Question 1

If U.S.consumers decrease their demand for cellphones from Finland,then other things the same Finland's

Accepted Answer

A)   exports and net exports fall.
B)   exports fall and net exports rise.
C)   imports and net exports fall.
D)   imports fall and net exports rise.E) B) and C)
F) None of the above

Question 2

Last year a country had $700 billion of saving and $900 of investment.This year it had $1000 of saving and $800 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 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) B) and C)
F) A) and B)

Question 4

You are staying in London over the summer and you have a number of dollars with you.If the dollar depreciates relative to the British pound,then other things the same,

Accepted Answer

A)   the dollar would buy more pounds.The depreciation would discourage you from buying as many British goods and services.
B)   the dollar would buy more pounds.The depreciation would encourage you to buy more British goods and services.
C)   the dollar would buy fewer pounds.The depreciation would discourage you from buying as many British goods and services.
D)   the dollar would buy fewer pounds.The depreciation would encourage you to buy more British goods and services.E) C) and D)
F) None of the above

Question 5

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 C)
F) A) and B)

Question 6

The law of one price states that

Accepted Answer

A)   a good must sell at the price fixed by law.
B)   a good must sell at the same price at all locations.
C)   a good cannot sell for a price greater than the legal price ceiling.
D)   nominal exchange rates will not vary.E) A) and B)
F) A) and C)

Question 7

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 C)

Question 8

Movies are a major export of the U.S.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

The nominal exchange rate is 8.5 Moroccan dirham per dollar.The price of a bushel of wheat in Morocco is 85 dirham in Morocco and $7 in the U.S.
A.What is the real exchange rate? Show your work.
B.Can arbitragers make a profit?
C.If your answer to B is yes,where would arbitragers buy and where would they sell.

Accepted Answer

A.The real exchange rate = $7 ...

Question 11

According to purchasing power parity,if over the course of a year the price level in the U.S.rises more than in Japan,then which of the following falls?

Accepted Answer

A)   the U.S.real exchange rate,but not the U.S.nominal exchange rate
B)   the U.S.nominal exchange rate,but not the U.S.real exchange rate
C)   the U.S.nominal exchange rate and the U.S.real exchange rate
D)   neither the real exchange rate nor the nominal exchange rateE) B) and D)
F) All of the above

Question 12

From 1980-1987,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) None of the above
F) B) and C)

Question 13

From 1980 to 1987

Accepted Answer

A)   foreigners were buying more capital assets from the United States than Americans were buying abroad.The United States was going into debt.
B)   Americans were buying more capital assets abroad than foreigners were buying from the United States.The United States was going into debt.
C)   foreigners were buying more capital assets from the United States than Americans were buying abroad.The United States was moving into surplus.
D)   Americans were buying more capital assets abroad than foreigners were buying from the United States.The United States was moving into surplus.E) None of the above
F) B) and C)

Question 14

A U.S.pharmacy buys drugs from a British company and pays for them with US dollars.This transaction

Accepted Answer

A)   increases British net exports,and increases U.S.net capital outflow.
B)   increases British net exports,and decreases U.S.net capital outflow.
C)   decreases British net exports,and increases U.S.net capital outflow.
D)   decreases British net exports,and decreases U.S.net capital outflow.E) B) and C)
F) A) and D)

Question 15

In an open economy,gross domestic product equals $1,850 billion,consumption expenditure equals $975 billion,government expenditure equals $225 billion,investment equals $500 billion,and net exports equals $150 billion.What is national savings?

Accepted Answer

A)   $0
B)   $500 billion
C)   $650 billion
D)   $975 billionE) C) and D)
F) B) and C)

Question 16

If a country exports more than it imports,then it has

Accepted Answer

A)   positive net exports and positive net capital outflows.
B)   positive net exports and negative net capital outflows.
C)   negative net exports and positive net capital outflows.
D)   negative net exports and negative net capital outflows.E) A) and D)
F) B) and C)

Question 17

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad,then it has

Accepted Answer

A)   $48 billion of imports and $40 billion of exports.
B)   $48 billion of exports and $40 billion of imports.
C)   $40 billion of imports and $32 billion of exports.
D)   $40 billion of exports and $32 billion of imports.E) B) and C)
F) B) and D)

Question 18

If purchasing-power parity holds,then the value of the

Accepted Answer

A)   nominal exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
B)   nominal exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.
C)   real exchange rate is equal to one.A dollar buys as many goods in the U.S.as it does overseas.
D)   real exchange rate is equal to one.A dollar buys the quantity of foreign currency equal to the U.S.price level divided by the foreign country's price level.E) None of the above
F) All of the above

Question 19

Suppose that a country imports $75 million of goods and services and exports $100 million of goods and services.What is the value of net exports?

Accepted Answer

A)   $175 million
B)   $75 million
C)   $25 million
D)   -$25 millionE) A) and B)
F) C) and D)

Question 20

If U.S.residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of U.S.assets,

Accepted Answer

A)   U.S.net capital outflow is $800 billion;capital is flowing into the U.S.
B)   U.S.net capital outflow is $800 billion;capital is flowing out of the U.S.
C)   U.S.net capital outflow is -$800 billion;capital is flowing into the U.S.
D)   U.S.net capital outflow is -$800 billion;capital is flowing out of the U.S.E) C) and D)
F) B) and D)

Exam 31: Open-Economy Macroeconomic Models

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 Answer
verified

Correct Answer
verified
A.The real exchange rate = $7 ...
View Answer

From 1980-1987,U.S.net capital outflow as a percent of GDP became a

Correct Answer
verified

If purchasing-power parity holds,then the value of the

Correct Answer
verified

You are staying in London over the summer and you have a number of dollars with you.If the dollar depreciates relative to the British pound,then other things the same,

Correct Answer
verified

Movies are a major export of the U.S.

Correct Answer
verified

If a country exports more than it imports,then it has

Correct Answer
verified

According to purchasing power parity,if over the course of a year the price level in the U.S.rises more than in Japan,then which of the following falls?

Correct Answer
verified

A U.S.pharmacy buys drugs from a British company and pays for them with US dollars.This transaction

Correct Answer
verified

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

Correct Answer
verified

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad,then it has

Correct Answer
verified

If U.S.residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of U.S.assets,

Correct Answer
verified

If U.S.consumers decrease their demand for cellphones from Finland,then other things the same Finland's

Correct Answer
verified

From 1980 to 1987

Correct Answer
verified

Last year a country had $700 billion of saving and $900 of investment.This year it had $1000 of saving and $800 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?

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

Suppose that a country imports $75 million of goods and services and exports $100 million of goods and services.What is the value of net exports?

Correct Answer
verified

The law of one price states that

Correct Answer
verified

In an open economy,gross domestic product equals $1,850 billion,consumption expenditure equals $975 billion,government expenditure equals $225 billion,investment equals $500 billion,and net exports equals $150 billion.What is national savings?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

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

Correct AnswerverifiedA.The real exchange rate = $7 ...View AnswerShow Answer

From 1980-1987,U.S.net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

If purchasing-power parity holds,then the value of the

Correct AnswerverifiedShow Answer

You are staying in London over the summer and you have a number of dollars with you.If the dollar depreciates relative to the British pound,then other things the same,

Correct AnswerverifiedShow Answer

Movies are a major export of the U.S.

Correct AnswerverifiedShow Answer

If a country exports more than it imports,then it has

Correct AnswerverifiedShow Answer

According to purchasing power parity,if over the course of a year the price level in the U.S.rises more than in Japan,then which of the following falls?

Correct AnswerverifiedShow Answer

A U.S.pharmacy buys drugs from a British company and pays for them with US dollars.This transaction

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 a country has net exports of $8 billion and sold $40 billion of goods and services abroad,then it has

Correct AnswerverifiedShow Answer

If U.S.residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of U.S.assets,

Correct AnswerverifiedShow Answer

If U.S.consumers decrease their demand for cellphones from Finland,then other things the same Finland's

Correct AnswerverifiedShow Answer

From 1980 to 1987

Correct AnswerverifiedShow Answer

Last year a country had $700 billion of saving and $900 of investment.This year it had $1000 of saving and $800 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?

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

Suppose that a country imports $75 million of goods and services and exports $100 million of goods and services.What is the value of net exports?

Correct AnswerverifiedShow Answer

The law of one price states that

Correct AnswerverifiedShow Answer

In an open economy,gross domestic product equals $1,850 billion,consumption expenditure equals $975 billion,government expenditure equals $225 billion,investment equals $500 billion,and net exports equals $150 billion.What is national savings?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A.The real exchange rate = $7 ...
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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Correct Answer
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Correct Answer
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Correct Answer
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Both net capital outflows and net export...
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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Correct Answer
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