Question 1

According to purchasing power parity, the nominal exchange rate between the U.S. and another country should equal the price level of foreign goods divided by the price level of U.S. goods.

Accepted Answer

A) True 
 B)False

Question 2

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 3

If a country's net exports fall, then its net capital outflow falls by the same amount.

Accepted Answer

A) True 
 B)False

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

Question 5

A Japanese bank buys U.S. government bonds, this purchase

Accepted Answer

A)   increases U.S. net capital outflow and has no affect on Japanese net capital outflow.
B)   increases U.S. net capital outflow and increases Japanese net capital outflow.
C)   increases U.S. net capital outflow, but decreases Japanese net capital outflow.
D)   decreases U.S. net capital outflow, but increases Japanese net capital outflow.E) A) and D)
F) B) and D)

Question 6

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

Accepted Answer

A)   1/2 cup of that country's hot chocolate per cup of U.S. hot chocolate
B)   1 cup of that country's hot chocolate per cup of U.S. hot chocolate
C)   2 cups of that country's hot chocolate per cup of U.S. hot chocolate
D)   None of the above is correct.E) A) and D)
F) None of the above

Question 7

An open economy's GDP is always given by

Accepted Answer

A)   Y = C + I + G.
B)   Y = C + I + G + T.
C)   Y = C + I + G + S.
D)   Y = C + I + G + NX.E) A) and D)
F) C) and D)

Question 8

According to purchasing-power parity which of the following would happen if a country raised its money supply growth rate?

Accepted Answer

A)   its nominal exchange rate would fall
B)   its real exchange rate would fall
C)   its real net exports would rise
D)   All of the above would happen.E) A) and D)
F) A) and C)

Question 9

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

Question 10

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Accepted Answer

A)   $7.2 billion of exports and $4.8 billion of imports.
B)   $7.2 billion of imports and $4.8 billion of exports.
C)   $4.8 billion of exports and $2.4 billion of imports.
D)   $4.8 billion of imports and $2.4 billion of exports.E) C) and D)
F) A) and C)

Question 11

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

Question 12

Egypt has exports of $500 million and imports of $750 million. Egypt

Accepted Answer

A)   sells more overseas then it buys from overseas; it has a trade deficit.
B)   sells more overseas then it buys from overseas; it has a trade surplus.
C)   buys more from overseas then it sells overseas; it has a trade deficit.
D)   buys more from overseas then it sells overseas; it has a trade surplus.E) A) and B)
F) All of the above

Question 13

Which of the following equations is correct?

Accepted Answer

A)   Y = C + I + G + NCO
B)   NX = NCO
C)   NCO = S - I
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 14

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros. What was the value of its imports?

Accepted Answer

The answer of A country had a net capital outflow...

Question 15

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

Accepted Answer

A)   .64 Canadian dollars per U.S. dollar
B)   1 Canadian dollar per U.S. dollar
C)   1.56 Canadian dollars per U.S. dollar
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 16

If Chileans buy more U.S. stocks and bonds and U.S. residents buy more Chilean wine, then

Accepted Answer

A)   both U.S. net exports and U.S. net capital outflows rise.
B)   U.S. net exports rise and U.S. net capital outflows fall.
C)   U.S. net exports fall and U.S. net capital outflows rise.
D)   both U.S. net exports and U.S. net capital outflows fall.E) None of the above
F) A) and C)

Question 17

If a country has negative net capital outflows, then its net exports are

Accepted Answer

A)   positive and its saving is larger than its domestic investment.
B)   positive and its saving is smaller than its domestic investment.
C)   negative and its saving is larger than its domestic investment.
D)   negative and its saving is smaller than its domestic investment.E) C) and D)
F) B) and D)

Question 18

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Accepted Answer

The answer of A country had a net capital outflow...

Question 19

When the Mexican peso gets "stronger" relative to the dollar,

Accepted Answer

A)   the U.S. trade deficit with Mexico rises.
B)   the U.S. trade deficit with Mexico falls.
C)   the U.S. trade deficit with Mexico is unchanged.
D)   None of the above necessarily happens.E) A) and B)
F) A) and C)

Question 20

A U.S. mutual fund uses $1 million to buy yen from a Japanese bank. It then uses these yen to buy stocks in a Japanese electronics firm. The Japanese electronic firm then exchanges the $1 million dollars of yen for dollars from a U.S. bank. It uses these dollars to buy equipment manufactured by a company located in the U.S. As a result of these exchanges, by how much, if at all, and in which direction does:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Exam 13: Open-Economy Macroeconomics: Basic Concepts

Nominal exchange rates

Correct Answer
verified

If a country has negative net capital outflows, then its net exports are

Correct Answer
verified

Which of the following equations is correct?

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

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Correct Answer
verified

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

An open economy's GDP is always given by

Correct Answer
verified

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Correct Answer
verified

If a country's net exports fall, then its net capital outflow falls by the same amount.

Correct Answer
verified

When the Mexican peso gets "stronger" relative to the dollar,

Correct Answer
verified

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

Correct Answer
verified

If Chileans buy more U.S. stocks and bonds and U.S. residents buy more Chilean wine, then

Correct Answer
verified

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros. What was the value of its imports?

Correct Answer
verified

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

Correct Answer
verified

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

Correct Answer
verified

According to purchasing-power parity which of the following would happen if a country raised its money supply growth rate?

Correct Answer
verified

According to purchasing power parity, the nominal exchange rate between the U.S. and another country should equal the price level of foreign goods divided by the price level of U.S. goods.

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

A Japanese bank buys U.S. government bonds, this purchase

Correct Answer
verified

Egypt has exports of $500 million and imports of $750 million. Egypt

Correct Answer
verified

Exam 13: Open-Economy Macroeconomics: Basic Concepts

Nominal exchange rates

Correct AnswerverifiedShow Answer

If a country has negative net capital outflows, then its net exports are

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

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

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Correct AnswerverifiedShow Answer

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

An open economy's GDP is always given by

Correct AnswerverifiedShow Answer

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Correct AnswerverifiedShow Answer

If a country's net exports fall, then its net capital outflow falls by the same amount.

Correct AnswerverifiedShow Answer

When the Mexican peso gets "stronger" relative to the dollar,

Correct AnswerverifiedShow Answer

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

Correct AnswerverifiedShow Answer

If Chileans buy more U.S. stocks and bonds and U.S. residents buy more Chilean wine, then

Correct AnswerverifiedShow Answer

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros. What was the value of its imports?

Correct AnswerverifiedShow Answer

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

Correct AnswerverifiedShow Answer

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

Correct AnswerverifiedShow Answer

According to purchasing-power parity which of the following would happen if a country raised its money supply growth rate?

Correct AnswerverifiedShow Answer

According to purchasing power parity, the nominal exchange rate between the U.S. and another country should equal the price level of foreign goods divided by the price level of U.S. goods.

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

A Japanese bank buys U.S. government bonds, this purchase

Correct AnswerverifiedShow Answer

Egypt has exports of $500 million and imports of $750 million. Egypt

Correct AnswerverifiedShow Answer

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

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Correct Answer
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Correct Answer
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Correct Answer
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