Question 1

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) All of the above
F) A) and B)

Question 2

Which of the following statements is correct for an open economy with a trade surplus?

Accepted Answer

A)   The trade surplus cannot last for very many years.
B)   The trade surplus must be offset by negative net capital outflow.
C)   The trade surplus implies that the country's national saving is greater than domestic investment.
D)   None of the above is correct.E) A) and C)
F) A) and D)

Question 3

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

Accepted Answer

A)   buying lobsters in Maine and selling them in Massachusetts.This action would increase the price of lobster in Massachusetts.
B)   buying lobsters in Maine and selling them in Massachusetts.This action would decrease the price of lobster in Massachusetts.
C)   buying lobsters in Massachusetts and selling them in Maine.This action would increase the price of lobster in Massachusetts.
D)   buying lobsters in Massachusetts and selling them in Maine.This action would decrease the price of lobster in Massachusetts.E) All of the above
F) B) and D)

Question 4

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company.
As a result of this exchange,by how much,if at all,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 in...

Question 5

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

Question 6

If Japan's national saving exceeds its domestic investment,then Japan has

Accepted Answer

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

Question 7

Ivan,a Russian citizen,sells several hundred cases of caviar to a restaurant chain in the United States.By itself,this sale

Accepted Answer

A)   increases U.S.net exports and decreases Russian net exports.
B)   increases U.S.net exports and has no effect on Russian net exports.
C)   decreases U.S.net exports and increases Russian net exports.
D)   decreases U.S.net exports and has no effect on Russian net exports.E) None of the above
F) A) and B)

Question 8

During some year a country had exports of $50 billion,imports of $35 billion,and purchased $30 billion of foreign assets.What was the value of domestic assets purchased by foreigners?

Accepted Answer

A)   $35 billion
B)   $20 billion
C)   $15 billion
D)   $5 billionE) All of the above
F) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The nominal exchange rate is 2 Barbados dollars per U.S.dollar.If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S.is 2 U.S.dollars,what is the real exchange rate to the nearest 100th?

Accepted Answer

A)   3 Barbados goods per U.S.good
B)   1.33 Barbados goods per U.S.good
C)   .75 Barbados goods per U.S.good
D)   none of the above is correctE) B) and C)
F) A) and C)

Question 11

Table 18-2
 
-Refer to Table 18-2.In real terms,U.S.goods are less expensive than goods in which country(ies) ?

Accepted Answer

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

Question 12

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India,the real exchange rate would be computed as how many Indian goods per U.S.goods?

Accepted Answer

A)   one
B)   the number of dollars needed to buy U.S.goods divided by the number of rupees needed to buy Indian goods
C)   the number of rupees needed to buy Indian goods divided by the number of dollars needed to buy U.S.goods
D)   None of the above is correct.E) B) and C)
F) None of the above

Question 13

The nominal exchange rate is .80 euros per U.S.dollar and a basket of goods in France costs 1,000 euros while the same basket costs $800 in the U.S.The nominal exchange rate is 1.2 Australian dollars per U.S.dollar and a basket of goods in Australia costs 960 Australian dollars while the same basket costs $800 in the U.S..Which country has purchasing-power parity with the U.S.?

Accepted Answer

A)   both France and Australia
B)   France but not Australia
C)   Australia but not France
D)   neither France nor AustraliaE) A) and B)
F) B) and C)

Question 14

If purchasing power parity holds,a bushel of rice costs $10 in the U.S. ,and the nominal exchange rate is 40 Thai baht per dollar,what is the price of rice in Thailand?

Accepted Answer

A)   400 baht
B)   200 baht
C)   100 baht
D)   40 bahtE) A) and C)
F) B) and D)

Question 15

Most of the change from 2000 to 2006 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) B) and D)
F) None of the above

Question 16

An American farm equipment dealer sells dollars to obtain euros.It then uses the euros to buy farm equipment from a German company.This exchange

Accepted Answer

A)   increases U.S.net capital outflow because Germans obtain U.S.assets.
B)   decreases U.S.net capital outflow because Germans obtain U.S.assets.
C)   increases U.S.net capital outflow because the U.S.buys capital goods.
D)   decreases U.S.net capital outflow because the U.S.buys capital goods.E) B) and C)
F) All of the above

Question 17

In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

Accepted Answer

A)   $280 billion
B)   $780 billion
C)   $890 billion
D)   $1,170 billionE) A) and B)
F) B) and C)

Question 18

From 1970 to 1998 the U.S.dollar

Accepted Answer

A)   gained value compared to the German mark because inflation was higher in Germany.
B)   gained value compared to the German mark because inflation was lower in Germany.
C)   lost value compared to the German mark because inflation was higher in Germany.
D)   lost value compared to the German mark because inflation was lower in Germany.E) All of the above
F) B) and D)

Question 19

Sheri,a U.S.citizen,builds and operates a bookstore in Spain.This action is an example of

Accepted Answer

A)   investment for Sheri and U.S.foreign direct investment.
B)   investment for Sheri and U.S.foreign portfolio investment.
C)   U.S.foreign direct investment and U.S.domestic investment.
D)   U.S.foreign portfolio investment and U.S.domestic investment.E) B) and C)
F) A) and D)

Question 20

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

Accepted Answer

A)   the trade deficit rises and net capital outflow rises.
B)   the trade deficit rises and net capital outflow falls.
C)   the trade deficit falls and net capital outflows rise.
D)   the trade deficit falls and net capital outflows fall.E) A) and D)
F) A) and C)

Exam 31: Open-Economy Macroeconomic Models

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

Correct Answer
verified

If purchasing power parity holds,a bushel of rice costs $10 in the U.S. ,and the nominal exchange rate is 40 Thai baht per dollar,what is the price of rice in Thailand?

Correct Answer
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During some year a country had exports of $50 billion,imports of $35 billion,and purchased $30 billion of foreign assets.What was the value of domestic assets purchased by foreigners?

Correct Answer
verified

Correct Answer
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In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

Correct Answer
verified

Sheri,a U.S.citizen,builds and operates a bookstore in Spain.This action is an example of

Correct Answer
verified

The nominal exchange rate is 2 Barbados dollars per U.S.dollar.If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S.is 2 U.S.dollars,what is the real exchange rate to the nearest 100th?

Correct Answer
verified

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India,the real exchange rate would be computed as how many Indian goods per U.S.goods?

Correct Answer
verified

If Japan's national saving exceeds its domestic investment,then Japan has

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company. As a result of this exchange,by how much,if at all,and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

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

From 1970 to 1998 the U.S.dollar

Correct Answer
verified

Table 18-2 -Refer to Table 18-2.In real terms,U.S.goods are less expensive than goods in which country(ies) ?

Correct Answer
verified

Most of the change from 2000 to 2006 in U.S.net capital outflow as a percent of GDP was due to a(n)

Correct Answer
verified

Which of the following statements is correct for an open economy with a trade surplus?

Correct Answer
verified

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

Correct Answer
verified

Ivan,a Russian citizen,sells several hundred cases of caviar to a restaurant chain in the United States.By itself,this sale

Correct Answer
verified

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

Correct Answer
verified

An American farm equipment dealer sells dollars to obtain euros.It then uses the euros to buy farm equipment from a German company.This exchange

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

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

Correct AnswerverifiedShow Answer

If purchasing power parity holds,a bushel of rice costs $10 in the U.S. ,and the nominal exchange rate is 40 Thai baht per dollar,what is the price of rice in Thailand?

Correct AnswerverifiedShow Answer

During some year a country had exports of $50 billion,imports of $35 billion,and purchased $30 billion of foreign assets.What was the value of domestic assets purchased by foreigners?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

Correct AnswerverifiedShow Answer

Sheri,a U.S.citizen,builds and operates a bookstore in Spain.This action is an example of

Correct AnswerverifiedShow Answer

The nominal exchange rate is 2 Barbados dollars per U.S.dollar.If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S.is 2 U.S.dollars,what is the real exchange rate to the nearest 100th?

Correct AnswerverifiedShow Answer

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India,the real exchange rate would be computed as how many Indian goods per U.S.goods?

Correct AnswerverifiedShow Answer

If Japan's national saving exceeds its domestic investment,then Japan has

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company. As a result of this exchange,by how much,if at all,and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

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

From 1970 to 1998 the U.S.dollar

Correct AnswerverifiedShow Answer

Table 18-2 -Refer to Table 18-2.In real terms,U.S.goods are less expensive than goods in which country(ies) ?

Correct AnswerverifiedShow Answer

Most of the change from 2000 to 2006 in U.S.net capital outflow as a percent of GDP was due to a(n)

Correct AnswerverifiedShow Answer

Which of the following statements is correct for an open economy with a trade surplus?

Correct AnswerverifiedShow Answer

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

Correct AnswerverifiedShow Answer

Ivan,a Russian citizen,sells several hundred cases of caviar to a restaurant chain in the United States.By itself,this sale

Correct AnswerverifiedShow Answer

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

Correct AnswerverifiedShow Answer

An American farm equipment dealer sells dollars to obtain euros.It then uses the euros to buy farm equipment from a German company.This exchange

Correct AnswerverifiedShow Answer

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

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