Question 1

The most accurate measure of the international value of the SA rand is

Accepted Answer

A) an exchange rate index that accounts for many exchange rates. 
B) the yen/rand exchange rate. 
C) the rand/dollar exchange rate. 
D) the euro/rand exchange rate. 
E) the Swiss franc/rand exchange rate. 
A) an exchange rate index that accounts for many exchange rates. 
B) the yen/rand exchange rate. 
C) the rand/dollar exchange rate. 
D) the euro/rand exchange rate. 
E) the Swiss franc/rand exchange rate.

Question 2

Currencies depreciate and appreciate all the time.Who gains and who loses when the SA rand depreciates?

Accepted Answer

A) Europeans holding SA rands gain, European tourists to SA lose. 
B) European exporters to SA gain, Europeans holding SA rands lose. 
C) SA exporters gain, SA importers lose. 
D) SA importers gain, SA exporters lose. 
A) Europeans holding SA rands gain, European tourists to SA lose. 
B) European exporters to SA gain, Europeans holding SA rands lose. 
C) SA exporters gain, SA importers lose. 
D) SA importers gain, SA exporters lose.

Question 3

Why are net exports and net capital outflow always equal?

Accepted Answer

Net exports and net capital outflow are

Question 4

A country's trade balance is positive when

Accepted Answer

A) exports exceed imports. 
B) exports plus investment exceed imports plus domestic saving. 
C) imports exceed exports. 
D) imports plus domestic saving exceed exports plus investment. 
A) exports exceed imports. 
B) exports plus investment exceed imports plus domestic saving. 
C) imports exceed exports. 
D) imports plus domestic saving exceed exports plus investment.

Question 5

Suppose that a US dollar buys more gold in Australia than it buys in SA.What does purchasing power parity imply should happen?

Accepted Answer

People can make a profit by buying gold

Question 6

Which of the following is an example of foreign direct investment?

Accepted Answer

A) General Motors of the USA buys steel from South Korea. 
B) General Motors of the USA buys shares in Saab of Sweden. 
C) McDonald's builds a restaurant in Moscow. 
D) UK publisher Bloomsbury sells the rights to make a film of a Harry Potter book to an American film studio. 
A) General Motors of the USA buys steel from South Korea. 
B) General Motors of the USA buys shares in Saab of Sweden. 
C) McDonald's builds a restaurant in Moscow. 
D) UK publisher Bloomsbury sells the rights to make a film of a Harry Potter book to an American film studio.

Question 7

For a given amount of SA national saving, an increase in SA net capital outflow decreases SA domestic investment.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would directly increase SA net capital outflow?

Accepted Answer

A) Rolls Royce sells an aircraft engine to Boeing of the USA. 
B) The Japanese financial company Nomura buys shares in Vodacom. 
C) SASOL builds a new oil rig in Mauritius. 
D) Honda builds a new plant in SA. 
A) Rolls Royce sells an aircraft engine to Boeing of the USA. 
B) The Japanese financial company Nomura buys shares in Vodacom. 
C) SASOL builds a new oil rig in Mauritius. 
D) Honda builds a new plant in SA.

Question 9

A country that exports more than it imports is said to have a trade deficit.

Accepted Answer

A) True 
 B)False

Question 10

If the exchange rate was 1.50 US dollars per rand, that would mean that South Africans would have to spend __________ to buy a $12 watch in New York City.

Accepted Answer

A) R8 
B) R15 
C) R1.5 
D) R12 
A) R8 
B) R15 
C) R1.5 
D) R12

Question 11

a) How do we find the real exchange rate from the nominal exchange rate?
b) Suppose a bottle of wine costs R20 in SA and 25 dollars in the USA.If the exchange rate is 0.80 rands per dollar, what is the real exchange rate?

Accepted Answer

a) Real Exchange Rate = Nominal Exchange

Question 12

If SA saves R1 000 billion and SA net capital outflow is - R200 billion, SA's domestic investment is

Accepted Answer

A) -R200 billion. 
B) R200 billion. 
C) R800 billion. 
D) R1 000 billion. 
E) R1 200 billion. 
A) -R200 billion. 
B) R200 billion. 
C) R800 billion. 
D) R1 000 billion. 
E) R1 200 billion.

Question 13

Suppose the money supply in Mexico grows more quickly than the money supply in the USA.We would expect that

Accepted Answer

A) the Mexican peso should appreciate relative to the US dollar. 
B) the Mexican peso should depreciate relative to the US dollar. 
C) None of these answers. 
D) the Mexican peso should maintain a constant exchange rate with the US dollar because of purchasing power parity. 
A) the Mexican peso should appreciate relative to the US dollar. 
B) the Mexican peso should depreciate relative to the US dollar. 
C) None of these answers. 
D) the Mexican peso should maintain a constant exchange rate with the US dollar because of purchasing power parity.

Question 14

Suppose the same basket of goods costs $100 in the USA and R80 in SA.According to PPP, if the prices do not change, what will be the exchange rate?

Accepted Answer

A) $5 per rand 
B) $4 per rand 
C) $1.25 per rand 
D) $0.80 per rand 
A) $5 per rand 
B) $4 per rand 
C) $1.25 per rand 
D) $0.80 per rand

Question 15

Which of the following products would likely be the least accurate if used to calculate purchasing power parity?

Accepted Answer

A) Diamonds. 
B) Gold. 
C) Cars. 
D) Wheat. 
E) Dental services. 
A) Diamonds. 
B) Gold. 
C) Cars. 
D) Wheat. 
E) Dental services.

Question 16

If the exchange rate changes from 3 Brazilian reals per rand to 4 reals per rand,

Accepted Answer

A) None of these answers. 
B) the rand has appreciated. 
C) the rand has depreciated. 
D) the rand could have appreciated or depreciated depending what happened to relative prices in Brazil and SA. 
A) None of these answers. 
B) the rand has appreciated. 
C) the rand has depreciated. 
D) the rand could have appreciated or depreciated depending what happened to relative prices in Brazil and SA.

Question 17

Suppose the nominal exchange rate between the Japanese yen and the SA rand is 100 yen per rand.Further, suppose that a kilogram of rice costs R2 in SA and 250 yen in Japan.What is the real exchange rate between Japan and SA?

Accepted Answer

A) 0.5 kilograms of Japanese rice per kilogram of SA rice. 
B) 0.8 kilograms of Japanese rice per kilogram of SA rice. 
C) 1.25 kilograms of Japanese rice per kilogram of SA rice. 
D) 2.5 kilograms of Japanese rice per kilogram of SA rice. 
E) None of these answers. 
A) 0.5 kilograms of Japanese rice per kilogram of SA rice. 
B) 0.8 kilograms of Japanese rice per kilogram of SA rice. 
C) 1.25 kilograms of Japanese rice per kilogram of SA rice. 
D) 2.5 kilograms of Japanese rice per kilogram of SA rice. 
E) None of these answers.

Question 18

Each of the following is a reason why international trade has expanded in recent decades except which one?

Accepted Answer

A) Technological improvements have meant that countries have become more similar in terms of the goods they can produce. 
B) Many new high technology goods have been introduced for which the cost of transport relative to the value of the product is low. 
C) There have been improvements in technology that have improved telecommunications between countries. 
D) Policy makers have promoted policies to increase international trade, such as the General Agreement on Tariffs and Trade, and subsequently established the World Trade Organization. 
E) Larger cargo ships and aeroplanes have reduced the cost of transporting goods. 
A) Technological improvements have meant that countries have become more similar in terms of the goods they can produce. 
B) Many new high technology goods have been introduced for which the cost of transport relative to the value of the product is low. 
C) There have been improvements in technology that have improved telecommunications between countries. 
D) Policy makers have promoted policies to increase international trade, such as the General Agreement on Tariffs and Trade, and subsequently established the World Trade Organization. 
E) Larger cargo ships and aeroplanes have reduced the cost of transporting goods.

Question 19

When the euro depreciates against the rand,

Accepted Answer

A) the number of rands per euro will increase. 
B) tourism from eurozone countries to SA will increase. 
C) SA exports to Euroland will increase. 
D) the price of imported Italian olive oil in SA will fall. 
A) the number of rands per euro will increase. 
B) tourism from eurozone countries to SA will increase. 
C) SA exports to Euroland will increase. 
D) the price of imported Italian olive oil in SA will fall.

Question 20

If purchasing power parity holds, the real exchange rate is always equal to 1.

Accepted Answer

A) True 
 B)False

The most accurate measure of the international value of the SA rand is

Currencies depreciate and appreciate all the time.Who gains and who loses when the SA rand depreciates?

Why are net exports and net capital outflow always equal?

A country's trade balance is positive when

Suppose that a US dollar buys more gold in Australia than it buys in SA.What does purchasing power parity imply should happen?

Which of the following is an example of foreign direct investment?

For a given amount of SA national saving, an increase in SA net capital outflow decreases SA domestic investment.

Which of the following would directly increase SA net capital outflow?

A country that exports more than it imports is said to have a trade deficit.

If the exchange rate was 1.50 US dollars per rand, that would mean that South Africans would have to spend __________ to buy a $12 watch in New York City.

a) How do we find the real exchange rate from the nominal exchange rate? b) Suppose a bottle of wine costs R20 in SA and 25 dollars in the USA.If the exchange rate is 0.80 rands per dollar, what is the real exchange rate?

If SA saves R1 000 billion and SA net capital outflow is - R200 billion, SA's domestic investment is

Suppose the money supply in Mexico grows more quickly than the money supply in the USA.We would expect that

Suppose the same basket of goods costs $100 in the USA and R80 in SA.According to PPP, if the prices do not change, what will be the exchange rate?

Which of the following products would likely be the least accurate if used to calculate purchasing power parity?

If the exchange rate changes from 3 Brazilian reals per rand to 4 reals per rand,

Suppose the nominal exchange rate between the Japanese yen and the SA rand is 100 yen per rand.Further, suppose that a kilogram of rice costs R2 in SA and 250 yen in Japan.What is the real exchange rate between Japan and SA?

Each of the following is a reason why international trade has expanded in recent decades except which one?

When the euro depreciates against the rand,

If purchasing power parity holds, the real exchange rate is always equal to 1.

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

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Exam 11: Open-Economy Macroeconomics: Basic Concepts

The most accurate measure of the international value of the SA rand is

Currencies depreciate and appreciate all the time.Who gains and who loses when the SA rand depreciates?

Why are net exports and net capital outflow always equal?

A country's trade balance is positive when

Suppose that a US dollar buys more gold in Australia than it buys in SA.What does purchasing power parity imply should happen?

Which of the following is an example of foreign direct investment?

For a given amount of SA national saving, an increase in SA net capital outflow decreases SA domestic investment.

Which of the following would directly increase SA net capital outflow?

A country that exports more than it imports is said to have a trade deficit.

If the exchange rate was 1.50 US dollars per rand, that would mean that South Africans would have to spend __________ to buy a $12 watch in New York City.

a) How do we find the real exchange rate from the nominal exchange rate? b) Suppose a bottle of wine costs R20 in SA and 25 dollars in the USA.If the exchange rate is 0.80 rands per dollar, what is the real exchange rate?

If SA saves R1 000 billion and SA net capital outflow is - R200 billion, SA's domestic investment is

Suppose the money supply in Mexico grows more quickly than the money supply in the USA.We would expect that

Suppose the same basket of goods costs $100 in the USA and R80 in SA.According to PPP, if the prices do not change, what will be the exchange rate?

Which of the following products would likely be the least accurate if used to calculate purchasing power parity?

If the exchange rate changes from 3 Brazilian reals per rand to 4 reals per rand,

Suppose the nominal exchange rate between the Japanese yen and the SA rand is 100 yen per rand.Further, suppose that a kilogram of rice costs R2 in SA and 250 yen in Japan.What is the real exchange rate between Japan and SA?

Each of the following is a reason why international trade has expanded in recent decades except which one?

When the euro depreciates against the rand,

If purchasing power parity holds, the real exchange rate is always equal to 1.

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters