Question 1

Table 31-2
 
-Refer to Table 31-2.Which currency(ies) is(are) less valuable than predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)   boloviano and dinar
B)   yen and kroner
C)   baht and kroner
D)   bahtE) All of the above
F) A) and B)

Question 2

Net capital outflow is defined as the purchase of

Accepted Answer

A)   foreign assets by domestic residents minus the purchase of domestic assets by foreign residents.
B)   foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents.
C)   domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents.
D)   domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.E) A) and B)
F) C) and D)

Question 3

If the Canadian nominal exchange rate does not change,but prices rise faster in Canada than in all other countries,then the Canadian real exchange rate

Accepted Answer

A)   does not change.
B)   rises.
C)   declines.
D)   There is not enough information to answer the questionE) A) and B)
F) None of the above

Question 4

Nominal exchange rates

Accepted Answer

A)   vary little over time.
B)   vary substantially over time.
C)   appreciate over time for most countries.
D)   depreciate over time for most countries.E) A) and D)
F) None of the above

Question 5

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) A) and C)
F) A) and B)

Question 6

Assuming all other things equal,what would happen to the U.S.dollar real exchange rate under each of the following circumstances?
a.
The U.S.nominal exchange rate depreciates.
b.
U.S.domestic prices increase.
c.
Prices in the rest of the world rise.

Accepted Answer

a.
The U.S.dollar real exchang...

Question 7

Jason plans to buy shrimp in Florida and sell them in Ames,Iowa where the price is higher.Jason plans to engage in arbitrage.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

The nominal exchange rate is 4 Saudi Arabian riyals,9 Moroccan dirham,45 Indian rupee,or .6 British pounds per U.S.dollar.A double latte espresso and a cinnamon biscotti costs $6 in the U.S. ,24 riyals in Saudi Arabia,45 Moroccan dirham in Morocco,250 Indian rupees in India,and 5 British pounds in Britain.According to these numbers,where is the real exchange rate between American and foreign goods the lowest?

Accepted Answer

A)   Saudi Arabia
B)   Morocco
C)   India
D)   BritainE) A) and B)
F) A) and C)

Question 10

A citizen of Saudi Arabia uses previously obtained U.S.dollars to purchase apples from the United States.This transaction

Accepted Answer

A)   increases Saudi net capital outflow,and increases U.S.net exports.
B)   increases Saudi net capital outflow,and decreases U.S.net exports.
C)   decreases Saudi net capital outflow,and increases U.S.net exports.
D)   decreases Saudi net capital outflow,and decreases U.S.net exports.E) All of the above
F) B) and D)

Question 11

Why are net exports and net capital outflow always equal?

Accepted Answer

Net exports and net capital outflow are ...

Question 12

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) A) and C)
F) None of the above

Question 13

If there is a trade deficit,then

Accepted Answer

A)   saving is greater than domestic investment and Y > C + I + G.
B)   saving is greater than domestic investment and Y 
C)   saving is less than domestic investment and Y > C +I + G.
D)   saving is less than domestic investment and Y < C + I + G.E) A) and B)
F) B) and C)

Question 14

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) B) and C)

Question 15

A country sells more to foreign countries than it buys from them.It has

Accepted Answer

A)   a trade surplus and positive net exports.
B)   a trade surplus and negative net exports.
C)   a trade deficit and positive net exports.
D)   a trade deficit and negative net exports.E) C) and D)
F) A) and B)

Question 16

If the Mexican nominal exchange rate does not change,but prices rise faster abroad than in Mexico,then the Mexican real exchange rate

Accepted Answer

A)   does not change.
B)   rises.
C)   declines.
D)   None of the above is necessarily correct.E) C) and D)
F) B) and D)

Question 17

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

Question 18

Which of the following is correct?

Accepted Answer

A)   NCO = NX
B)   NCO + I = NX
C)   NX + NCO = Y
D)   Y = NCO - IE) A) and C)
F) C) and D)

Question 19

Suppose that the inflation rate is higher in Turkey than in the U.S.for the next six months.Then according to purchasing power parity,if exchange rates are given in terms of how many Turkish lira or how many Turkish goods a U.S.dollar buys,

Accepted Answer

A)   the nominal exchange rate rises but the real exchange rate does not.
B)   the nominal exchange rate does not rise,but the real exchange rate does.
C)   both the nominal and real exchange rates rise.
D)   neither the nominal nor the real exchange rate rises.E) B) and C)
F) None of the above

Question 20

In which of the following situations must national saving rise?

Accepted Answer

A)   Both domestic investment and net capital outflow increase.
B)   Domestic investment increases and net capital outflow decreases.
C)   Domestic investment decreases and net capital outflow increases.
D)   Both domestic investment and net capital outflow decrease.E) C) and D)
F) B) and C)

Exam 31: Open-Economy Macroeconomics: Basic Concepts

A citizen of Saudi Arabia uses previously obtained U.S.dollars to purchase apples from the United States.This transaction

Correct Answer
verified

Nominal exchange rates

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

Jason plans to buy shrimp in Florida and sell them in Ames,Iowa where the price is higher.Jason plans to engage in arbitrage.

Correct Answer
verified

If there is a trade deficit,then

Correct Answer
verified

If the Mexican nominal exchange rate does not change,but prices rise faster abroad than in Mexico,then the Mexican real exchange rate

Correct Answer
verified

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

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

Net capital outflow is defined as the purchase of

Correct Answer
verified

A country sells more to foreign countries than it buys from them.It has

Correct Answer
verified

If the Canadian nominal exchange rate does not change,but prices rise faster in Canada than in all other countries,then the Canadian real exchange rate

Correct Answer
verified

Correct Answer
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Which of the following is correct?

Correct Answer
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Assuming all other things equal,what would happen to the U.S.dollar real exchange rate under each of the following circumstances? a. The U.S.nominal exchange rate depreciates. b. U.S.domestic prices increase. c. Prices in the rest of the world rise.

Correct Answer
verified
a.
The U.S.dollar real exchang...
View Answer

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

Correct Answer
verified

In which of the following situations must national saving rise?

Correct Answer
verified

Suppose that the inflation rate is higher in Turkey than in the U.S.for the next six months.Then according to purchasing power parity,if exchange rates are given in terms of how many Turkish lira or how many Turkish goods a U.S.dollar buys,

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

Table 31-2 -Refer to Table 31-2.Which currency(ies) is(are) less valuable than predicted by the doctrine of purchasing-power parity?

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

Exam 31: Open-Economy Macroeconomics: Basic Concepts

A citizen of Saudi Arabia uses previously obtained U.S.dollars to purchase apples from the United States.This transaction

Correct AnswerverifiedShow Answer

Nominal exchange rates

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

Jason plans to buy shrimp in Florida and sell them in Ames,Iowa where the price is higher.Jason plans to engage in arbitrage.

Correct AnswerverifiedShow Answer

If there is a trade deficit,then

Correct AnswerverifiedShow Answer

If the Mexican nominal exchange rate does not change,but prices rise faster abroad than in Mexico,then the Mexican real exchange rate

Correct AnswerverifiedShow Answer

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

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

Net capital outflow is defined as the purchase of

Correct AnswerverifiedShow Answer

A country sells more to foreign countries than it buys from them.It has

Correct AnswerverifiedShow Answer

If the Canadian nominal exchange rate does not change,but prices rise faster in Canada than in all other countries,then the Canadian real exchange rate

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Assuming all other things equal,what would happen to the U.S.dollar real exchange rate under each of the following circumstances? a. The U.S.nominal exchange rate depreciates. b. U.S.domestic prices increase. c. Prices in the rest of the world rise.

Correct Answerverifieda.The U.S.dollar real exchang...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In which of the following situations must national saving rise?

Correct AnswerverifiedShow Answer

Suppose that the inflation rate is higher in Turkey than in the U.S.for the next six months.Then according to purchasing power parity,if exchange rates are given in terms of how many Turkish lira or how many Turkish goods a U.S.dollar buys,

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

Table 31-2 -Refer to Table 31-2.Which currency(ies) is(are) less valuable than predicted by the doctrine of purchasing-power parity?

Correct AnswerverifiedShow Answer

Why are net exports and net capital outflow always equal?

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

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a.
The U.S.dollar real exchang...
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Net exports and net capital outflow are ...
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