Question 1

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

Question 2

In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?

Accepted Answer

A)   7.2 yuan
B)   6 yuan
C)   5 yuan
D)   3.6 yuanE) B) and C)
F) B) and D)

Question 3

Why are net exports and net capital outflow always equal?

Accepted Answer

Net exports and net capital outflow are ...

Question 4

If over the next few years inflation is higher in Mexico than in the U.S., then according to purchasing-power parity which of the following should rise?

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

Question 5

A U.S. firm called EcoWind produces windmills for households to generate electricity. It uses 25,000 recently obtained pesos to buy copper from a mining company in Argentina. As a result of this exchange, by how much, if at all, and in which direction did:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 6

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) A) and D)

Question 7

Table 31-2
 
-Refer to Table 31-2. For which countryies)  in the table does purchasing-power parity with the U.S. hold?

Accepted Answer

A)   Germany and Japan
B)   Japan and Saudi Arabia
C)   Britain and Venezuela
D)   GermanyE) A) and B)
F) None of the above

Question 8

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 9

If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar, then compared to British goods, U.S. goods become

Accepted Answer

A)   relatively more expensive for both British and U.S. residents.
B)   relatively more expensive for British residents and relatively less expensive for U.S. residents.
C)   relatively less expensive for British residents and relatively more expensive for U.S. residents.
D)   relatively less expensive for both British and U.S. residents.E) A) and B)
F) None of the above

Question 10

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

Question 11

If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs

Accepted Answer

A)   125 Egyptian pounds
B)   50 Egyptian pounds
C)   5 Egyptian pounds
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 12

The nominal exchange rate is 2 Barbados dollars per U.S. dollar. If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S. is 2 U.S. dollars, what is the real exchange rate to the nearest 100th?

Accepted Answer

A)   3 Barbados goods per U.S. good
B)   1.33 Barbados goods per U.S. good
C)   .75 Barbados goods per U.S. good
D)   none of the above is correctE) A) and D)
F) A) and C)

Question 13

If purchasing-power parity holds, a dollar will buy

Accepted Answer

A)   more goods in foreign countries than in the United States.
B)   as many goods in foreign countries as it does in the United States.
C)   fewer goods in foreign countries than it does in the United States.
D)   None of the above is implied by purchasing-power parity.E) B) and C)
F) A) and B)

Question 14

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Accepted Answer

A) True 
 B)False

Question 15

John, a U.S. citizen, opens up a Sports bar in Tokyo. This is an example of U.S.

Accepted Answer

A)   exports.
B)   imports.
C)   foreign portfolio investment.
D)   foreign direct investment.E) C) and D)
F) A) and B)

Question 16

Suppose that the real exchange rate between the United States and Kenya 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 Kenyan goods a basket of U.S. goods buys) ?

Accepted Answer

A)   an increase in the number of Kenyan shillings that can be purchased with a dollar
B)   an increase in the price of U.S. goods
C)   a decrease in the price in Kenyan shillings of Kenyan goods
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 17

Which of the following statements is incorrect for an open economy?

Accepted Answer

A)   A country can have a trade deficit, trade surplus, or balanced trade.
B)   A country that has a trade deficit has positive net capital outflow.
C)   Net exports must equal net capital outflow.
D)   National saving equals domestic investment plus net capital outflow.E) None of the above
F) C) and D)

Question 18

If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other things the same

Accepted Answer

A)   the trade deficit rises and net capital outflow rises.
B)   the trade deficit rises and net capital outflow falls.
C)   the trade deficit falls and net capital outflows rise.
D)   the trade deficit falls and net capital outflows fall.E) All of the above
F) A) and B)

Question 19

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 20

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

Exam 18: Open-Economy Macroeconomics: Basic Concepts

The nominal exchange rate is 2 Barbados dollars per U.S. dollar. If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S. is 2 U.S. dollars, what is the real exchange rate to the nearest 100th?

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

In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?

Correct Answer
verified

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

Correct Answer
verified

If over the next few years inflation is higher in Mexico than in the U.S., then according to purchasing-power parity which of the following should rise?

Correct Answer
verified

Suppose that the real exchange rate between the United States and Kenya 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 Kenyan goods a basket of U.S. goods buys) ?

Correct Answer
verified

If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar, then compared to British goods, U.S. goods become

Correct Answer
verified

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

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

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

Which of the following both reduce net exports?

Correct Answer
verified

Net capital outflow is defined as the purchase of

Correct Answer
verified

John, a U.S. citizen, opens up a Sports bar in Tokyo. This is an example of U.S.

Correct Answer
verified

Table 31-2 -Refer to Table 31-2. For which countryies) in the table does purchasing-power parity with the U.S. hold?

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

Which of the following statements is incorrect for an open economy?

Correct Answer
verified

If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs

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

If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other things the same

Correct Answer
verified

If purchasing-power parity holds, a dollar will buy

Correct Answer
verified

Exam 18: Open-Economy Macroeconomics: Basic Concepts

The nominal exchange rate is 2 Barbados dollars per U.S. dollar. If the price of a good in Barbados is 3 Barbados dollars and the price in the U.S. is 2 U.S. dollars, what is the real exchange rate to the nearest 100th?

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

In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If over the next few years inflation is higher in Mexico than in the U.S., then according to purchasing-power parity which of the following should rise?

Correct AnswerverifiedShow Answer

Suppose that the real exchange rate between the United States and Kenya 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 Kenyan goods a basket of U.S. goods buys) ?

Correct AnswerverifiedShow Answer

If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar, then compared to British goods, U.S. goods become

Correct AnswerverifiedShow Answer

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Correct AnswerverifiedShow Answer

Why are net exports and net capital outflow always equal?

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

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

Which of the following both reduce net exports?

Correct AnswerverifiedShow Answer

Net capital outflow is defined as the purchase of

Correct AnswerverifiedShow Answer

John, a U.S. citizen, opens up a Sports bar in Tokyo. This is an example of U.S.

Correct AnswerverifiedShow Answer

Table 31-2 -Refer to Table 31-2. For which countryies) in the table does purchasing-power parity with the U.S. hold?

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

Which of the following statements is incorrect for an open economy?

Correct AnswerverifiedShow Answer

If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs

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

If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other things the same

Correct AnswerverifiedShow Answer

If purchasing-power parity holds, a dollar will buy

Correct AnswerverifiedShow Answer

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A. Its net exports are negativ...
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Net exports and net capital outflow are ...
View Answer

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

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