Question 1

If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge per dollar, the dollar has

Accepted Answer

A) appreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods. 
B) appreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods. 
C) depreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods. 
D) depreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods. 
A) appreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods. 
B) appreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods. 
C) depreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods. 
D) depreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods.

Question 2

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

Accepted Answer

A) -$1 billion 
B) -$2 billion 
C) $1 billion 
D) $2 billion 
A) -$1 billion 
B) -$2 billion 
C) $1 billion 
D) $2 billion

Question 3

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 4

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. 
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.

Question 5

From 2000 to 2012 the U.S. had a trade

Accepted Answer

A) surplus and a large net capital inflow. 
B) surplus and a large net capital outflow. 
C) deficit and a large net capital inflow. 
D) deficit and a large net capital outflow. 
A) surplus and a large net capital inflow. 
B) surplus and a large net capital outflow. 
C) deficit and a large net capital inflow. 
D) deficit and a large net capital outflow.

Question 6

A farmer in Mexico purchases a tractor made in the U.S. This purchase is an example of

Accepted Answer

A) a U.S. import and a Mexican export 
B) a U.S. export and a Mexican import 
C) an export for both the U.S. and Mexico 
D) an import for both Mexico and the U.S. 
A) a U.S. import and a Mexican export 
B) a U.S. export and a Mexican import 
C) an export for both the U.S. and Mexico 
D) an import for both Mexico and the U.S.

Question 7

Which of the following events would be consistent with purchasing-power parity?

Accepted Answer

A) The price level in the United States rises more rapidly than that in Ireland and the real exchange rate defined as Irish goods per unit of U.S. goods stays the same. 
B) The money supply in the United States rises more rapidly than in Egypt and the nominal exchange rate defined as Egyptian pounds per dollar falls. 
C) Earl, a worldwide traveler, looks at exchange rates and worldwide breakfast prices one morning and finds that whatever country he decides to go to he can convert $15 into enough local currency to buy the same breakfast. 
D) All of the above are correct. 
A) The price level in the United States rises more rapidly than that in Ireland and the real exchange rate defined as Irish goods per unit of U.S. goods stays the same. 
B) The money supply in the United States rises more rapidly than in Egypt and the nominal exchange rate defined as Egyptian pounds per dollar falls. 
C) Earl, a worldwide traveler, looks at exchange rates and worldwide breakfast prices one morning and finds that whatever country he decides to go to he can convert $15 into enough local currency to buy the same breakfast. 
D) All of the above are correct.

Question 8

If a country has saving of $2 trillion and investment of $1.5 trillion, then it has

Accepted Answer

A) a trade surplus and its net capital outflow = $.5 trillion. 
B) a trade surplus and its net capital outflow = -$.5 trillion. 
C) a trade deficit and its net capital outflow = $.5 trillion. 
D) a trade deficit and its net capital outflow = -$.5 trillion. 
A) a trade surplus and its net capital outflow = $.5 trillion. 
B) a trade surplus and its net capital outflow = -$.5 trillion. 
C) a trade deficit and its net capital outflow = $.5 trillion. 
D) a trade deficit and its net capital outflow = -$.5 trillion.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following does purchasing-power parity imply?

Accepted Answer

A) the foreign price level times the nominal exchange rate (given as amount of foreign currency per dollar) equals the U.S. price level. 
B) The price of domestic goods relative to foreign goods cannot change. 
C) The nominal exchange rate is the ratio of foreign prices to U.S. prices. 
D) All of the above are correct. 
A) the foreign price level times the nominal exchange rate (given as amount of foreign currency per dollar) equals the U.S. price level. 
B) The price of domestic goods relative to foreign goods cannot change. 
C) The nominal exchange rate is the ratio of foreign prices to U.S. prices. 
D) All of the above are correct.

Question 11

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 12

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

Accepted Answer

A) increase U.S. net exports and have no effect on Mexican net exports. 
B) increase U.S. net exports and decrease Mexican net exports. 
C) decrease U.S. net exports and have no effect on Mexican net exports. 
D) decrease U.S. net exports and increase Mexican net exports. 
A) increase U.S. net exports and have no effect on Mexican net exports. 
B) increase U.S. net exports and decrease Mexican net exports. 
C) decrease U.S. net exports and have no effect on Mexican net exports. 
D) decrease U.S. net exports and increase Mexican net exports.

Question 13

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 14

If a country's saving rises, then either its investment or its net capital outflow rises (or both).

Accepted Answer

A) True 
 B)False

Question 15

If a country's imports exceed its exports it has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 16

A country has $100 million of net exports and $170 million of saving. Net capital outflow is

Accepted Answer

A) $70 million and domestic investment is $170 million. 
B) $70 million and domestic investment is $270 million. 
C) $100 million and domestic investment is $70 million. 
D) None of the above is correct. 
A) $70 million and domestic investment is $170 million. 
B) $70 million and domestic investment is $270 million. 
C) $100 million and domestic investment is $70 million. 
D) None of the above is correct.

Question 17

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Accepted Answer

A) A Swedish bank buys a bond issued by the U.S. government. 
B) A German company builds a car factory in the U.S. 
C) A U.S. mutual fund purchases stock issued by a corporation in Bolivia. 
D) A U.S. grocery chain builds and operates a new warehouse in Honduras. 
A) A Swedish bank buys a bond issued by the U.S. government. 
B) A German company builds a car factory in the U.S. 
C) A U.S. mutual fund purchases stock issued by a corporation in Bolivia. 
D) A U.S. grocery chain builds and operates a new warehouse in Honduras.

Question 18

It is possible for a country to have domestic investment that exceeds national saving.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

Accepted Answer

A) more willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
B) more willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
C) less willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
D) less willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
A) more willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
B) more willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
C) less willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
D) less willing to purchase U.S. bonds, so U.S. net capital outflow would rise.

Question 20

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Accepted Answer

A) small but always positive. 
B) small and sometimes negative and sometimes positive. 
C) large and positive. 
D) large but sometimes negative and sometimes positive. 
A) small but always positive. 
B) small and sometimes negative and sometimes positive. 
C) large and positive. 
D) large but sometimes negative and sometimes positive.

Exam 31: Open-Economy Macroeconomics: Basic Concepts

If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge per dollar, the dollar has

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

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?

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)?

From 2000 to 2012 the U.S. had a trade

A farmer in Mexico purchases a tractor made in the U.S. This purchase is an example of

Which of the following events would be consistent with purchasing-power parity?

If a country has saving of $2 trillion and investment of $1.5 trillion, then it has

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

Which of the following does purchasing-power parity imply?

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?

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

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

If a country's saving rises, then either its investment or its net capital outflow rises (or both).

If a country's imports exceed its exports it has a trade surplus.

A country has $100 million of net exports and $170 million of saving. Net capital outflow is

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

It is possible for a country to have domestic investment that exceeds national saving.

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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