Question 1

A German company exchanges euros for dollars from U.S.residents and then uses the dollars to buy U.S.products to sell in Germany.U.S.residents who exchanged their dollars for euros use the euros to buy bonds issued by Spanish corporations.At this point

Accepted Answer

A)   both U.S.net exports and U.S.net capital outflows have risen.
B)   both U.S.net exports and U.S.net capital outflow have fallen.
C)   U.S.net exports have risen and U.S.net capital outflow have fallen.
D)   U.S.net exports have fallen and U.S.net capital outflow have risen.E) All of the above
F) A) and B)

Question 2

Mark,a U.S.citizen,buys stock in a British Shipping company.This purchase is an example of

Accepted Answer

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

Question 3

You are the CEO of a U.S.firm considering building a factory in Chile.If the dollar appreciates relative to the Chilean peso,then other things the same

Accepted Answer

A)   it takes fewer dollars to build the factory.By itself building the factory increases U.S.net capital outflow.
B)   it takes fewer dollars to build the factory.By itself building the factory decreases U.S.net capital outflow.
C)   it takes more dollars to build the factory.By itself building the factory increases U.S.net capital outflow.
D)   it takes more dollars to build the factory.By itself building the factory decreases U.S.net capital outflow.E) B) and C)
F) A) and D)

Question 4

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

Question 5

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Accepted Answer

A)   P*/(Pe) .
B)   P/(P*e) .
C)   e(P*/P) .
D)   e(P/P*) ,E) All of the above
F) None of the above

Question 6

Why are net exports and net capital outflow always equal?

Accepted Answer

Net exports and net capital outflow are ...

Question 7

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Accepted Answer

The building of the ...

Question 8

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

Accepted Answer

A)   decreases U.S.net capital outflow.
B)   does not change U.S.net capital outflow.
C)   increases U.S.net capital outflow by more than the value of the bond.
D)   increases U.S.net capital outflow by the value of the bond.E) C) and D)
F) All of the above

Question 9

Purchasing-power parity describes the forces that determine

Accepted Answer

A)   prices in the short run.
B)   prices in the long run.
C)   exchange rates in the short run.
D)   exchange rates in the long run.E) C) and D)
F) B) and C)

Question 10

If the exchange rate is .60 British pounds = $1,a bottle of ale that costs 3 pounds costs

Accepted Answer

A)   $1.80.
B)   $4.80.
C)   $5.
D)   None of the above is correct.E) A) and B)
F) B) and D)

Question 11

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

Accepted Answer

A)   fewer domestic goods and fewer foreign goods.
B)   more domestic goods and fewer foreign goods.
C)   fewer domestic goods and more foreign goods.
D)   more domestic goods and more foreign goods.E) All of the above
F) B) and C)

Question 12

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 13

From 1960 to about 1975 in the United States,net capital outflow was

Accepted Answer

A)   small but always positive.
B)   small and sometimes negative and sometimes positive.
C)   large and positive.
D)   large but sometimes negative and sometimes positive.E) A) and D)
F) C) and D)

Question 14

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods,which of the following increases?

Accepted Answer

A)   Saudi Arabian net exports but not Saudi Arabian net capital outflow
B)   Saudi Arabian net capital outflow but not Saudi Arabian net exports
C)   both Saudi Arabian net exports and net capital outflow
D)   neither Saudi Arabian net exports nor net capital outflowE) A) and D)
F) A) and B)

Question 15

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Accepted Answer

According to purchasing-power parity,a d...

Question 16

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

Question 17

The ability to profit by purchasing wheat in the U.S.and selling it in China implies that the

Accepted Answer

A)   nominal exchange rate is less than 1.
B)   nominal exchange rate is greater than 1.
C)   real exchange rate is less than 1.
D)   real exchange rate is greater than 1.E) B) and C)
F) A) and D)

Question 18

A farm equipment retailer in Azerbaijan exchanges Azerbaijan manats (the currency of Azerbaijan)for $300,000 a bank in Azerbaijan was holding.It uses the $300,000 to buy farm equipment from a U.S.company.The U.S.company deposits half of these funds in a U.S.bank and exchanges the other half for euros from a bank in London.
As a result of these transactions,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 19

If Norway sold more goods and services abroad than it purchased from abroad,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) None of the above
F) A) and D)

Question 20

The nominal exchange rate is 30 Thai bhat for one U.S.dollar.A sub sandwich combo deal in the U.S.costs $6 dollars in the U.S.and 120 bhat in Thailand.The real exchange rate is

Accepted Answer

A)   3/8
B)   2/3
C)   3/2
D)   8/3E) B) and C)
F) A) and C)

Exam 31: Open-Economy Macroeconomic Models

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

Correct Answer
verified

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

Correct Answer
verified

Why are net exports and net capital outflow always equal?

Correct Answer
verified
Net exports and net capital outflow are ...
View Answer

If Norway sold more goods and services abroad than it purchased from abroad,then it had

Correct Answer
verified

If the exchange rate is .60 British pounds = $1,a bottle of ale that costs 3 pounds costs

Correct Answer
verified

Net capital outflow equals the difference between a country's

Correct Answer
verified

Purchasing-power parity describes the forces that determine

Correct Answer
verified

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

Correct Answer
verified

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

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods,which of the following increases?

Correct Answer
verified

You are the CEO of a U.S.firm considering building a factory in Chile.If the dollar appreciates relative to the Chilean peso,then other things the same

Correct Answer
verified

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Correct Answer
verified
The building of the ...
View Answer

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Correct Answer
verified
According to purchasing-power parity,a d...
View Answer

From 1960 to about 1975 in the United States,net capital outflow was

Correct Answer
verified

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

The nominal exchange rate is 30 Thai bhat for one U.S.dollar.A sub sandwich combo deal in the U.S.costs $6 dollars in the U.S.and 120 bhat in Thailand.The real exchange rate is

Correct Answer
verified

The ability to profit by purchasing wheat in the U.S.and selling it in China implies that the

Correct Answer
verified

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Correct Answer
verified

A German company exchanges euros for dollars from U.S.residents and then uses the dollars to buy U.S.products to sell in Germany.U.S.residents who exchanged their dollars for euros use the euros to buy bonds issued by Spanish corporations.At this point

Correct Answer
verified

Mark,a U.S.citizen,buys stock in a British Shipping company.This purchase is an example of

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

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

Correct AnswerverifiedShow Answer

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

Correct AnswerverifiedShow Answer

Why are net exports and net capital outflow always equal?

Correct AnswerverifiedNet exports and net capital outflow are ...View AnswerShow Answer

If Norway sold more goods and services abroad than it purchased from abroad,then it had

Correct AnswerverifiedShow Answer

If the exchange rate is .60 British pounds = $1,a bottle of ale that costs 3 pounds costs

Correct AnswerverifiedShow Answer

Net capital outflow equals the difference between a country's

Correct AnswerverifiedShow Answer

Purchasing-power parity describes the forces that determine

Correct AnswerverifiedShow Answer

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

Correct AnswerverifiedShow 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

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods,which of the following increases?

Correct AnswerverifiedShow Answer

You are the CEO of a U.S.firm considering building a factory in Chile.If the dollar appreciates relative to the Chilean peso,then other things the same

Correct AnswerverifiedShow Answer

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Correct AnswerverifiedThe building of the ...View AnswerShow Answer

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Correct AnswerverifiedAccording to purchasing-power parity,a d...View AnswerShow Answer

From 1960 to about 1975 in the United States,net capital outflow was

Correct AnswerverifiedShow Answer

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

The nominal exchange rate is 30 Thai bhat for one U.S.dollar.A sub sandwich combo deal in the U.S.costs $6 dollars in the U.S.and 120 bhat in Thailand.The real exchange rate is

Correct AnswerverifiedShow Answer

The ability to profit by purchasing wheat in the U.S.and selling it in China implies that the

Correct AnswerverifiedShow Answer

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Correct AnswerverifiedShow Answer

A German company exchanges euros for dollars from U.S.residents and then uses the dollars to buy U.S.products to sell in Germany.U.S.residents who exchanged their dollars for euros use the euros to buy bonds issued by Spanish corporations.At this point

Correct AnswerverifiedShow Answer

Mark,a U.S.citizen,buys stock in a British Shipping company.This purchase is an example of

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Net exports and net capital outflow are ...
View Answer

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Correct Answer
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The building of the ...
View Answer

Correct Answer
verified
According to purchasing-power parity,a d...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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