Question 1

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Accepted Answer

The theory of purchasing-power parity su...

Question 2

From 2008 to 2012 both U.S. saving and U.S. investment fell.

Accepted Answer

A) True 
 B)False

Question 3

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the suit cheaper?

Accepted Answer

The real exchange rate = $400 ...

Question 4

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

Question 5

The nominal exchange rate is 4 Saudi Arabian riyals, 8 Moroccan dirham, 60 Indian rupees, or .8 euros per U.S. dollar. A fast food breakfast costs $5 in the U.S., 30 riyals in Saudi Arabia, 40 Moroccan dirham in Morocco, 250 Indian rupees in India, and 5 euros in France. According to these numbers, where is the real exchange rate between American and foreign goods the lowest?

Accepted Answer

A)   Saudi Arabia
B)   Morocco
C)   India
D)   BritainE) C) and D)
F) None of the above

Question 6

U.S. exports make up less than 20 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 7

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) None of the above
F) All of the above

Question 8

If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?

Accepted Answer

A)   15/4
B)   5/3
C)   3/5
D)   4/15E) All of the above
F) A) and D)

Question 9

While on vacation in Europe you notice that a tablet computer is selling for 600 euros in France and for 533 pounds in Britain. You also know that the exchange rates are .75 euros per dollar and .65 British pounds per dollar. Where is the number of dollars you would pay for the tablet lower? How many dollars would you have to pay to buy it there?

Accepted Answer

It costs less in France where ...

Question 10

If a dollar buys more rice in the China. than in the U.S., then

Accepted Answer

A)   the real exchange rate is greater than 1; a profit might be made by buying rice in the U.S. and selling it in China.
B)   the real exchange rate is greater than 1; a profit might be made by buying rice in China. and selling it in the U.S.
C)   the real exchange rate is less than 1; a profit might be made by buying rice in the U.S. and selling it in China.
D)   the real exchange rate is less than 1; a profit might be made by buying rice in China and selling it in the U.S.E) A) and D)
F) B) and C)

Question 11

If a U.S. textbook publishing company sells texts overseas, 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

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Accepted Answer

A) True 
 B)False

Question 13

If domestic residents of France purchase 1.2 trillion euros of foreign assets and foreigners purchase 1.5 trillion euros of French assets, then France's net capital outflow is

Accepted Answer

A)   -.3 trillion euros, so it must have a trade deficit.
B)   -.3 trillion euros, so it must have a trade surplus.
C)   .3 trillion euros, so it must have a trade deficit.
D)   .3 trillion euros, so it must have a trade surplus.E) None of the above
F) A) and D)

Question 14

Over the past five decades, the U.S. economy has become

Accepted Answer

A)   more closed.
B)   more open.
C)   less trade-oriented.
D)   more self-sufficient.E) None of the above
F) C) and D)

Question 15

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Accepted Answer

A)   The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
B)   The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera there.
C)   The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
D)   The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera.E) A) and C)
F) B) and D)

Question 16

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the television cheaper?

Accepted Answer

The real exchange rate = 30,00...

Question 17

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has

Accepted Answer

A)   positive net exports with Australia and a trade surplus with Australia.
B)   positive net exports with Australia and a trade deficit with Australia.
C)   negative net exports with Australia and a trade surplus with Australia.
D)   negative net exports with Australia and a trade deficit with Australia.E) All of the above
F) B) and C)

Question 18

According to purchasing-power parity, if prices in the United States increase by a larger percentage than prices in the United Kingdom, then the

Accepted Answer

A)   real exchange rate rises.
B)   nominal exchange rate rises.
C)   real exchange rate falls.
D)   nominal exchange rate falls.E) B) and D)
F) All of the above

Question 19

Other things the same, if a country saves more, then

Accepted Answer

A)   net capital outflow rises, so net exports rise.
B)   net capital outflow rises, so net exports fall.
C)   net capital outflow falls, so net exports rise.
D)   net capital outflow falls, so net exports fall.E) A) and B)
F) A) and C)

Question 20

A U.S. grocery store chain bought $800,000 worth of Kenyan currency from a bank in Kenya. It then used these funds to buy $800,000 worth of coffee from Kenyan coffee growers.
As a result of this exchange, 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 ...

Exam 13: Open-Economy Macroeconomics: Basic Concepts

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the suit cheaper?

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Correct Answer
verified

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

Correct Answer
verified

Over the past five decades, the U.S. economy has become

Correct Answer
verified

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

Correct Answer
verified

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has

Correct Answer
verified

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

Correct Answer
verified
The real exchange rate = 30,00...
View Answer

If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?

Correct Answer
verified

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Correct Answer
verified
The theory of purchasing-power parity su...
View Answer

Other things the same, if a country saves more, then

Correct Answer
verified

Correct Answer
verified
It costs less in France where ...
View Answer

If a U.S. textbook publishing company sells texts overseas, U.S. net exports

Correct Answer
verified

If domestic residents of France purchase 1.2 trillion euros of foreign assets and foreigners purchase 1.5 trillion euros of French assets, then France's net capital outflow is

Correct Answer
verified

From 2008 to 2012 both U.S. saving and U.S. investment fell.

Correct Answer
verified

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Correct Answer
verified

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

If a dollar buys more rice in the China. than in the U.S., then

Correct Answer
verified

U.S. exports make up less than 20 percent of GDP.

Correct Answer
verified

According to purchasing-power parity, if prices in the United States increase by a larger percentage than prices in the United Kingdom, then the

Correct Answer
verified

Correct Answer
verified

Exam 13: Open-Economy Macroeconomics: Basic Concepts

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the suit cheaper?

Correct AnswerverifiedThe real exchange rate = $400 ...View AnswerShow Answer

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Over the past five decades, the U.S. economy has become

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has

Correct AnswerverifiedShow Answer

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

Correct AnswerverifiedThe real exchange rate = 30,00...View AnswerShow Answer

If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?

Correct AnswerverifiedShow Answer

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Correct AnswerverifiedThe theory of purchasing-power parity su...View AnswerShow Answer

Other things the same, if a country saves more, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt costs less in France where ...View AnswerShow Answer

If a U.S. textbook publishing company sells texts overseas, U.S. net exports

Correct AnswerverifiedShow Answer

If domestic residents of France purchase 1.2 trillion euros of foreign assets and foreigners purchase 1.5 trillion euros of French assets, then France's net capital outflow is

Correct AnswerverifiedShow Answer

From 2008 to 2012 both U.S. saving and U.S. investment fell.

Correct AnswerverifiedShow Answer

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Correct AnswerverifiedShow Answer

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

If a dollar buys more rice in the China. than in the U.S., then

Correct AnswerverifiedShow Answer

U.S. exports make up less than 20 percent of GDP.

Correct AnswerverifiedShow Answer

According to purchasing-power parity, if prices in the United States increase by a larger percentage than prices in the United Kingdom, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The real exchange rate = 30,00...
View Answer

Correct Answer
verified

Correct Answer
verified
The theory of purchasing-power parity su...
View Answer

Correct Answer
verified

Correct Answer
verified
It costs less in France where ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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