Question 1

A firm in China sells toys to a U.S.department store chain.Other things the same,these sales

Accepted Answer

A)   increase U.S.net exports and decrease Chinese net exports.
B)   decrease U.S.net exports and increase Chinese net exports.
C)   increase U.S.and Chinese net exports.
D)   decrease U.S.and Chinese net exports.E) A) and B)
F) A) and C)

Question 2

If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S.beef,a pound of U.S.beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar,then Chilean beef costs

Accepted Answer

A)   1,250 pesos per pound.
B)   800 pesos per pound
C)   250 pesos per pound.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 3

According to purchasing-power parity theory,the nominal exchange rate between the U.S.and another country should equal the price level for that country divided by the price level for the U.S..

Accepted Answer

A) True 
 B)False

Question 4

If the dollar buys fewer bananas in Guatemala than in Honduras,then traders could make a profit by

Accepted Answer

A)   buying bananas in Honduras and selling them in Guatemala,which would tend to raise the price of bananas in Honduras.
B)   buying bananas in Honduras and selling them in Guatemala,which would tend to raise the price of bananas in Guatemala.
C)   buying bananas in Guatemala and selling them in Honduras,which would tend to raise the price of bananas in Guatemala.
D)   buying bananas in Guatemala and selling them in Honduras,which would tend to raise the price of bananas in Honduras.E) A) and B)
F) B) 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) None of the above
F) C) and D)

Question 6

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 7

Suppose that more British decide to vacation in the U.S.and that the British purchase more U.S.Treasury bonds.Ignoring how payments are made for these purchases,

Accepted Answer

A)   the first action by itself raises U.S.net exports,the second action by itself raises U.S.net capital outflow.
B)   the first action by itself raises U.S.net exports,the second action by itself lowers U.S.net capital outflow.
C)   the first action by itself lowers U.S.net exports,the second action by itself raises U.S.net capital outflow.
D)   the first action by itself lowers U.S.net exports,the second action by itself lowers U.S.net capital outflow.E) B) and C)
F) A) and B)

Question 8

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 9

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a bottle of wine costs 25 euros in France and 20 dollars in the United States.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

Accepted Answer

The real exchange rate = nomin...

Question 11

If a country has positive net capital outflows,then its net exports are

Accepted Answer

A)   positive,and its saving is larger than its domestic investment.
B)   positive,and its saving is smaller than its domestic investment.
C)   negative,and its saving is larger than its domestic investment.
D)   negative,and its saving is smaller than its domestic investment.E) A) and B)
F) B) and C)

Question 12

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

Accepted Answer

A)   The U.S.has a trade surplus of $100 billion.
B)   The U.S.has a trade surplus of $50 billion.
C)   The U.S.has a trade deficit of $100 billion.
D)   The U.S.has a trade deficit of $50 billion.E) None of the above
F) A) and C)

Question 13

If the U.S.real exchange rate appreciates,U.S.exports to Europe

Accepted Answer

A)   and European exports to the U.S.both rise.
B)   and European exports to the U.S.both fall.
C)   rise,and European exports to the U.S.fall.
D)   fall,and European exports to the U.S.rise.E) A) and D)
F) A) and C)

Question 14

A rational investor will always purchase the bond that pays the highest real interest rate.

Accepted Answer

A) True 
 B)False

Question 15

Bolivia buys railroad engines from a U.S.firm and pays for them with Bolivianos (Bolivian currency) .By itself,this exchange

Accepted Answer

A)   increases both U.S.net exports and U.S.net capital outflow.
B)   decreases both U.S.net exports and U.S.net capital outflow.
C)   increases U.S.net exports and does not affect U.S.net capital outflow.
D)   None of the above is correct.E) B) and D)
F) B) and C)

Question 16

If a Starbucks tall-latte cost $2.80 in the United States and 2.93 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Accepted Answer

A)   .956 If the exchange rate is less than this,it costs more dollars to buy a tall-latte in the U.S.than in the Euro area.
B)   .956 If the exchange rate is less than this,it costs fewer dollars to buy a tall-latte in the U.S.then in the Euro area.
C)   1.046 If the exchange rate is less than this,it costs more dollars to buy a tall-latte in the U.S.than in the Euro area.
D)   1.046 If the exchange rate is less than this,it costs fewer dollars to buy a tall-latte in the U.S.than in the Euro area.E) B) and D)
F) None of the above

Question 17

When the central bank of some country prints large quantities of money,that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Accepted Answer

A) True 
 B)False

Question 18

List the factors that might influence a country's exports,imports,and trade balance.

Accepted Answer

a.
the tastes of consumers for domestic ...

Question 19

Exchange rates are 120 yen per dollar,0.8 euro per dollar,and 10 pesos per dollar.A bottle of beer in New York costs 6 dollars,1,200 yen in Tokyo,7.2 euro in Munich,and 50 pesos in Cancun.Where is the most expensive and the cheapest beer in that order?

Accepted Answer

A)   Cancun,New York
B)   New York,Tokyo
C)   Tokyo,Cancun
D)   Munich,New YorkE) All of the above
F) None of the above

Question 20

One year a country has positive net exports.The next year it still has positive but larger net exports

Accepted Answer

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

Exam 31: Open-Economy Macroeconomics: Basic Concepts

If a country has positive net capital outflows,then its net exports are

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

A firm in China sells toys to a U.S.department store chain.Other things the same,these sales

Correct AnswerverifiedShow Answer

If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S.beef,a pound of U.S.beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar,then Chilean beef costs

Correct AnswerverifiedShow Answer

If a Starbucks tall-latte cost $2.80 in the United States and 2.93 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Correct AnswerverifiedShow Answer

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Correct AnswerverifiedShow Answer

Suppose a bottle of wine costs 25 euros in France and 20 dollars in the United States.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

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

List the factors that might influence a country's exports,imports,and trade balance.

Correct Answerverifieda.the tastes of consumers for domestic ...View AnswerShow Answer

Bolivia buys railroad engines from a U.S.firm and pays for them with Bolivianos (Bolivian currency) .By itself,this exchange

Correct AnswerverifiedShow Answer

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

Correct AnswerverifiedShow Answer

Exchange rates are 120 yen per dollar,0.8 euro per dollar,and 10 pesos per dollar.A bottle of beer in New York costs 6 dollars,1,200 yen in Tokyo,7.2 euro in Munich,and 50 pesos in Cancun.Where is the most expensive and the cheapest beer in that order?

Correct AnswerverifiedShow Answer

A rational investor will always purchase the bond that pays the highest real interest rate.

Correct AnswerverifiedShow Answer

If the U.S.real exchange rate appreciates,U.S.exports to Europe

Correct AnswerverifiedShow Answer

One year a country has positive net exports.The next year it still has positive but larger net exports

Correct AnswerverifiedShow Answer

According to purchasing-power parity theory,the nominal exchange rate between the U.S.and another country should equal the price level for that country divided by the price level for the U.S..

Correct AnswerverifiedShow Answer

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

Correct AnswerverifiedShow Answer

If the dollar buys fewer bananas in Guatemala than in Honduras,then traders could make a profit by

Correct AnswerverifiedShow Answer

When the central bank of some country prints large quantities of money,that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that more British decide to vacation in the U.S.and that the British purchase more U.S.Treasury bonds.Ignoring how payments are made for these purchases,

Correct AnswerverifiedShow Answer

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The real exchange rate = nomin...
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the tastes of consumers for domestic ...
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