Question 1

A country must have a positive net outflow of capital if it has a trade deficit.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy more stock in foreign corporations. Other things the same, these actions

Accepted Answer

A)  raise both U.S. net exports and U.S. net capital outflows.
B)  raise U.S. net exports and lower U.S. net capital outflows.
C)  lower both U.S. net exports and U.S. net capital outflows.
D)  lower U.S. net exports and raise U.S. net capital outflows.E) C) and D)
F) A) and C)

Question 3

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) A) and B)

Question 4

Suppose that the real exchange rate between the United States and South Korea is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of South Korean goods a basket of U.S goods buys) ?

Accepted Answer

A)  a decrease in the quantity of South Korean currency that can be purchased with a dollar
B)  a decrease in the price of U.S. baskets of goods
C)  a decrease in the price in South Korean currency of South Korean goods.
D)  None of the above is correct.E) B) and D)
F) B) and C)

Question 5

If the exchange rate is 12.5 pesos per U.S. dollar, it is also 1/12.5 U.S. dollars per peso.

Accepted Answer

A) True 
 B)False

Question 6

As measured by the amount of trade it does, has the U.S. economy become more internationalized? Provide two reasons for this change.

Accepted Answer

Yes.
reduced transportation co...

Question 7

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Accepted Answer

A)  7/4 cans of Belgian coffee per can of U.S. coffee
B)  5.6/5 cans of Belgian coffee per can of U.S. coffee
C)  5/5.6 cans of Belgian coffee per can of U.S. coffee
D)  4/7 cans of Belgian coffee per can of U.S. coffeeE) A) and B)
F) A) and C)

Question 8

If a nation is selling more goods and services to foreigners than it is buying from them, then on net it must be selling assets abroad.

Accepted Answer

A) True 
 B)False

Question 9

If a country's purchases of foreign assets exceeds foreign purchases of domestic assets, that country 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 B)
F) C) and D)

Question 10

If foreign residents purchase 30 billion pesos of Mexican assets and Mexican residents purchase 25 billion pesos of foreign assets, then Mexico has a net capital outflow of 5 billion pesos.

Accepted Answer

A) True 
 B)False

Question 11

All saving in the U.S. economy shows up as

Accepted Answer

A)  investment in the U.S. economy.
B)  U.S. net capital outflow.
C)  either investment in the U.S. economy or U.S. net capital outflow.
D)  None of the above is correct.E) A) and D)
F) B) and C)

Question 12

If a nation produces less than it spends what do we know about:
A. its net exports?
B. its net capital outflow?
C. its saving in relation to its domestic investment?

Accepted Answer

A. Its net exports are negativ...

Question 13

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

Accepted Answer

A)  40 and your purchase will increase Brazil's net exports.
B)  10 and your purchase will increase Brazil's net exports.
C)  40 and your purchase will decrease Brazil's net exports.
D)  10 and your purchase will decrease Brazil's net exports.E) All of the above
F) None of the above

Question 14

If prices in Mexico rise at a higher rate than prices in the U.S., then according to purchasing-power parity the U.S. nominal exchange rate with Mexico should rise.

Accepted Answer

A) True 
 B)False

Question 15

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) C) and D)
F) B) and C)

Question 16

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Accepted Answer

A)  increase U.S. net capital outflow because Germans obtain U.S. assets.
B)  decrease U.S. net capital outflow because Germans obtain U.S. assets.
C)  increase U.S. net capital outflow because the U.S. buys capital goods.
D)  decrease U.S. net capital outflow because the U.S. buys capital goods.E) B) and C)
F) A) and C)

Question 17

While vacationing in Agra, India, the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees. If the exchange rate was previously 55 rupees per dollar, what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

Accepted Answer

At an exchange rate of 55 rupees the roo...

Question 18

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

Question 19

Suppose that the nominal exchange rate is 80 yen per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that these values change to 100 yen per dollar, $600, and 70,000 yen. Then the real exchange rate would

Accepted Answer

A)  appreciate which by itself would make U.S. net exports fall.
B)  appreciate which by itself would make U.S. net exports rise.
C)  depreciate which by itself would make U.S. net exports fall.
D)  depreciate which by itself would make U.S. net exports rise.E) C) and D)
F) A) and B)

Question 20

If a U.S. shirt maker purchases cotton from Egypt, 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) A) and D)
F) A) and C)

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy more stock in foreign corporations. Other things the same, these actions

Correct Answer
verified

A country must have a positive net outflow of capital if it has a trade deficit.

Correct Answer
verified

If a country's purchases of foreign assets exceeds foreign purchases of domestic assets, that country has

Correct Answer
verified

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

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 the exchange rate is 12.5 pesos per U.S. dollar, it is also 1/12.5 U.S. dollars per peso.

Correct Answer
verified

Suppose that the real exchange rate between the United States and South Korea is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of South Korean goods a basket of U.S goods buys) ?

Correct Answer
verified

If foreign residents purchase 30 billion pesos of Mexican assets and Mexican residents purchase 25 billion pesos of foreign assets, then Mexico has a net capital outflow of 5 billion pesos.

Correct Answer
verified

Suppose that the nominal exchange rate is 80 yen per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that these values change to 100 yen per dollar, $600, and 70,000 yen. Then the real exchange rate would

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

If a nation is selling more goods and services to foreigners than it is buying from them, then on net it must be selling assets abroad.

Correct Answer
verified

If prices in Mexico rise at a higher rate than prices in the U.S., then according to purchasing-power parity the U.S. nominal exchange rate with Mexico should rise.

Correct Answer
verified

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports

Correct Answer
verified

Correct Answer
verified
At an exchange rate of 55 rupees the roo...
View Answer

As measured by the amount of trade it does, has the U.S. economy become more internationalized? Provide two reasons for this change.

Correct Answer
verified
Yes.
reduced transportation co...
View Answer

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

Correct Answer
verified

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Correct Answer
verified

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Correct Answer
verified

If a nation produces less than it spends what do we know about: A. its net exports? B. its net capital outflow? C. its saving in relation to its domestic investment?

Correct Answer
verified
A. Its net exports are negativ...
View Answer

All saving in the U.S. economy shows up as

Correct Answer
verified

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy more stock in foreign corporations. Other things the same, these actions

Correct AnswerverifiedShow Answer

A country must have a positive net outflow of capital if it has a trade deficit.

Correct AnswerverifiedShow Answer

If a country's purchases of foreign assets exceeds foreign purchases of domestic assets, that country has

Correct AnswerverifiedShow Answer

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

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 the exchange rate is 12.5 pesos per U.S. dollar, it is also 1/12.5 U.S. dollars per peso.

Correct AnswerverifiedShow Answer

Suppose that the real exchange rate between the United States and South Korea is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of South Korean goods a basket of U.S goods buys) ?

Correct AnswerverifiedShow Answer

If foreign residents purchase 30 billion pesos of Mexican assets and Mexican residents purchase 25 billion pesos of foreign assets, then Mexico has a net capital outflow of 5 billion pesos.

Correct AnswerverifiedShow Answer

Suppose that the nominal exchange rate is 80 yen per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that these values change to 100 yen per dollar, $600, and 70,000 yen. Then the real exchange rate would

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

If a nation is selling more goods and services to foreigners than it is buying from them, then on net it must be selling assets abroad.

Correct AnswerverifiedShow Answer

If prices in Mexico rise at a higher rate than prices in the U.S., then according to purchasing-power parity the U.S. nominal exchange rate with Mexico should rise.

Correct AnswerverifiedShow Answer

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAt an exchange rate of 55 rupees the roo...View AnswerShow Answer

As measured by the amount of trade it does, has the U.S. economy become more internationalized? Provide two reasons for this change.

Correct AnswerverifiedYes.reduced transportation co...View AnswerShow Answer

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

Correct AnswerverifiedShow Answer

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Correct AnswerverifiedShow Answer

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Correct AnswerverifiedShow Answer

If a nation produces less than it spends what do we know about: A. its net exports? B. its net capital outflow? C. its saving in relation to its domestic investment?

Correct AnswerverifiedA. Its net exports are negativ...View AnswerShow Answer

All saving in the U.S. economy shows up as

Correct AnswerverifiedShow 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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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
verified
At an exchange rate of 55 rupees the roo...
View Answer

Correct Answer
verified
Yes.
reduced transportation co...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A. Its net exports are negativ...
View Answer

Correct Answer
verified