Question 1

If the Canadian dollar gets weaker relative to the Chinese yuan, what might happen?

Accepted Answer

A)  Canadian trade surplus will fall. 
B)  Canadian trade deficit will fall. 
C)  Chinese trade surplus will rise. 
D)  Chinese trade deficit will fall. 
A)  Canadian trade surplus will fall. 
B)  Canadian trade deficit will fall. 
C)  Chinese trade surplus will rise. 
D)  Chinese trade deficit will fall.

Question 2

Suppose that Colby, a resident of Canada, buys video games from a company in Japan. Explain why and in what directions this changes Canadian net exports and Canadian net capital outflow.

Accepted Answer

The purchase of a foreign good by a Cana

Question 3

In Ireland, a pint of beer costs 5 euros. In Australia, a pint of beer costs 6 Australian dollars. If the exchange rate is 0.6 euros per Australian dollar, what is the real exchange rate?

Accepted Answer

A)  0.5 pints of Irish beer per pint of Australian beer 
B)  0.72 pints of Irish beer per pint of Australian beer 
C)  1.39 pints of Irish beer per pint of Australian beer 
D)  2 pints of Irish beer per pint of Australian beer 
A)  0.5 pints of Irish beer per pint of Australian beer 
B)  0.72 pints of Irish beer per pint of Australian beer 
C)  1.39 pints of Irish beer per pint of Australian beer 
D)  2 pints of Irish beer per pint of Australian beer

Question 4

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Accepted Answer

A)  that labour can easily move across Canada's borders 
B)  that purchasing-power parity holds in Canada 
C)  that Canada's net foreign investment is zero 
D)  that investors' funds can easily move across Canada's borders 
A)  that labour can easily move across Canada's borders 
B)  that purchasing-power parity holds in Canada 
C)  that Canada's net foreign investment is zero 
D)  that investors' funds can easily move across Canada's borders

Question 5

Suppose Judy, a Canadian citizen, opens an ice cream store in Bermuda. What would her expenditures be?

Accepted Answer

A)  Canadian foreign portfolio investment that would increase Canadian net capital outflow 
B)  Canadian foreign portfolio investment that would decrease Canadian net capital outflow 
C)  Canadian foreign direct investment that would increase Canadian net capital outflow 
D)  Canadian foreign direct investment that would decrease Canadian net capital outflow 
A)  Canadian foreign portfolio investment that would increase Canadian net capital outflow 
B)  Canadian foreign portfolio investment that would decrease Canadian net capital outflow 
C)  Canadian foreign direct investment that would increase Canadian net capital outflow 
D)  Canadian foreign direct investment that would decrease Canadian net capital outflow

Question 6

What are foreign-produced goods and services that are sold domestically called?

Accepted Answer

A)  imports 
B)  exports 
C)  net imports 
D)  net exports 
A)  imports 
B)  exports 
C)  net imports 
D)  net exports

Question 7

Assume Canada is a small open economy with perfect capital mobility. If the interest rate is 7 percent in Canada and 5 percent in Japan, and if the exchange rate is stable at 80 Japanese yen for one Canadian dollar, what would happen?

Accepted Answer

A)  Canadian investors want to invest in Japan, and Japanese investors want to invest in Canada. 
B)  Both Canadian and Japanese investors want to invest in Canada. 
C)  Canadian investors want to invest in Canada, and Japanese investors want to invest in Japan. 
D)  Both Canadian and Japanese investors want to invest in Japan. 
A)  Canadian investors want to invest in Japan, and Japanese investors want to invest in Canada. 
B)  Both Canadian and Japanese investors want to invest in Canada. 
C)  Canadian investors want to invest in Canada, and Japanese investors want to invest in Japan. 
D)  Both Canadian and Japanese investors want to invest in Japan.

Question 8

Ivan, a Russian citizen, sells several hundred cases of Russian caviar to a Canadian hotel chain. Which statement best identifies the effects of this transaction?

Accepted Answer

A)  It increases Canadian net exports and has no effect on Russian net exports. 
B)  It increases Canadian net exports and decreases Russian net exports. 
C)  It decreases Canadian net exports and has no effect on Russian net exports. 
D)  It decreases Canadian net exports and increases Russian net exports. 
A)  It increases Canadian net exports and has no effect on Russian net exports. 
B)  It increases Canadian net exports and decreases Russian net exports. 
C)  It decreases Canadian net exports and has no effect on Russian net exports. 
D)  It decreases Canadian net exports and increases Russian net exports.

Question 9

Between 1981 and 1988, what caused most of the change in Canadian net capital outflow as a percent of GDP?

Accepted Answer

A)  decline in public saving 
B)  decline in private saving 
C)  increase in public saving 
D)  increase in private saving 
A)  decline in public saving 
B)  decline in private saving 
C)  increase in public saving 
D)  increase in private saving

Question 10

How do the nominal exchange rate and the real exchange rate differ?

Accepted Answer

The nominal exchange rate is the rate at

Question 11

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

Accepted Answer

A)  It increases Saudi net capital outflow and increases Canadian net exports. 
B)  It increases Saudi net capital outflow and decreases Canadian net exports. 
C)  It decreases Saudi net capital outflow and increases Canadian net exports. 
D)  It decreases Saudi net capital outflow and decreases Canadian net exports. 
A)  It increases Saudi net capital outflow and increases Canadian net exports. 
B)  It increases Saudi net capital outflow and decreases Canadian net exports. 
C)  It decreases Saudi net capital outflow and increases Canadian net exports. 
D)  It decreases Saudi net capital outflow and decreases Canadian net exports.

Question 12

When the central bank prints large quantities of money, that money loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Accepted Answer

A) True 
 B)False

Question 13

A country with no imports necessarily has zero net exports.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be Canadian foreign direct investment?

Accepted Answer

A)  A Polish company opens a shipbuilding plant in Halifax. 
B)  A Bolivian bank buys Canadian corporate bonds. 
C)  A Canadian bank buys Peruvian corporate bonds. 
D)  A Canadian canning company opens a plant in Ecuador. 
A)  A Polish company opens a shipbuilding plant in Halifax. 
B)  A Bolivian bank buys Canadian corporate bonds. 
C)  A Canadian bank buys Peruvian corporate bonds. 
D)  A Canadian canning company opens a plant in Ecuador.

Question 15

If the real exchange rate of the Canadian dollar falls, Canadian net exports will fall.

Accepted Answer

A) True 
 B)False

Question 16

From 1970 to 1998, the Canadian dollar depreciated against the German mark and appreciated against the Italian lira because Canada experienced more inflation than Germany but less inflation than Italy.

Accepted Answer

A) True 
 B)False

Question 17

What terms refers to the process of taking advantage of different prices for a good in different markets?

Accepted Answer

A)  arbitrage 
B)  currency exchange 
C)  capitalism 
D)  the law of one price 
A)  arbitrage 
B)  currency exchange 
C)  capitalism 
D)  the law of one price

Question 18

When Larissa, a Canadian living in Canada, purchases a Louis Vuitton suit case made in Paris, what is this purchase?

Accepted Answer

A)  both a Canadian and a French import 
B)  a Canadian export and a French import 
C)  a Canadian import and a French export 
D)  both a Canadian and a French export 
A)  both a Canadian and a French import 
B)  a Canadian export and a French import 
C)  a Canadian import and a French export 
D)  both a Canadian and a French export

Question 19

In 2009, approximately what was Canadian net capital outflow as a percent of GDP?

Accepted Answer

A)  -4.5 percent 
B)  -2.5 percent 
C)  2.5 percent 
D)  4.5 percent 
A)  -4.5 percent 
B)  -2.5 percent 
C)  2.5 percent 
D)  4.5 percent

Question 20

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Accepted Answer

A) True 
 B)False

If the Canadian dollar gets weaker relative to the Chinese yuan, what might happen?

Suppose that Colby, a resident of Canada, buys video games from a company in Japan. Explain why and in what directions this changes Canadian net exports and Canadian net capital outflow.

In Ireland, a pint of beer costs 5 euros. In Australia, a pint of beer costs 6 Australian dollars. If the exchange rate is 0.6 euros per Australian dollar, what is the real exchange rate?

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Suppose Judy, a Canadian citizen, opens an ice cream store in Bermuda. What would her expenditures be?

What are foreign-produced goods and services that are sold domestically called?

Assume Canada is a small open economy with perfect capital mobility. If the interest rate is 7 percent in Canada and 5 percent in Japan, and if the exchange rate is stable at 80 Japanese yen for one Canadian dollar, what would happen?

Ivan, a Russian citizen, sells several hundred cases of Russian caviar to a Canadian hotel chain. Which statement best identifies the effects of this transaction?

Between 1981 and 1988, what caused most of the change in Canadian net capital outflow as a percent of GDP?

How do the nominal exchange rate and the real exchange rate differ?

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

When the central bank prints large quantities of money, that money loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

A country with no imports necessarily has zero net exports.

Which of the following would be Canadian foreign direct investment?

If the real exchange rate of the Canadian dollar falls, Canadian net exports will fall.

From 1970 to 1998, the Canadian dollar depreciated against the German mark and appreciated against the Italian lira because Canada experienced more inflation than Germany but less inflation than Italy.

What terms refers to the process of taking advantage of different prices for a good in different markets?

When Larissa, a Canadian living in Canada, purchases a Louis Vuitton suit case made in Paris, what is this purchase?

In 2009, approximately what was Canadian net capital outflow as a percent of GDP?

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 12: Open-Economy Macroeconomics: Basic Concepts

If the Canadian dollar gets weaker relative to the Chinese yuan, what might happen?

Suppose that Colby, a resident of Canada, buys video games from a company in Japan. Explain why and in what directions this changes Canadian net exports and Canadian net capital outflow.

In Ireland, a pint of beer costs 5 euros. In Australia, a pint of beer costs 6 Australian dollars. If the exchange rate is 0.6 euros per Australian dollar, what is the real exchange rate?

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Suppose Judy, a Canadian citizen, opens an ice cream store in Bermuda. What would her expenditures be?

What are foreign-produced goods and services that are sold domestically called?

Assume Canada is a small open economy with perfect capital mobility. If the interest rate is 7 percent in Canada and 5 percent in Japan, and if the exchange rate is stable at 80 Japanese yen for one Canadian dollar, what would happen?

Ivan, a Russian citizen, sells several hundred cases of Russian caviar to a Canadian hotel chain. Which statement best identifies the effects of this transaction?

Between 1981 and 1988, what caused most of the change in Canadian net capital outflow as a percent of GDP?

How do the nominal exchange rate and the real exchange rate differ?

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

When the central bank prints large quantities of money, that money loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

A country with no imports necessarily has zero net exports.

Which of the following would be Canadian foreign direct investment?

If the real exchange rate of the Canadian dollar falls, Canadian net exports will fall.

From 1970 to 1998, the Canadian dollar depreciated against the German mark and appreciated against the Italian lira because Canada experienced more inflation than Germany but less inflation than Italy.

What terms refers to the process of taking advantage of different prices for a good in different markets?

When Larissa, a Canadian living in Canada, purchases a Louis Vuitton suit case made in Paris, what is this purchase?

In 2009, approximately what was Canadian net capital outflow as a percent of GDP?

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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