Question 1

What is the formula for a closed economy's GDP?

Accepted Answer

A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX 
A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX

Question 2

What is the logic behind the theory of purchasing-power parity?

Accepted Answer

The logic behind purchasing-power parity

Question 3

Roger lives in Iceland and purchases a snowmobile manufactured in Canada.Which of the following is this purchase?

Accepted Answer

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

Question 4

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Accepted Answer

A) 1/3 
B) 1 
C) 3 
D) 10 
A) 1/3 
B) 1 
C) 3 
D) 10

Question 5

Which of the following would be Canadian foreign direct investment?

Accepted Answer

A) Your Canadian-based mutual fund buys shares of stock in Eastern European companies. 
B) A Canadian citizen opens a guitar store in Hong Kong. 
C) A Swiss bank buys a Canadian government bond. 
D) A German tractor factory opens a plant in Victoria, British Colimbia. 
A) Your Canadian-based mutual fund buys shares of stock in Eastern European companies. 
B) A Canadian citizen opens a guitar store in Hong Kong. 
C) A Swiss bank buys a Canadian government bond. 
D) A German tractor factory opens a plant in Victoria, British Colimbia.

Question 6

If the Canadian real exchange rate appreciates,which of the following will most likely happen?

Accepted Answer

A) Exports increase and imports decrease. 
B) Exports decrease and imports increase. 
C) Exports and imports both increase. 
D) Exports and imports both decrease. 
A) Exports increase and imports decrease. 
B) Exports decrease and imports increase. 
C) Exports and imports both increase. 
D) Exports and imports both decrease.

Question 7

Which of the following is the most likely effect of an appreciation of the Canadian real exchange rate on the quantity of Alberta beef demanded by French citizens?

Accepted Answer

A) French citizens will buy less of Alberta beef. 
B) French citizens will buy more of Alberta beef. 
C) The quantity of Alberta beef demanded by French citizens will not change because the nominal exchange rate has not changed. 
D) The quantity of Alberta beef demanded by French citizens will not change because it is the French real interest rate that matters for French citizens. 
A) French citizens will buy less of Alberta beef. 
B) French citizens will buy more of Alberta beef. 
C) The quantity of Alberta beef demanded by French citizens will not change because the nominal exchange rate has not changed. 
D) The quantity of Alberta beef demanded by French citizens will not change because it is the French real interest rate that matters for French citizens.

Question 8

A country has $150 million of net exports and $190 million of saving.What is net capital outflow?

Accepted Answer

A) -$40 million 
B) $40 million 
C) $150 million 
D) $190 million 
A) -$40 million 
B) $40 million 
C) $150 million 
D) $190 million

Question 9

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

Accepted Answer

A) arbitrage 
B) absolute advantage 
C) capitalism 
D) the law of one price 
A) arbitrage 
B) absolute advantage 
C) capitalism 
D) the law of one price

Question 10

For an economy as a whole,net exports must equal minus one times net capital outflow.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following best describes Canadian net capital outflow and net exports since 1999?

Accepted Answer

A) Net capital outflow has been positive, and net exports have been negative. 
B) Net capital outflow and net exports have been positive. 
C) Net capital outflow and net exports have been negative. 
D) Net capital outflow has been negative, and net exports have been positive. 
A) Net capital outflow has been positive, and net exports have been negative. 
B) Net capital outflow and net exports have been positive. 
C) Net capital outflow and net exports have been negative. 
D) Net capital outflow has been negative, and net exports have been positive.

Question 12

Which of the following best defines net capital outflow?

Accepted Answer

A) It is the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B) It is the purchase of foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C) It is the purchase of domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D) It is the purchase of domestic assets by foreign residents minus the purchase of foreign assets by domestic residents. 
A) It is the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B) It is the purchase of foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C) It is the purchase of domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D) It is the purchase of domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

Question 13

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services.What is the value of that country's net exports?

Accepted Answer

A) $280 million 
B) $200 million 
C) $120 million 
D) -$200 million 
A) $280 million 
B) $200 million 
C) $120 million 
D) -$200 million

Question 14

Which of the following partly caused the increase in international trade in Canada since 1989?

Accepted Answer

A) an increase in Canadian GDP 
B) an appreciation of the dollar 
C) better quality of Canadian products 
D) the free trade agreement between Canada and the United States 
A) an increase in Canadian GDP 
B) an appreciation of the dollar 
C) better quality of Canadian products 
D) the free trade agreement between Canada and the United States

Question 15

If P = domestic prices,P* = foreign prices,and e is the nominal exchange rate,what is implied by purchasing-power parity?

Accepted Answer

A) P = e/P* 
B) 1 = e/P* 
C) e = P*/P 
D) P/P*=1 
A) P = e/P* 
B) 1 = e/P* 
C) e = P*/P 
D) P/P*=1

Question 16

For many questions in macroeconomics,international issues are peripheral.

Accepted Answer

A) True 
 B)False

Question 17

Suppose that Bill,a resident of Canada,buys software 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 18

What does purchasing-power parity imply?

Accepted Answer

A) that real incomes should be the same in all countries 
B) that the nominal exchange rates should be equal to 1 for all currencies 
C) that the price of a standard hamburger should be the same everywhere 
D) that the rent for an apartment should be the same everywhere 
A) that real incomes should be the same in all countries 
B) that the nominal exchange rates should be equal to 1 for all currencies 
C) that the price of a standard hamburger should be the same everywhere 
D) that the rent for an apartment should be the same everywhere

Question 19

When a country's central bank increases the money supply,which of the following happens to a unit of that country's money?

Accepted Answer

A) It gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy. 
B) It gains value in terms of the domestic goods and services it can buy, but loses value in terms of the foreign currency it can buy. 
C) It loses value in terms of the domestic goods and services it can buy, but gains value in terms of the foreign currency it can buy. 
D) It loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy. 
A) It gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy. 
B) It gains value in terms of the domestic goods and services it can buy, but loses value in terms of the foreign currency it can buy. 
C) It loses value in terms of the domestic goods and services it can buy, but gains value in terms of the foreign currency it can buy. 
D) It loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.

Question 20

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase apples from Canada.Which of the following correctly identifies 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.

What is the formula for a closed economy's GDP?

What is the logic behind the theory of purchasing-power parity?

Roger lives in Iceland and purchases a snowmobile manufactured in Canada.Which of the following is this purchase?

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Which of the following would be Canadian foreign direct investment?

If the Canadian real exchange rate appreciates,which of the following will most likely happen?

Which of the following is the most likely effect of an appreciation of the Canadian real exchange rate on the quantity of Alberta beef demanded by French citizens?

A country has $150 million of net exports and $190 million of saving.What is net capital outflow?

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

For an economy as a whole,net exports must equal minus one times net capital outflow.

Which of the following best describes Canadian net capital outflow and net exports since 1999?

Which of the following best defines net capital outflow?

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services.What is the value of that country's net exports?

Which of the following partly caused the increase in international trade in Canada since 1989?

If P = domestic prices,P* = foreign prices,and e is the nominal exchange rate,what is implied by purchasing-power parity?

For many questions in macroeconomics,international issues are peripheral.

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

What does purchasing-power parity imply?

When a country's central bank increases the money supply,which of the following happens to a unit of that country's money?

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase apples from Canada.Which of the following correctly identifies the effects of this transaction?

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

What is the formula for a closed economy's GDP?

What is the logic behind the theory of purchasing-power parity?

Roger lives in Iceland and purchases a snowmobile manufactured in Canada.Which of the following is this purchase?

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Which of the following would be Canadian foreign direct investment?

If the Canadian real exchange rate appreciates,which of the following will most likely happen?

Which of the following is the most likely effect of an appreciation of the Canadian real exchange rate on the quantity of Alberta beef demanded by French citizens?

A country has $150 million of net exports and $190 million of saving.What is net capital outflow?

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

For an economy as a whole,net exports must equal minus one times net capital outflow.

Which of the following best describes Canadian net capital outflow and net exports since 1999?

Which of the following best defines net capital outflow?

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services.What is the value of that country's net exports?

Which of the following partly caused the increase in international trade in Canada since 1989?

If P = domestic prices,P* = foreign prices,and e is the nominal exchange rate,what is implied by purchasing-power parity?

For many questions in macroeconomics,international issues are peripheral.

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

What does purchasing-power parity imply?

When a country's central bank increases the money supply,which of the following happens to a unit of that country's money?

A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase apples from Canada.Which of the following correctly identifies the effects of this transaction?

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