Question 1

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

Question 2

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Accepted Answer

A)   A Swedish bank buys a bond issued by the U.S. government.
B)   A German company builds a car factory in the U.S.
C)   A U.S. mutual fund purchases stock issued by a corporation in Bolivia.
D)   A U.S. grocery chain builds and operates a new warehouse in Honduras.E) B) and C)
F) B) and D)

Question 3

Which of the following is an example of U.S. foreign direct investment?

Accepted Answer

A)   A Swedish car manufacturer opens a plant in Tennessee.
B)   A Dutch citizen buys shares of stock in a U.S. company.
C)   A U.S. based restaurant chain opens new restaurants in India.
D)   A U.S. citizen buys stock in companies located in Japan.E) A) and B)
F) A) and C)

Question 4

If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge per dollar, the dollar has

Accepted Answer

A)   appreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods.
B)   appreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods.
C)   depreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods.
D)   depreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods.E) A) and B)
F) All of the above

Question 5

Peru has exports of $31.5 million and imports of $30 million. Peru

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

Question 6

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 C)

Question 7

Which of the following does purchasing-power parity imply?

Accepted Answer

A)   The purchasing power of the dollar is the same in the U.S. as in foreign countries.
B)   The price of domestic goods relative to foreign goods cannot change.
C)   The nominal exchange rate is the ratio of U.S. prices to foreign prices.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 8

During the tough economic times from 2008-2012,

Accepted Answer

A)   investment fell but saving rose, so net capital outflow rose.
B)   investment fell by more than saving fell, so net capital outflow rose
C)   investment fell by less than saving fell, so net capital outflow fell.
D)   investment and saving both fell by about the same percent.E) A) and B)
F) All of the above

Question 9

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

Question 10

Last year a country had $700 billion of saving and $900 of investment. This year it had $1000 billion of saving and $800 billion of investment. By how much did net capital outflow change? By how much did net exports change? How is it possible for a country to have saving that is greater than investment?

Accepted Answer

Both net capital outflows and net export...

Question 11

In which of the following situations must national saving rise?

Accepted Answer

A)   Both domestic investment and net capital outflow increase.
B)   Domestic investment increases and net capital outflow decreases.
C)   Domestic investment decreases and net capital outflow increases.
D)   Both domestic investment and net capital outflow decrease.E) A) and B)
F) None of the above

Question 12

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

Accepted Answer

A)   the foreign price is 4 dinars and the exchange rate is 1/2 dinars per dollar
B)   the foreign price is 5 dinars and the exchange rate is 2.5 dinars per dollar
C)   the foreign price is 4 dinars and the exchange rate is 2 dinars per dollar
D)   the foreign price is 5 dinars and the exchange rate is 2/5 dinars per dollarE) A) and B)
F) A) and C)

Question 13

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 14

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Accepted Answer

A) True 
 B)False

Question 15

You hold currency from a foreign country. If that country has a higher rate of inflation than the United States, then over time the foreign currency will buy

Accepted Answer

A)   more goods in that country and buy more dollars.
B)   more goods in that country but buy fewer dollars.
C)   fewer goods in that country but buy more dollars.
D)   fewer goods in that country and buy fewer dollars.E) None of the above
F) A) and D)

Question 16

If the real exchange rate between the U.S. and Argentina is 1, then

Accepted Answer

A)   purchasing-power parity holds, and 1 U.S. dollar buys 1 Argentinean bolivar.
B)   purchasing-power parity holds, and the amount of dollars needed to buy goods in the U.S. is the same as the amount needed to buy enough Argentinean bolivars to buy the same goods in Argentina.
C)   purchasing-power parity does not hold, but 1 U.S. dollar buys 1 Argentinean bolivar.
D)   purchasing-power parity does not hold, but the amount of dollars needed to buy goods in the U.S. is the same as the amount needed to buy enough Argentinean bolivars to buy the same goods in Argentina.E) A) and B)
F) A) and C)

Question 17

The large trade deficits in the U.S. during the 1990's were primarily associated with a rise in domestic investment spending rather than a rise in the budget deficit.

Accepted Answer

A) True 
 B)False

Question 18

By itself, when a Japanese bank purchases a bond issued by a U.S. corporation, U.S. net capital outflow rises.

Accepted Answer

A) True 
 B)False

Question 19

Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real exchange rate would be computed as how many Danish goods per U.S. goods?

Accepted Answer

A)   five
B)   the amount of kroner that can be bought with twenty U.S. cents
C)   the amount of kroner that can be bought with 5 dollars
D)   None of the above is correct.E) None of the above
F) All of the above

Question 20

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be

Accepted Answer

A)   $110 billion
B)   $90 billion.
C)   $70 billion.
D)   $60 billion.E) B) and C)
F) A) and C)

Exam 13: Open-Economy Macroeconomics: Basic Concepts

Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real exchange rate would be computed as how many Danish goods per U.S. goods?

Correct Answer
verified

The large trade deficits in the U.S. during the 1990's were primarily associated with a rise in domestic investment spending rather than a rise in the budget deficit.

Correct Answer
verified

Peru has exports of $31.5 million and imports of $30 million. Peru

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

You hold currency from a foreign country. If that country has a higher rate of inflation than the United States, then over time the foreign currency will buy

Correct Answer
verified

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

Correct Answer
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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 Answer
verified

If the real exchange rate between the U.S. and Argentina is 1, then

Correct Answer
verified

Correct Answer
verified
Both net capital outflows and net export...
View Answer

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Correct Answer
verified

By itself, when a Japanese bank purchases a bond issued by a U.S. corporation, U.S. net capital outflow rises.

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

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

Correct Answer
verified

If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge per dollar, the dollar has

Correct Answer
verified

In which of the following situations must national saving rise?

Correct Answer
verified

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be

Correct Answer
verified

Which of the following does purchasing-power parity imply?

Correct Answer
verified

During the tough economic times from 2008-2012,

Correct Answer
verified

Which of the following is an example of U.S. foreign direct investment?

Correct Answer
verified

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct Answer
verified

Exam 13: Open-Economy Macroeconomics: Basic Concepts

Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real exchange rate would be computed as how many Danish goods per U.S. goods?

Correct AnswerverifiedShow Answer

The large trade deficits in the U.S. during the 1990's were primarily associated with a rise in domestic investment spending rather than a rise in the budget deficit.

Correct AnswerverifiedShow Answer

Peru has exports of $31.5 million and imports of $30 million. Peru

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

You hold currency from a foreign country. If that country has a higher rate of inflation than the United States, then over time the foreign currency will buy

Correct AnswerverifiedShow Answer

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

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 the real exchange rate between the U.S. and Argentina is 1, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedBoth net capital outflows and net export...View AnswerShow Answer

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Correct AnswerverifiedShow Answer

By itself, when a Japanese bank purchases a bond issued by a U.S. corporation, U.S. net capital outflow rises.

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

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

Correct AnswerverifiedShow Answer

If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge per dollar, the dollar has

Correct AnswerverifiedShow Answer

In which of the following situations must national saving rise?

Correct AnswerverifiedShow Answer

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be

Correct AnswerverifiedShow Answer

Which of the following does purchasing-power parity imply?

Correct AnswerverifiedShow Answer

During the tough economic times from 2008-2012,

Correct AnswerverifiedShow Answer

Which of the following is an example of U.S. foreign direct investment?

Correct AnswerverifiedShow Answer

If the exchange rate is 80 yen per dollar, then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct AnswerverifiedShow Answer

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Both net capital outflows and net export...
View Answer

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