Question 1

Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austria's net capital outflow?

Accepted Answer

A)  Carl's
B)  Carly's
C)  both Carl's and Carly's
D)  neither Carl's nor Carly'sE) B) and C)
F) All of the above

Question 2

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Accepted Answer

A)  both a U.S. and Chinese export.
B)  both a U.S. and Chinese import.
C)  a U.S. import and a Chinese export.
D)  a U.S. export and a Chinese import.E) B) and C)
F) All of the above

Question 3

A Portuguese company exchanges euros for $60,000 from a U.S. bank. The Portuguese firm then uses the dollars to purchase $60,000 of canning equipment from a U.S. company. As a result of these two transactions alone

Accepted Answer

A)  both U.S. net capital outflow and U.S. net exports rise.
B)  U.S. net capital outflow rose and U.S. net exports fall.
C)  U.S. net capital outflow fell and U.S. net exports rise.
D)  both U.S. net capital and U.S. net exports fall.E) A) and C)
F) All of the above

Question 4

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Accepted Answer

A)  foreign portfolio investment that increase U.S. net capital outflow.
B)  foreign portfolio investment that decrease U.S. net capital outflow.
C)  foreign direct investment that increase U.S. net capital outflow.
D)  foreign direct investment that decrease U.S. net capital outflow.E) A) and C)
F) A) and D)

Question 5

A department store chain in Japan uses yen to purchase 500,000 U.S. dollars from a U.S. bank. It then uses these dollars to buy DVDs from a U.S. filmmaker. As a result of these transactions:
A. By how much and in what direction did U.S. net exports change?
B. By how much and in which direction did U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 6

The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3. Which of the following prices for a particular good are consistent with these exchange rates?

Accepted Answer

A)  $4 in the U.S. and 3 euros in Italy.
B)  $4 in the U.S. and 3.75 euros in Italy.
C)  $5 in the U.S. and 3 euros in Italy.
D)  $6 in the U.S. and 2.50 euros in Italy.E) B) and D)
F) A) and C)

Question 7

If saving is less than domestic investment, then

Accepted Answer

A)  there is a trade deficit and Y > C + I + G.
B)  there is a trade deficit and Y 
C)  there is a trade surplus and Y > C + I + G.
D)  there is a trade surplus and Y < C + I + G.E) A) and B)
F) A) and C)

Question 8

A country recently had a GDP of $1000 billion. Its consumption expenditures were $650 billion, its government spent $250 billion, and it had domestic investment of $150 billion. What was the value of this country's net capital outflow? Explain how you found your answer.

Accepted Answer

saving = GDP - consumption - government ...

Question 9

From 1991-2000, 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) All of the above

Question 10

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 D)
F) All of the above

Question 11

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

Question 12

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

Question 13

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) None of the above

Question 14

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Accepted Answer

A)  are an export of the U.S. and increase U.S. net exports.
B)  are an export of the U.S. and decrease U.S. net exports.
C)  are an import of the U.S. and increase U.S. net exports.
D)  are an import of the U.S. and decrease U.S. net exports.E) A) and B)
F) None of the above

Question 15

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Accepted Answer

The theory of purchasing-power parity su...

Question 16

Which of the following both reduce net exports?

Accepted Answer

A)  exports rise, imports rise
B)  exports rise, imports fall
C)  exports fall, imports rise
D)  exports fall, imports fallE) None of the above
F) B) and C)

Question 17

If domestic residents of other countries purchase $600 billion of U.S. assets and U.S residents purchase $500 billion of foreign assets, then U.S. net capital outflow is

Accepted Answer

A)  $100 billion and the U.S. has a trade surplus.
B)  $100 billion and the U.S has a trade deficit.
C)  -$100 billion and the U.S. has a trade surplus.
D)  -$100 billion and the U.S. has a trade deficit.E) A) and B)
F) A) and C)

Question 18

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) A) and D)

Question 19

If the number of South Korean Won it takes to buy a U.S. dollar rises and the prices of U.S. goods rise more than the prices of South Korean goods. then the US real exchange rate

Accepted Answer

A)  appreciates and so U.S. net exports fall.
B)  appreciates and so U.S. net exports rise.
C)  depreciates and so U.S. net exports fall.
D)  depreciates and so U.S. net exports rise.E) A) and D)
F) B) and C)

Question 20

If a country had a trade surplus of $50 billion and then its exports rose by $30 billion and its imports rose by $20 billion, its net exports would now be

Accepted Answer

A)  $0 billion.
B)  $20 billion.
C)  $40 billion.
D)  $60 billion.E) C) and D)
F) A) and B)

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Which of the following both reduce net exports?

Correct Answer
verified

Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austria's net capital outflow?

Correct Answer
verified

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

Correct Answer
verified

If a country had a trade surplus of $50 billion and then its exports rose by $30 billion and its imports rose by $20 billion, its net exports would now be

Correct Answer
verified

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Correct Answer
verified

The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3. Which of the following prices for a particular good are consistent with these exchange rates?

Correct Answer
verified

If the number of South Korean Won it takes to buy a U.S. dollar rises and the prices of U.S. goods rise more than the prices of South Korean goods. then the US real exchange rate

Correct Answer
verified

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

Correct Answer
verified

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Correct Answer
verified

If domestic residents of other countries purchase $600 billion of U.S. assets and U.S residents purchase $500 billion of foreign assets, then U.S. net capital outflow is

Correct Answer
verified

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Correct Answer
verified
The theory of purchasing-power parity su...
View Answer

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Correct Answer
verified

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Correct Answer
verified

If saving is less than domestic investment, then

Correct Answer
verified

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

Correct Answer
verified

A Portuguese company exchanges euros for $60,000 from a U.S. bank. The Portuguese firm then uses the dollars to purchase $60,000 of canning equipment from a U.S. company. As a result of these two transactions alone

Correct Answer
verified

A country recently had a GDP of $1000 billion. Its consumption expenditures were $650 billion, its government spent $250 billion, and it had domestic investment of $150 billion. What was the value of this country's net capital outflow? Explain how you found your answer.

Correct Answer
verified
saving = GDP - consumption - government ...
View 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 Answer
verified

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

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

Correct Answer
verified

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Which of the following both reduce net exports?

Correct AnswerverifiedShow Answer

Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austria's net capital outflow?

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 a country had a trade surplus of $50 billion and then its exports rose by $30 billion and its imports rose by $20 billion, its net exports would now be

Correct AnswerverifiedShow Answer

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3. Which of the following prices for a particular good are consistent with these exchange rates?

Correct AnswerverifiedShow Answer

If the number of South Korean Won it takes to buy a U.S. dollar rises and the prices of U.S. goods rise more than the prices of South Korean goods. then the US real exchange rate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A U.S. corporation builds a restaurant in China. Its expenditures are U.S.

Correct AnswerverifiedShow Answer

If domestic residents of other countries purchase $600 billion of U.S. assets and U.S residents purchase $500 billion of foreign assets, then U.S. net capital outflow is

Correct AnswerverifiedShow Answer

Can purchasing-power parity be used to explain the fact that the U.S. dollar depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

Correct AnswerverifiedThe theory of purchasing-power parity su...View AnswerShow Answer

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

Correct AnswerverifiedShow Answer

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Correct AnswerverifiedShow Answer

If saving is less than domestic investment, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Portuguese company exchanges euros for $60,000 from a U.S. bank. The Portuguese firm then uses the dollars to purchase $60,000 of canning equipment from a U.S. company. As a result of these two transactions alone

Correct AnswerverifiedShow Answer

A country recently had a GDP of $1000 billion. Its consumption expenditures were $650 billion, its government spent $250 billion, and it had domestic investment of $150 billion. What was the value of this country's net capital outflow? Explain how you found your answer.

Correct Answerverifiedsaving = GDP - consumption - government ...View AnswerShow 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

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

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The theory of purchasing-power parity su...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
saving = GDP - consumption - government ...
View Answer

Correct Answer
verified

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

Correct Answer
verified