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) None of the above
F) A) and D)

Question 2

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

Question 3

If the Mexican nominal exchange rate does not change, but prices rise faster abroad than in Mexico, then the Mexican real exchange rate

Accepted Answer

A)   does not change.
B)   rises.
C)   declines.
D)   None of the above is necessarily correct.E) A) and D)
F) A) and C)

Question 4

From 1991-2000, 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) C) and D)
F) None of the above

Question 5

Other things the same, if the dollar appreciates relative to the Japanese yen, then

Accepted Answer

A)   the exchange rate falls. It will cost fewer yen to travel in the U.S.
B)   the exchange rate falls. It will cost more yen to travel in the U.S.
C)   the exchange rate rises. It will cost fewer yen to travel in the U.S.
D)   the exchange rate rises. It will cost more yen to travel in the U.S.E) All of the above
F) C) and D)

Question 6

A country has a trade deficit. Which of the following must also be true?

Accepted Answer

A)   net capital outflow is positive and domestic investment is larger than saving
B)   net capital outflow is positive and saving is larger than domestic investment
C)   net capital outflow is negative and domestic investment is larger than saving
D)   net capital outflow is negative and saving is larger than domestic investmentE) None of the above
F) B) and C)

Question 7

Foreign-produced goods and services that are purchased domestically are called

Accepted Answer

A)   imports.
B)   exports.
C)   net imports.
D)   net exports.E) A) and C)
F) B) and C)

Question 8

Other things the same, if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar, the dollar has

Accepted Answer

A)   appreciated and so buys more Algerian goods.
B)   appreciated and so buys fewer Algerian goods.
C)   depreciated and so buys more Algerian goods.
D)   depreciated and so buys fewer Algerian goods.E) A) and C)
F) A) and B)

Question 9

You buy a new car built in Sweden. Other things the same, your purchase by itself

Accepted Answer

A)   raises both U.S. exports and U.S. net exports.
B)   raises U.S. exports and lowers U.S. net exports.
C)   raises both U.S. imports and U.S. net exports.
D)   raises U.S. imports and lowers U.S. net exports.E) A) and C)
F) A) and D)

Question 10

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

Accepted Answer

A)   the nominal exchange rate falls, the price of goods in Italy falls
B)   the nominal exchange rate falls, the price of goods in Italy rises
C)   the nominal exchange rate rises, the price of goods in Italy falls
D)   the nominal exchange rate rises, the price of goods in Italy risesE) All of the above
F) None of the above

Question 11

A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports

Accepted Answer

A)   increase, and U.S. net capital outflow increases.
B)   increase, and U.S. net capital outflow decreases.
C)   decrease, and U.S. net capital outflow increases.
D)   decrease, and U.S. net capital outflow decreases.E) All of the above
F) A) and D)

Question 12

Net capital outflow equals the difference between a country's

Accepted Answer

A)   income and expenditure.
B)   investment and saving.
C)   buying of foreign goods and services and sales of goods and services abroad.
D)   purchases of foreign assets and sales of domestic assets abroad.E) B) and C)
F) B) and D)

Question 13

Other things the same, the real exchange rate between American and Chinese goods would be higher if

Accepted Answer

A)   prices of Chinese goods were higher, or the number of yuan a dollar purchased was higher.
B)   prices of Chinese goods were higher, or the number of yuan a dollar purchased was lower.
C)   prices of Chinese goods were lower, or the number of yuan a dollar purchased was higher.
D)   prices of Chinese goods were lower, or the number of yuan a dollar purchased was lower.E) None of the above
F) All of the above

Question 14

A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is

Accepted Answer

A)   1.106. If purchasing power partiy held the nominal exchange rate would be higher.
B)   1.106. If purchasing power parity held the nominal exchange rate would be lower.
C)   .904. If purchasing power partiy held the nominal exchange rate would be higher.
D)   .904. If purchasing power parity held the nominal exchange rate would be lower.E) A) and C)
F) A) and B)

Question 15

A country has $30 billion of domestic investment and net capital outflows of -$20 billion. What is the country's saving?

Accepted Answer

A)   -$50 billion
B)   -$10 billion
C)   $10 billion
D)   $50 billionE) None of the above
F) All of the above

Question 16

A country's saving is greater than its domestic investment. This difference means that its

Accepted Answer

A)   net capital outflow and net exports are positive.
B)   net capital outflow and net exports are negative.
C)   net capital outflow is positive and net exports are negative.
D)   net capital outflow is negative and net exports are positive.E) All of the above
F) A) and B)

Question 17

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Accepted Answer

A) True 
 B)False

Question 18

The country of Wiknam has net capital outflow of $1,000, government purchases of $5,000 and consumption of $20,000. Which of the following is correct?

Accepted Answer

A)   If its domestic investment is $1,000, its GDP is $26,000.
B)   If its domestic investment is $2,000, its GDP is $28,000.
C)   If its domestic investment is $5,000, its GDP is $29,000.
D)   None of the above are correct.E) A) and B)
F) A) and D)

Question 19

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) A) and B)
F) None of the above

Question 20

Table 13-2
 
-Refer to Table 13-2. For which country(ies)  in the table does purchasing-power parity hold?

Accepted Answer

A)   Bolivia and Japan
B)   Bolivia and Morocco
C)   Japan and Morocco
D)   Norway and ThailandE) A) and D)
F) All of the above

Exam 13: Open-Economy Macroeconomic Models

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

Correct AnswerverifiedShow Answer

Other things the same, if the dollar appreciates relative to the Japanese yen, then

Correct AnswerverifiedShow Answer

The country of Wiknam has net capital outflow of $1,000, government purchases of $5,000 and consumption of $20,000. Which of the following is correct?

Correct AnswerverifiedShow Answer

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Correct AnswerverifiedShow Answer

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

Other things the same, if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar, the dollar has

Correct AnswerverifiedShow Answer

A country has $30 billion of domestic investment and net capital outflows of -$20 billion. What is the country's saving?

Correct AnswerverifiedShow Answer

Net capital outflow equals the difference between a country's

Correct AnswerverifiedShow Answer

A country has a trade deficit. Which of the following must also be true?

Correct AnswerverifiedShow Answer

A country's saving is greater than its domestic investment. This difference means that its

Correct AnswerverifiedShow Answer

Foreign-produced goods and services that are purchased domestically are called

Correct AnswerverifiedShow Answer

You buy a new car built in Sweden. Other things the same, your purchase by itself

Correct AnswerverifiedShow Answer

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

Correct AnswerverifiedShow Answer

A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is

Correct AnswerverifiedShow Answer

If the Mexican nominal exchange rate does not change, but prices rise faster abroad than in Mexico, then the Mexican real exchange rate

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2. For which country(ies) in the table does purchasing-power parity hold?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same, the real exchange rate between American and Chinese goods would be higher if

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 U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports

Correct AnswerverifiedShow Answer

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