Question 1

Suppose Bob,a Greek citizen,opens a restaurant in Vancouver.Which of the following correctly identifies the effects of this action?

Accepted Answer

A) It increases Canadian net capital outflow and has no effect on Greek net capital outflow. 
B) It increases both Canadian and Greek net capital outflows. 
C) It increases Canadian net capital outflow, but decreases Greek net capital outflow. 
D) It decreases Canadian net capital outflow, but increases Greek net capital outflow. 
A) It increases Canadian net capital outflow and has no effect on Greek net capital outflow. 
B) It increases both Canadian and Greek net capital outflows. 
C) It increases Canadian net capital outflow, but decreases Greek net capital outflow. 
D) It decreases Canadian net capital outflow, but increases Greek net capital outflow.

Question 2

If a Swiss watchmaker opens a factory in Canada,which of the following is this an example of?

Accepted Answer

A) Swiss exports 
B) Swiss imports 
C) Swiss foreign portfolio investment 
D) Swiss foreign direct investment 
A) Swiss exports 
B) Swiss imports 
C) Swiss foreign portfolio investment 
D) Swiss foreign direct investment

Question 3

How do you measure the current account balance?

Accepted Answer

A) net exports 
B) net exports - net inflow of dividends and interest payments 
C) net exports + net inflow of dividends and interest payments 
D) net inflow of dividends and interest payments - net exports 
A) net exports 
B) net exports - net inflow of dividends and interest payments 
C) net exports + net inflow of dividends and interest payments 
D) net inflow of dividends and interest payments - net exports

Question 4

Suppose that a Canadian dollar buys more gold in Australia than it buys in Burkina Faso.What does purchasing-power parity imply should happen?

Accepted Answer

People can make a profit by buying gold

Question 5

How are net exports of a country determined?

Accepted Answer

A) the value of goods and services imported minus the value of goods and services exported 
B) the value of goods and services exported minus the value of goods and services imported 
C) the value of goods exported minus the value of goods imported 
D) the value of goods imported minus the value of goods exported 
A) the value of goods and services imported minus the value of goods and services exported 
B) the value of goods and services exported minus the value of goods and services imported 
C) the value of goods exported minus the value of goods imported 
D) the value of goods imported minus the value of goods exported

Question 6

In which situation must domestic saving equal investment?

Accepted Answer

A) when NX is negative 
B) when NX is zero 
C) when NCO is negative 
D) when imports are zero 
A) when NX is negative 
B) when NX is zero 
C) when NCO is negative 
D) when imports are zero

Question 7

Which of the following does a trade surplus imply?

Accepted Answer

A) saving is greater than domestic investment and Y > C + I + G B) saving is greater than domestic investment and Y C + I + G D) saving is less than domestic investment and Y < C + I + G A) saving is greater than domestic investment and Y > C + I + G B) saving is greater than domestic investment and Y C + I + G D) saving is less than domestic investment and Y < C + I + G

Question 8

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars.Which of the following correctly identifies the effects of this transaction?

Accepted Answer

A) Canadian net exports increase, and Canadian net capital outflow increases. 
B) Canadian net exports increase, and Canadian net capital outflow decreases. 
C) Canadian net exports decrease, and Canadian net capital outflow increases. 
D) Canadian net exports decrease, and Canadian net capital outflow decreases. 
A) Canadian net exports increase, and Canadian net capital outflow increases. 
B) Canadian net exports increase, and Canadian net capital outflow decreases. 
C) Canadian net exports decrease, and Canadian net capital outflow increases. 
D) Canadian net exports decrease, and Canadian net capital outflow decreases.

Question 9

Suppose the real exchange rate is 3/5 kilograms of Chilean beef per kilogram of Canadian beef,a kilogram of Canadian beef costs $3,and the nominal exchange rate is 400 Chilean pesos per dollar.What does Chilean beef cost?

Accepted Answer

A) 960 pesos per kilogram 
B) 1200 pesos per kilogram 
C) 1500 pesos per kilogram 
D) 2000 pesos per kilogram 
A) 960 pesos per kilogram 
B) 1200 pesos per kilogram 
C) 1500 pesos per kilogram 
D) 2000 pesos per kilogram

Question 10

What does the law of one price state?

Accepted Answer

A) A good cannot be sold at a black market price. 
B) A good must sell at the price fixed by law. 
C) A good must sell at the same price at all locations. 
D) A good cannot sell for a price greater than the legal price ceiling. 
A) A good cannot be sold at a black market price. 
B) A good must sell at the price fixed by law. 
C) A good must sell at the same price at all locations. 
D) A good cannot sell for a price greater than the legal price ceiling.

Question 11

John,a Canadian citizen,opens up a 70s-style disco bar in Tokyo.Which of the following does this count as?

Accepted Answer

A) Canadian exports 
B) Canadian imports 
C) Canadian foreign portfolio investment 
D) Canadian foreign direct investment 
A) Canadian exports 
B) Canadian imports 
C) Canadian foreign portfolio investment 
D) Canadian foreign direct investment

Question 12

Between 1981 and 1988,what caused most of the change in Canadian net capital outflow as a percent of GDP?

Accepted Answer

A) decrease in Canadian investment 
B) decrease in Canadian national saving 
C) increase in Canadian investment 
D) increase in Canadian national saving 
A) decrease in Canadian investment 
B) decrease in Canadian national saving 
C) increase in Canadian investment 
D) increase in Canadian national saving

Question 13

Suppose the price level in Canada increases from P1 to P2,while the price level abroad (P*)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

Accepted Answer

By definition,the real exchange rate is

Question 14

If the world real interest rate exceeds the Canadian real interest rate,what would Canadian savers most likely do?

Accepted Answer

A) Canadian savers would prefer to buy foreign assets. 
B) Canadian savers would prefer to buy Canadian assets. 
C) Canadian savers will prefer to wait until the two real interest rates are again equal. 
D) Canadian savers will sell their foreign assets and buy Canadian assets instead. 
A) Canadian savers would prefer to buy foreign assets. 
B) Canadian savers would prefer to buy Canadian assets. 
C) Canadian savers will prefer to wait until the two real interest rates are again equal. 
D) Canadian savers will sell their foreign assets and buy Canadian assets instead.

Question 15

Suppose the nominal exchange rate is 95 yen/dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

Accepted Answer

A) -9 yen/dollar 
B) -1.1 yen/dollar 
C) 1.1 yen/dollar 
D) 9 yen/dollar 
A) -9 yen/dollar 
B) -1.1 yen/dollar 
C) 1.1 yen/dollar 
D) 9 yen/dollar

Question 16

Which of the following was of much concern about the Canadian economy in the 1960s and 1970s?

Accepted Answer

A) increasing budget deficits 
B) the extent of foreign investment in Canada 
C) the fact that net exports were positive 
D) Canadians purchasing too many foreign assets 
A) increasing budget deficits 
B) the extent of foreign investment in Canada 
C) the fact that net exports were positive 
D) Canadians purchasing too many foreign assets

Question 17

Which of the following does a trade deficit imply?

Accepted Answer

A) saving is greater than domestic investment and Y > C + I + G B) saving is greater than domestic investment and Y C + I + G D) saving is less than domestic investment and Y < C + I + G A) saving is greater than domestic investment and Y > C + I + G B) saving is greater than domestic investment and Y C + I + G D) saving is less than domestic investment and Y < C + I + G

Question 18

When a country's central bank increases 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 rises, and its currency depreciates relative to other currencies in the world. 
C) Its price level falls, and its currency appreciates 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 rises, and its currency depreciates relative to other currencies in the world. 
C) Its price level falls, and its currency appreciates relative to other currencies in the world. 
D) Its price level falls, and its currency depreciates relative to other currencies in the world.

Question 19

The large,positive net capital outflow in Canada after 1999 is primarily the result of government budget surpluses.

Accepted Answer

A) True 
 B)False

Question 20

A country sells more to people overseas than it buys from them.Which of the following correctly identifies the effects of these transactions?

Accepted Answer

A) The country will have a trade surplus and positive net exports. 
B) The country will have a trade surplus and negative net exports. 
C) The country will have a trade deficit and positive net exports. 
D) The country will have a trade deficit and negative net exports. 
A) The country will have a trade surplus and positive net exports. 
B) The country will have a trade surplus and negative net exports. 
C) The country will have a trade deficit and positive net exports. 
D) The country will have a trade deficit and negative net exports.

Suppose Bob,a Greek citizen,opens a restaurant in Vancouver.Which of the following correctly identifies the effects of this action?

If a Swiss watchmaker opens a factory in Canada,which of the following is this an example of?

How do you measure the current account balance?

Suppose that a Canadian dollar buys more gold in Australia than it buys in Burkina Faso.What does purchasing-power parity imply should happen?

How are net exports of a country determined?

In which situation must domestic saving equal investment?

Which of the following does a trade surplus imply?

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars.Which of the following correctly identifies the effects of this transaction?

Suppose the real exchange rate is 3/5 kilograms of Chilean beef per kilogram of Canadian beef,a kilogram of Canadian beef costs $3,and the nominal exchange rate is 400 Chilean pesos per dollar.What does Chilean beef cost?

What does the law of one price state?

John,a Canadian citizen,opens up a 70s-style disco bar in Tokyo.Which of the following does this count as?

Between 1981 and 1988,what caused most of the change in Canadian net capital outflow as a percent of GDP?

Suppose the price level in Canada increases from P1 to P2,while the price level abroad (P*)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

If the world real interest rate exceeds the Canadian real interest rate,what would Canadian savers most likely do?

Suppose the nominal exchange rate is 95 yen/dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

Which of the following was of much concern about the Canadian economy in the 1960s and 1970s?

Which of the following does a trade deficit imply?

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

The large,positive net capital outflow in Canada after 1999 is primarily the result of government budget surpluses.

A country sells more to people overseas than it buys from them.Which of the following correctly identifies the effects of these transactions?

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

Exam 12: Open-Economy Macroeconomics: Basic Concepts

Suppose Bob,a Greek citizen,opens a restaurant in Vancouver.Which of the following correctly identifies the effects of this action?

If a Swiss watchmaker opens a factory in Canada,which of the following is this an example of?

How do you measure the current account balance?

Suppose that a Canadian dollar buys more gold in Australia than it buys in Burkina Faso.What does purchasing-power parity imply should happen?

How are net exports of a country determined?

In which situation must domestic saving equal investment?

Which of the following does a trade surplus imply?

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars.Which of the following correctly identifies the effects of this transaction?

Suppose the real exchange rate is 3/5 kilograms of Chilean beef per kilogram of Canadian beef,a kilogram of Canadian beef costs $3,and the nominal exchange rate is 400 Chilean pesos per dollar.What does Chilean beef cost?

What does the law of one price state?

John,a Canadian citizen,opens up a 70s-style disco bar in Tokyo.Which of the following does this count as?

Between 1981 and 1988,what caused most of the change in Canadian net capital outflow as a percent of GDP?

Suppose the price level in Canada increases from P1 to P2,while the price level abroad (P*)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

If the world real interest rate exceeds the Canadian real interest rate,what would Canadian savers most likely do?

Suppose the nominal exchange rate is 95 yen/dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

Which of the following was of much concern about the Canadian economy in the 1960s and 1970s?

Which of the following does a trade deficit imply?

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

The large,positive net capital outflow in Canada after 1999 is primarily the result of government budget surpluses.

A country sells more to people overseas than it buys from them.Which of the following correctly identifies the effects of these transactions?

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