Question 1

When a country's central bank decreases the money supply,which of the following best predicts the consequences?

Accepted Answer

A) Its price level rises, and its currency appreciates relative to other currencies in the world. 
B) Its price level falls, and its currency appreciates relative to other currencies in the world. 
C) Its price level rises, and its currency depreciates relative to other currencies in the world. 
D) Its price level falls, and its currency depreciates relative to other currencies in the world. 
A) Its price level rises, and its currency appreciates relative to other currencies in the world. 
B) Its price level falls, and its currency appreciates relative to other currencies in the world. 
C) Its price level rises, and its currency depreciates relative to other currencies in the world. 
D) Its price level falls, and its currency depreciates relative to other currencies in the world. B

Question 2

How has Canadian national saving changed in recent history?

Accepted Answer

A) It remained positive from 1999 to 2008. 
B) It decreased below 10 percent toward the end of the 1990s. 
C) It had a historic high in early 1990s. 
D) It has been decreasing since 1991. 
A) It remained positive from 1999 to 2008. 
B) It decreased below 10 percent toward the end of the 1990s. 
C) It had a historic high in early 1990s. 
D) It has been decreasing since 1991. A

Question 3

Why does purchasing-power parity theory NOT hold at all times?

Accepted Answer

A) because countries use different currencies 
B) because wages are higher in some countries and lower in others 
C) because some goods and services cannot be traded 
D) because prices are different across countries 
A) because countries use different currencies 
B) because wages are higher in some countries and lower in others 
C) because some goods and services cannot be traded 
D) because prices are different across countries C

Question 4

Suppose that a lobster in Nova Scotia costs $10 and the same type of lobster in New Brunswick costs $30.How could people make a profit in the situation?

Accepted Answer

A) by buying lobsters in Nova Scotia and selling them in New Brunswick, which would increase the price of lobster in New Brunswick 
B) by buying lobsters in Nova Scotia and selling them in New Brunswick, which would decrease the price of lobster in New Brunswick 
C) by buying lobsters in New Brunswick and selling them in Nova Scotia, which would increase the price of lobster in New Brunswick 
D) by buying lobsters in New Brunswick and selling them in Nova Scotia, which would decrease the price of lobster in New Brunswick 
A) by buying lobsters in Nova Scotia and selling them in New Brunswick, which would increase the price of lobster in New Brunswick 
B) by buying lobsters in Nova Scotia and selling them in New Brunswick, which would decrease the price of lobster in New Brunswick 
C) by buying lobsters in New Brunswick and selling them in Nova Scotia, which would increase the price of lobster in New Brunswick 
D) by buying lobsters in New Brunswick and selling them in Nova Scotia, which would decrease the price of lobster in New Brunswick

Question 5

Which of the following would be a Canadian foreign portfolio investment?

Accepted Answer

A) CAE, a Canadian company, builds a new factory near Rome, Italy. 
B) Your economics professor, a Canadian citizen, buys shares of stock in companies located in Eastern European countries. 
C) A Dutch hotel chain opens a new hotel in Canada. 
D) A citizen of Singapore buys a bond issued by a Canadian corporation. 
A) CAE, a Canadian company, builds a new factory near Rome, Italy. 
B) Your economics professor, a Canadian citizen, buys shares of stock in companies located in Eastern European countries. 
C) A Dutch hotel chain opens a new hotel in Canada. 
D) A citizen of Singapore buys a bond issued by a Canadian corporation.

Question 6

Which of the following best describes how the Canadian economy has evolved over the past five decades?

Accepted Answer

A) It has become more closed. 
B) It has become more open. 
C) It has become less trade-oriented. 
D) It has become more self-sufficient. 
A) It has become more closed. 
B) It has become more open. 
C) It has become less trade-oriented. 
D) It has become more self-sufficient.

Question 7

A country's exports are $600 billion,and imports are $700 billion.What is the country's trade balance?

Accepted Answer

A) $100 billion deficit 
B) $100 billion surplus 
C) $1300 billion deficit 
D) $1300 billion surplus 
A) $100 billion deficit 
B) $100 billion surplus 
C) $1300 billion deficit 
D) $1300 billion surplus

Question 8

The country of Sylvania has a GDP of $4000,investment of $500,government purchases of $400,and net capital outflow of negative $300.What is consumption?

Accepted Answer

A) $600 
B) $700 
C) $3400 
D) $3700 
A) $600 
B) $700 
C) $3400 
D) $3700

Question 9

What is the formula for national saving?

Accepted Answer

A) S = I + C 
B) S = I - NX 
C) S = I + NCO 
D) S = NX - NCO 
A) S = I + C 
B) S = I - NX 
C) S = I + NCO 
D) S = NX - NCO

Question 10

Assume Canada is a small open economy with perfect capital mobility.If the interest rate is 8 percent in Canada and 6 percent in China,and if the exchange rate is stable at 6 Chinese yuan for one Canadian dollar,what would happen?

Accepted Answer

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

Question 11

When Dee,a Canadian living in Canada purchases a designer dress made in Milan,which of the following is this purchase?

Accepted Answer

A) both a Canadian and an Italian import 
B) a Canadian export and an Italian import 
C) a Canadian import and an Italian export 
D) both a Canadian and an Italian export 
A) both a Canadian and an Italian import 
B) a Canadian export and an Italian import 
C) a Canadian import and an Italian export 
D) both a Canadian and an Italian export

Question 12

What do net exports measure?

Accepted Answer

A) income minus expenditure 
B) exports minus imports 
C) expenditure minus income 
D) imports minus exports 
A) income minus expenditure 
B) exports minus imports 
C) expenditure minus income 
D) imports minus exports

Question 13

How does international trade affect the standard of living?

Accepted Answer

A) It raises the standard of living in all trading countries. 
B) It lowers the standard of living in all trading countries. 
C) It raises the standard of living in the exporting country and lowers it in the importing country. 
D) It raises the standard of living in the importing country and lowers it in the exporting country. 
A) It raises the standard of living in all trading countries. 
B) It lowers the standard of living in all trading countries. 
C) It raises the standard of living in the exporting country and lowers it in the importing country. 
D) It raises the standard of living in the importing country and lowers it in the exporting country.

Question 14

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

Accepted Answer

A) It increases Canadian net capital outflow by more than the value of the bond. 
B) It increases Canadian net capital outflow by the value of the bond. 
C) It does not change Canadian net capital outflow. 
D) It decreases Canadian net capital outflow. 
A) It increases Canadian net capital outflow by more than the value of the bond. 
B) It increases Canadian net capital outflow by the value of the bond. 
C) It does not change Canadian net capital outflow. 
D) It decreases Canadian net capital outflow.

Question 15

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

Accepted Answer

A) The real exchange rate, defined as Algerian goods per unit of Canadian goods, rises. 
B) The real exchange rate, defined as Algerian goods per unit of Canadian goods, falls. 
C) The nominal exchange rate, defined as Algerian currency per dollar, rises. 
D) The nominal exchange rate, defined as Algerian currency per dollar, falls. 
A) The real exchange rate, defined as Algerian goods per unit of Canadian goods, rises. 
B) The real exchange rate, defined as Algerian goods per unit of Canadian goods, falls. 
C) The nominal exchange rate, defined as Algerian currency per dollar, rises. 
D) The nominal exchange rate, defined as Algerian currency per dollar, falls.

Question 16

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

Accepted Answer

A) True 
 B)False

Question 17

What does purchasing-power parity imply about the real exchange rate?

Accepted Answer

If purchasing-power

Question 18

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,which of the following is the definition of the real exchange rate?

Accepted Answer

A) e(P*/P) 
B) e(P/P*) 
C) e + P/P 
D) e - P/P* 
A) e(P*/P) 
B) e(P/P*) 
C) e + P/P 
D) e - P/P*

Question 19

Suppose a bottle of wine costs 25 euros in France and $20 in Canada.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

Accepted Answer

The real exchange rate = Nomin

Question 20

Which of the following best describes net capital outflow in Canada from 1961 to about 1998?

Accepted Answer

A) small but always positive 
B) small and sometimes negative and sometimes positive 
C) large and positive 
D) large and negative in all but three years 
A) small but always positive 
B) small and sometimes negative and sometimes positive 
C) large and positive 
D) large and negative in all but three years

When a country's central bank decreases the money supply,which of the following best predicts the consequences?

How has Canadian national saving changed in recent history?

Why does purchasing-power parity theory NOT hold at all times?

Suppose that a lobster in Nova Scotia costs $10 and the same type of lobster in New Brunswick costs $30.How could people make a profit in the situation?

Which of the following would be a Canadian foreign portfolio investment?

Which of the following best describes how the Canadian economy has evolved over the past five decades?

A country's exports are $600 billion,and imports are $700 billion.What is the country's trade balance?

The country of Sylvania has a GDP of $4000,investment of $500,government purchases of $400,and net capital outflow of negative $300.What is consumption?

What is the formula for national saving?

Assume Canada is a small open economy with perfect capital mobility.If the interest rate is 8 percent in Canada and 6 percent in China,and if the exchange rate is stable at 6 Chinese yuan for one Canadian dollar,what would happen?

When Dee,a Canadian living in Canada purchases a designer dress made in Milan,which of the following is this purchase?

What do net exports measure?

How does international trade affect the standard of living?

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

What does purchasing-power parity imply about the real exchange rate?

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,which of the following is the definition of the real exchange rate?

Suppose a bottle of wine costs 25 euros in France and $20 in Canada.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

Which of the following best describes net capital outflow in Canada from 1961 to about 1998?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's 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 and 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

When a country's central bank decreases the money supply,which of the following best predicts the consequences?

How has Canadian national saving changed in recent history?

Why does purchasing-power parity theory NOT hold at all times?

Suppose that a lobster in Nova Scotia costs $10 and the same type of lobster in New Brunswick costs $30.How could people make a profit in the situation?

Which of the following would be a Canadian foreign portfolio investment?

Which of the following best describes how the Canadian economy has evolved over the past five decades?

A country's exports are $600 billion,and imports are $700 billion.What is the country's trade balance?

The country of Sylvania has a GDP of $4000,investment of $500,government purchases of $400,and net capital outflow of negative $300.What is consumption?

What is the formula for national saving?

Assume Canada is a small open economy with perfect capital mobility.If the interest rate is 8 percent in Canada and 6 percent in China,and if the exchange rate is stable at 6 Chinese yuan for one Canadian dollar,what would happen?

When Dee,a Canadian living in Canada purchases a designer dress made in Milan,which of the following is this purchase?

What do net exports measure?

How does international trade affect the standard of living?

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

What does purchasing-power parity imply about the real exchange rate?

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,which of the following is the definition of the real exchange rate?

Suppose a bottle of wine costs 25 euros in France and $20 in Canada.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

Which of the following best describes net capital outflow in Canada from 1961 to about 1998?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's 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 and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff between Inflation and Unemployment

Five Debates over Macroeconomic Policy

Filters