Question 1

If a county has 25 billion euros of imports,15 billion euros of exports,and sells 20 billion euros of assets to foreigners,how many foreign assets do domestic residents purchase?

Accepted Answer

A)   5 billion euros
B)   10 billion euros
C)   30 billion euros
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 2

According to purchasing power parity,if the same basket of goods costs $100 in the U.S.and 50 pounds in Britain,then what is the nominal exchange rate?

Accepted Answer

A)   2 pounds per dollar
B)   1 pound per dollar
C)   1/2 pound per dollar
D)   None of the above is correctE) A) and B)
F) None of the above

Question 3

If the exchange rate is 70 Bangladesh taka per dollar and a bushel of rice costs 200 taka in Bangladesh and $3 in the United States,then the real exchange rate is

Accepted Answer

A)   greater than one and arbitrageurs could profit by buying rice in the United States and selling it in Bangladesh.
B)   greater than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in the United States.
C)   less than one and arbitrageurs could profit by buying rice in the United States and selling it in Bangladesh.
D)   less than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in the United States.E) A) and B)
F) All of the above

Question 4

Other things the same,the real exchange rate between U.S.and Belgian goods would be higher if

Accepted Answer

A)   prices in the U.S.were higher,or the number of euro the dollar purchased were higher.
B)   prices in the U.S.were higher,or the number of euro the dollar purchased were lower.
C)   prices in the U.S.were lower,or the number of euro the dollar purchased were higher.
D)   prices in the U.S.were lower,or the number of euro the dollar purchased were lower.E) A) and D)
F) All of the above

Question 5

Table 18-1
 
-Refer to Table 18-1.What are Bolivia's net exports?

Accepted Answer

A)   $30 billion
B)   $5 billion
C)   -$5 billion
D)   -$25 billionE) C) and D)
F) All of the above

Question 6

If the exchange rate is .70 euro per dollar,the price of an MP3 player in Paris is 150 euros and the price of an MP3 player in the U.S.is $150,then what is the real exchange rate?

Accepted Answer

A)   1/.70 French MP3 players per U.S.MP3 player
B)   1 French MP3 players per U.S.MP3 player
C)   .70 French MP3 players per U.S.MP3 player.
D)   None of the above are correct.E) B) and D)
F) A) and C)

Question 7

If US goods cost 1/5 of one dollar for every kroner Danish goods cost,the real exchange rate would be computed as how many Danish goods per U.S.goods?

Accepted Answer

A)   five
B)   one fifth the price of the U.S.goods
C)   the amount of kroner that can be bought with 1/5 of one dollar.
D)   None of the above is correct.E) C) and D)
F) B) and D)

Question 8

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Accepted Answer

A)   The U.S.has a trade surplus of $350 billion.
B)   The U.S.has a trade surplus of $50 billion.
C)   The U.S.has a trade deficit of $350 billion.
D)   The U.S.has a trade deficit of $50 billion.E) B) and C)
F) A) and B)

Question 9

Net capital outflow

Accepted Answer

A)   is always greater than net exports.
B)   is always less than net exports.
C)   is always equal to net exports.
D)   could be any of the above.E) All of the above
F) B) and C)

Question 10

Suppose a Starbucks tall latte cost $4.00 in the United States and 3.20 euros in the Euro area.Also,suppose a McDonald's Big Mac costs $3.50 in the United States and 2.45 euros in Euro area.If the nominal exchange rate is .80 euros per dollar,which goods have prices that are consistent with purchasing power parity?

Accepted Answer

A)   Both the tall latte and the Big Mac.
B)   Neither the tall latte nor the Big Mac.
C)   The tall latte but not the Big Mac.
D)   The Big Mac but not the tall latte.E) A) and D)
F) All of the above

Question 11

Other things the same,the real exchange rate between American and Mexican goods would be lower if

Accepted Answer

A)   prices of Mexican goods were higher,or the number of pesos a dollar purchased was higher.
B)   prices of Mexican goods were higher,or the number of pesos a dollar purchased was lower.
C)   prices of Mexican goods were lower,or the number of pesos a dollar purchased was higher.
D)   prices of Mexican goods were lower,or the number of pesos a dollar purchased was lower.E) All of the above
F) A) and C)

Question 12

According to purchasing power parity,the nominal exchange rate between the U.S.and another country should equal the price level of foreign goods divided by the price level of U.S.goods.

Accepted Answer

A) True 
 B)False

Question 13

A firm in India hires a U.S.firm to provide economic forecasts.By itself this transaction

Accepted Answer

A)   increases U.S.exports and so increases the U.S.trade balance.
B)   increases U.S.exports and so decreases the U.S.trade balance.
C)   increases U.S.imports and so increases the U.S.trade balance.
D)   increases U.S.imports and so decreases the U.S.trade balance.E) C) and D)
F) A) and B)

Question 14

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Accepted Answer

Yes.
reduced transportation co...

Question 15

Which of the following events would be consistent with purchasing-power parity?

Accepted Answer

A)   The price level in the United States rises more rapidly than that in Ireland and the real exchange rate defined as Irish goods per unit of U.S.goods stays the same.
B)   The money supply in the United States rises more rapidly than in Egypt and the nominal exchange rate defined as Egyptian pounds per dollar falls.
C)   Earl,a worldwide traveler,looks at exchange rates and worldwide breakfast prices one morning and finds that whatever country he decides to go to he can convert $15 into enough local currency to buy the same breakfast.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 16

Firms in Saudi Arabia sell oil to the U.S.Other things the same,these oil sales

Accepted Answer

A)   increase Saudi net exports and net capital outflow.
B)   decrease Saudi net exports and net capital outflow.
C)   increase Saudi net exports and decrease Saudi net capital outflow.
D)   decrease Saudi net exports and increase Saudi net capital outflow.E) A) and B)
F) None of the above

Question 17

Other things the same,if the U.S.real exchange rate appreciates,U.S.net exports

Accepted Answer

A)   increase and U.S.net capital outflow decreases.
B)   decrease and U.S.net capital outflow increases.
C)   and U.S.net capital outflow both increase.
D)   and U.S.net capital outflow both decrease.E) B) and C)
F) C) and D)

Question 18

A basket of goods costs $800 in the U.S.In Belgium the basket of goods costs 800 euros and the exchange rate is .80 euros per U.S.dollar.In Japan the basket of goods costs 720,000 yen and the exchange rate is 900 yen per dollar.Which country has purchasing-power parity with the U.S.?

Accepted Answer

A)   both
B)   Belgium but not Japan
C)   Japan but not Belgium
D)   neither Belgium nor JapanE) A) and B)
F) C) and D)

Question 19

Most of the change from 1991 to 2000 in U.S.net capital outflow as a percent of GDP was due to a(n)

Accepted Answer

A)   decrease in U.S.investment.
B)   decrease in U.S.national saving.
C)   increase in U.S.investment.
D)   increase in U.S.national saving.E) A) and B)
F) A) and C)

Question 20

If prices in the U.S.rise faster than prices in the United Kingdom,then according to the doctrine of purchasing-power parity the U.S.nominal exchange rate should fall.

Accepted Answer

A) True 
 B)False

Exam 31: Open-Economy Macroeconomic Models

Other things the same,the real exchange rate between U.S.and Belgian goods would be higher if

Correct Answer
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Net capital outflow

Correct Answer
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If US goods cost 1/5 of one dollar for every kroner Danish goods cost,the real exchange rate would be computed as how many Danish goods per U.S.goods?

Correct Answer
verified

Firms in Saudi Arabia sell oil to the U.S.Other things the same,these oil sales

Correct Answer
verified

Correct Answer
verified

Most of the change from 1991 to 2000 in U.S.net capital outflow as a percent of GDP was due to a(n)

Correct Answer
verified

Table 18-1 -Refer to Table 18-1.What are Bolivia's net exports?

Correct Answer
verified

If the exchange rate is 70 Bangladesh taka per dollar and a bushel of rice costs 200 taka in Bangladesh and $3 in the United States,then the real exchange rate is

Correct Answer
verified

Which of the following events would be consistent with purchasing-power parity?

Correct Answer
verified

If a county has 25 billion euros of imports,15 billion euros of exports,and sells 20 billion euros of assets to foreigners,how many foreign assets do domestic residents purchase?

Correct Answer
verified

A firm in India hires a U.S.firm to provide economic forecasts.By itself this transaction

Correct Answer
verified

According to purchasing power parity,if the same basket of goods costs $100 in the U.S.and 50 pounds in Britain,then what is the nominal exchange rate?

Correct Answer
verified

Other things the same,if the U.S.real exchange rate appreciates,U.S.net exports

Correct Answer
verified

If the exchange rate is .70 euro per dollar,the price of an MP3 player in Paris is 150 euros and the price of an MP3 player in the U.S.is $150,then what is the real exchange rate?

Correct Answer
verified

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Correct Answer
verified

A basket of goods costs $800 in the U.S.In Belgium the basket of goods costs 800 euros and the exchange rate is .80 euros per U.S.dollar.In Japan the basket of goods costs 720,000 yen and the exchange rate is 900 yen per dollar.Which country has purchasing-power parity with the U.S.?

Correct Answer
verified

If prices in the U.S.rise faster than prices in the United Kingdom,then according to the doctrine of purchasing-power parity the U.S.nominal exchange rate should fall.

Correct Answer
verified

Other things the same,the real exchange rate between American and Mexican goods would be lower if

Correct Answer
verified

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Correct Answer
verified
Yes.
reduced transportation co...
View Answer

According to purchasing power parity,the nominal exchange rate between the U.S.and another country should equal the price level of foreign goods divided by the price level of U.S.goods.

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

Other things the same,the real exchange rate between U.S.and Belgian goods would be higher if

Correct AnswerverifiedShow Answer

Net capital outflow

Correct AnswerverifiedShow Answer

If US goods cost 1/5 of one dollar for every kroner Danish goods cost,the real exchange rate would be computed as how many Danish goods per U.S.goods?

Correct AnswerverifiedShow Answer

Firms in Saudi Arabia sell oil to the U.S.Other things the same,these oil sales

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most of the change from 1991 to 2000 in U.S.net capital outflow as a percent of GDP was due to a(n)

Correct AnswerverifiedShow Answer

Table 18-1 -Refer to Table 18-1.What are Bolivia's net exports?

Correct AnswerverifiedShow Answer

If the exchange rate is 70 Bangladesh taka per dollar and a bushel of rice costs 200 taka in Bangladesh and $3 in the United States,then the real exchange rate is

Correct AnswerverifiedShow Answer

Which of the following events would be consistent with purchasing-power parity?

Correct AnswerverifiedShow Answer

If a county has 25 billion euros of imports,15 billion euros of exports,and sells 20 billion euros of assets to foreigners,how many foreign assets do domestic residents purchase?

Correct AnswerverifiedShow Answer

A firm in India hires a U.S.firm to provide economic forecasts.By itself this transaction

Correct AnswerverifiedShow Answer

According to purchasing power parity,if the same basket of goods costs $100 in the U.S.and 50 pounds in Britain,then what is the nominal exchange rate?

Correct AnswerverifiedShow Answer

Other things the same,if the U.S.real exchange rate appreciates,U.S.net exports

Correct AnswerverifiedShow Answer

If the exchange rate is .70 euro per dollar,the price of an MP3 player in Paris is 150 euros and the price of an MP3 player in the U.S.is $150,then what is the real exchange rate?

Correct AnswerverifiedShow Answer

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Correct AnswerverifiedShow Answer

A basket of goods costs $800 in the U.S.In Belgium the basket of goods costs 800 euros and the exchange rate is .80 euros per U.S.dollar.In Japan the basket of goods costs 720,000 yen and the exchange rate is 900 yen per dollar.Which country has purchasing-power parity with the U.S.?

Correct AnswerverifiedShow Answer

If prices in the U.S.rise faster than prices in the United Kingdom,then according to the doctrine of purchasing-power parity the U.S.nominal exchange rate should fall.

Correct AnswerverifiedShow Answer

Other things the same,the real exchange rate between American and Mexican goods would be lower if

Correct AnswerverifiedShow Answer

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Correct AnswerverifiedYes.reduced transportation co...View AnswerShow Answer

According to purchasing power parity,the nominal exchange rate between the U.S.and another country should equal the price level of foreign goods divided by the price level of U.S.goods.

Correct AnswerverifiedShow Answer

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Yes.
reduced transportation co...
View Answer

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