of other countries, then

Correct AnswerverifiedShow Answer

A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

Correct AnswerverifiedForeigners purchased...View AnswerShow Answer

A country recently had saving of 250 billion euro and domestic investment of 400 billion euro. What was the value of this country's net exports? Show your work.

Correct Answerverifiedsaving = investment + net capital outflo...View AnswerShow Answer

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A. U.S. net exports ...
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A. U.S. net exports ...
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The real exchange rate = 8/5 =...
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Foreigners purchased...
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saving = investment + net capital outflo...
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