Question 1

If the exchange rate is 8 Moroccan dirhams per U.S. dollars, a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat, and a similar crate of oranges in Miami sells for $55 dollars, then

Accepted Answer

A)   the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in the U.S. and selling them in Morocco.
B)   the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the U.S.
C)   the real exchange rate is less than one and arbitrageurs could profit by buying oranges in the U.S. and selling them in Morocco.
D)   the real exchange rate is less than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the U.S.E) B) and C)
F) A) and D)

Question 2

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

Accepted Answer

A)   U.S. net exports but not US net capital outflow
B)   U.S. net capital outflow but not U.S. net exports
C)   U.S. net exports and U.S. net capital outflow
D)   neither U.S. net exports nor U.S. net capital outflowE) None of the above
F) A) and D)

Question 3

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

Accepted Answer

A)   the nominal exchange rate falls, the price of goods in Italy falls
B)   the nominal exchange rate falls, the price of goods in Italy rises
C)   the nominal exchange rate rises, the price of goods in Italy falls
D)   the nominal exchange rate rises, the price of goods in Italy risesE) B) and C)
F) A) and D)

Question 4

International trade

Accepted Answer

A)   raises the standard of living in all trading countries.
B)   lowers the standard of living in all trading countries.
C)   leaves the standard of living unchanged.
D)   raises the standard of living for importing countries and lowers it for exporting countries.E) B) and C)
F) None of the above

Question 5

According to the theory of purchasing-power parity, the nominal exchange rate between two countries must reflect the differing

Accepted Answer

A)   price levels in those countries.
B)   resource endowments in those countries.
C)   income levels in those countries.
D)   standards of living between those countries.E) None of the above
F) B) and D)

Question 6

According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro area?

Accepted Answer

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

Question 7

In which period was most of the change in U.S. net capital outflow due to an increase in investment in the U.S.?

Accepted Answer

A)   1980-1987
B)   1991-2000
C)   2000-2012
D)   None of the above are correct.E) A) and B)
F) A) and C)

Question 8

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales

Accepted Answer

A)   decrease U.S. exports but increase U.S. net exports.
B)   decrease both U.S. exports and U.S. net exports.
C)   increase both U.S. exports and U.S. net exports.
D)   increase U.S. exports but decrease U.S. net exports.E) None of the above
F) All of the above

Question 9

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Accepted Answer

A)   buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras.
B)   buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala.
C)   buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala.
D)   buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.E) A) and B)
F) None of the above

Question 10

If a country has a trade surplus then

Accepted Answer

A) S > I and Y > C + I + G. B) S > I and Y C) S C + I + G. D) S < I and Y < C + I + G.E) A) and B) F) C) and D)

Question 11

Net exports measures the difference between a country's

Accepted Answer

A)   income and expenditures.
B)   sale of goods and services abroad and purchase of foreign goods and services.
C)   sale of domestic assets abroad and purchase of foreign assets.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 12

Table 31-2
 
-Refer to Table 31-2. Which currencyies)  isare)  have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)   the euro and the riyal
B)   the pound and the yen
C)   the bolivar
D)   the yenE) A) and B)
F) All of the above

Question 13

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the suit cheaper?

Accepted Answer

The real exchange rate = $400 ...

Question 14

While vacationing in Italy, you see an interesting meal on a menu. The price is 24 euros.
A. If the exchange rate is .80 euros per dollar, how many dollars would you have to give up to buy the meal?
B. If the dollar appreciated against the euro, but the price of the meal remained 24 euro, would the meal cost more or fewer dollars? Explain.

Accepted Answer

A. 24 euros = $x times .80 eur...

Question 15

In 2011 the U.S. began with a trade deficit. During the year exports rose by more than imports. What should have happened to the U.S. trade deficit?

Accepted Answer

It should ...

Question 16

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the television cheaper?

Accepted Answer

The real exchange rate = 30,00...

Question 17

In an open economy, national saving can be less than investment.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

Movies are a major export of the U.S.

Accepted Answer

A) True 
 B)False

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the suit cheaper?

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales

Correct Answer
verified

Correct Answer
verified
A. 24 euros = $x times .80 eur...
View Answer

If the exchange rate is 8 Moroccan dirhams per U.S. dollars, a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat, and a similar crate of oranges in Miami sells for $55 dollars, then

Correct Answer
verified

In 2011 the U.S. began with a trade deficit. During the year exports rose by more than imports. What should have happened to the U.S. trade deficit?

Correct Answer
verified
It should ...
View Answer

Net exports measures the difference between a country's

Correct Answer
verified

Table 31-2 -Refer to Table 31-2. Which currencyies) isare) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Correct Answer
verified

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

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

International trade

Correct Answer
verified

Movies are a major export of the U.S.

Correct Answer
verified

In which period was most of the change in U.S. net capital outflow due to an increase in investment in the U.S.?

Correct Answer
verified

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Correct Answer
verified

If a country has a trade surplus then

Correct Answer
verified

According to the theory of purchasing-power parity, the nominal exchange rate between two countries must reflect the differing

Correct Answer
verified

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

Correct Answer
verified

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

Correct Answer
verified
The real exchange rate = 30,00...
View Answer

In an open economy, national saving can be less than investment.

Correct Answer
verified

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

Correct Answer
verified

According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro area?

Correct Answer
verified

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the suit cheaper?

Correct AnswerverifiedThe real exchange rate = $400 ...View AnswerShow Answer

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA. 24 euros = $x times .80 eur...View AnswerShow Answer

If the exchange rate is 8 Moroccan dirhams per U.S. dollars, a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat, and a similar crate of oranges in Miami sells for $55 dollars, then

Correct AnswerverifiedShow Answer

In 2011 the U.S. began with a trade deficit. During the year exports rose by more than imports. What should have happened to the U.S. trade deficit?

Correct AnswerverifiedIt should ...View AnswerShow Answer

Net exports measures the difference between a country's

Correct AnswerverifiedShow Answer

Table 31-2 -Refer to Table 31-2. Which currencyies) isare) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Correct AnswerverifiedShow Answer

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

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

International trade

Correct AnswerverifiedShow Answer

Movies are a major export of the U.S.

Correct AnswerverifiedShow Answer

In which period was most of the change in U.S. net capital outflow due to an increase in investment in the U.S.?

Correct AnswerverifiedShow Answer

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Correct AnswerverifiedShow Answer

If a country has a trade surplus then

Correct AnswerverifiedShow Answer

According to the theory of purchasing-power parity, the nominal exchange rate between two countries must reflect the differing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

Correct AnswerverifiedThe real exchange rate = 30,00...View AnswerShow Answer

In an open economy, national saving can be less than investment.

Correct AnswerverifiedShow Answer

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

Correct AnswerverifiedShow Answer

According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro area?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

Correct Answer
verified

Correct Answer
verified
A. 24 euros = $x times .80 eur...
View Answer

Correct Answer
verified

Correct Answer
verified
It should ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
saving = GDP - consumption - government ...
View 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
The real exchange rate = 30,00...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified