Question 1

Table 31-2
Colombian Trade Flows  
-Refer to Table 31-2.​ What are Colombian net exports?

Accepted Answer

A) ​20 billion pesos 
B) 10 billion pesos 
C) ​-10 billion pesos 
D) -​20 billion pesos 
A) ​20 billion pesos 
B) 10 billion pesos 
C) ​-10 billion pesos 
D) -​20 billion pesos

Question 2

If France had positive net exports last year, then it

Accepted Answer

A) sold more abroad than it purchased abroad and had a trade surplus. 
B) sold more abroad than it purchased abroad and had a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit. 
A) sold more abroad than it purchased abroad and had a trade surplus. 
B) sold more abroad than it purchased abroad and had a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit.

Question 3

A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S.

Accepted Answer

A) foreign direct investment that increase U.S. net capital outflow. 
B) foreign direct investment that decrease U.S. net capital outflow. 
C) foreign portfolio investment that increase U.S. net capital outflow. 
D) foreign portfolio investment that decrease U.S. net capital outflow. 
A) foreign direct investment that increase U.S. net capital outflow. 
B) foreign direct investment that decrease U.S. net capital outflow. 
C) foreign portfolio investment that increase U.S. net capital outflow. 
D) foreign portfolio investment that decrease U.S. net capital outflow.

Question 4

A country has a trade deficit. Which of the following must also be true?

Accepted Answer

A) net capital outflow is positive and domestic investment is larger than saving 
B) net capital outflow is positive and saving is larger than domestic investment 
C) net capital outflow is negative and domestic investment is larger than saving 
D) net capital outflow is negative and saving is larger than domestic investment 
A) net capital outflow is positive and domestic investment is larger than saving 
B) net capital outflow is positive and saving is larger than domestic investment 
C) net capital outflow is negative and domestic investment is larger than saving 
D) net capital outflow is negative and saving is larger than domestic investment

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Other things the same, if the exchange rate changes from .8 euros per dollar to .9 euros per dollar, the dollar

Accepted Answer

A) depreciates so U.S. goods become less expensive relative to foreign goods. 
B) depreciates so U.S. goods become more expensive relative to foreign goods. 
C) appreciates so U.S. goods become less expensive relative to foreign goods. 
D) appreciates so U.S. goods become more expensive relative to foreign goods. 
A) depreciates so U.S. goods become less expensive relative to foreign goods. 
B) depreciates so U.S. goods become more expensive relative to foreign goods. 
C) appreciates so U.S. goods become less expensive relative to foreign goods. 
D) appreciates so U.S. goods become more expensive relative to foreign goods.

Question 7

Visitors to a country hosting a world soccer tournament purchase food, souvenirs, and accommodations while attending the tournament. Which of the following should these expenditures raise?

Accepted Answer

A) ​The host country's net exports and its net capital outflow. 
B) The host country's net exports but not its net capital outflow. 
C) The host country's net capital outflow but nor its net exports. 
D) Neither the host country's net exports not its net capital outflow. 
A) ​The host country's net exports and its net capital outflow. 
B) The host country's net exports but not its net capital outflow. 
C) The host country's net capital outflow but nor its net exports. 
D) Neither the host country's net exports not its net capital outflow.

Question 8

Paul, a U.S. citizen, builds a telescope factory in Israel. His expenditures

Accepted Answer

A) increase U.S. and Israeli net capital outflow. 
B) increase U.S. net capital outflow, but decrease Israeli net capital outflow. 
C) decrease U.S. net capital outflow, but increase Israeli net capital outflow. 
D) None of the above is correct. 
A) increase U.S. and Israeli net capital outflow. 
B) increase U.S. net capital outflow, but decrease Israeli net capital outflow. 
C) decrease U.S. net capital outflow, but increase Israeli net capital outflow. 
D) None of the above is correct.

Question 9

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

Accepted Answer

A) an increase in the quantity of Brazilian currency that can be purchased with a dollar 
B) a decrease in the price of U.S. goods 
C) an increase in the price in Brazilian currency of Brazilian goods 
D) All of the above are correct. 
A) an increase in the quantity of Brazilian currency that can be purchased with a dollar 
B) a decrease in the price of U.S. goods 
C) an increase in the price in Brazilian currency of Brazilian goods 
D) All of the above are correct.

Question 10

If the Kenyan nominal exchange rate declines, and prices are unchanged in Kenya and abroad, then the Kenyan real exchange rate

Accepted Answer

A) does not change. 
B) rises. 
C) declines 
D) None of the above is necessarily correct. 
A) does not change. 
B) rises. 
C) declines 
D) None of the above is necessarily correct.

Question 11

Under what circumstances does purchasing-power parity explain how exchange rates are determined, and why is it not completely accurate?

Accepted Answer

Purchasing-power parity works well in he

Question 12

Suppose that money supply growth continues to be higher in Turkey than it is in the United States. What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

Accepted Answer

Higher money growth leads to higher pric

Question 13

During a hyperinflation the real domestic value of a country's currency

Accepted Answer

A) falls and its nominal exchange rate depreciates. 
B) falls and its nominal exchange rate appreciates. 
C) rises and its nominal exchange rate depreciates. 
D) rises and its nominal exchange rate appreciates. 
A) falls and its nominal exchange rate depreciates. 
B) falls and its nominal exchange rate appreciates. 
C) rises and its nominal exchange rate depreciates. 
D) rises and its nominal exchange rate appreciates.

Question 14

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale

Accepted Answer

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

Question 15

The large trade deficits in the U.S. during the 1990's were primarily associated with a rise in domestic investment spending rather than a rise in the budget deficit.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A country with negative net exports has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 18

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

Accepted Answer

A) buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States. 
B) buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in Egypt. 
C) buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in Egypt. 
D) buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in the United States. 
A) buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States. 
B) buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in Egypt. 
C) buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in Egypt. 
D) buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in the United States.

Question 19

If the U.S. real exchange rate with Japan is greater than 1, then U.S. goods are relatively cheap.

Accepted Answer

A) True 
 B)False

Question 20

If Saudi Arabia had negative net exports last year, then it

Accepted Answer

A) sold more abroad than it purchased abroad and had a trade surplus. 
B) sold more abroad than it purchased abroad and had a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit. 
A) sold more abroad than it purchased abroad and had a trade surplus. 
B) sold more abroad than it purchased abroad and had a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit.

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Table 31-2 Colombian Trade Flows -Refer to Table 31-2.​ What are Colombian net exports?

If France had positive net exports last year, then it

A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S.

A country has a trade deficit. Which of the following must also be true?

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

Other things the same, if the exchange rate changes from .8 euros per dollar to .9 euros per dollar, the dollar

Visitors to a country hosting a world soccer tournament purchase food, souvenirs, and accommodations while attending the tournament. Which of the following should these expenditures raise?

Paul, a U.S. citizen, builds a telescope factory in Israel. His expenditures

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

If the Kenyan nominal exchange rate declines, and prices are unchanged in Kenya and abroad, then the Kenyan real exchange rate

Under what circumstances does purchasing-power parity explain how exchange rates are determined, and why is it not completely accurate?

Suppose that money supply growth continues to be higher in Turkey than it is in the United States. What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

During a hyperinflation the real domestic value of a country's currency

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale

The large trade deficits in the U.S. during the 1990's were primarily associated with a rise in domestic investment spending rather than a rise in the budget deficit.

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

A country with negative net exports has a trade surplus.

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

If the U.S. real exchange rate with Japan is greater than 1, then U.S. goods are relatively cheap.

If Saudi Arabia had negative net exports last year, then it

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

Filters

Table 31-2 Colombian Trade Flows -Refer to Table 31-2. What are Colombian net exports?