Question 1

If a Swiss chocolate maker opens a factory in Canada. What 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 D

Question 2

If Canada buys cameras from Japan, both Canadian net exports and Canadian net capital outflow decrease.

Accepted Answer

A) True 
 B)False  True

Question 3

How do we find the real exchange rate from the nominal exchange rate?

Accepted Answer

Real exchange rate = Nominal exchange rate × Domestic price index / Foreign price index

Question 4

Since 1999, what caused most of the change of Canadian net capital outflow as a percent of GDP?

Accepted Answer

A)  decrease in private investment 
B)  increase in national saving 
C)  decrease in U.S. investment 
D)  decrease in national saving 
A)  decrease in private investment 
B)  increase in national saving 
C)  decrease in U.S. investment 
D)  decrease in national saving

Question 5

Suppose that the dollar buys less cotton in Canada than in Egypt. How could traders make a profit?

Accepted Answer

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

Question 6

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 7

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 8

Which of the following would be Canadian foreign direct investment?

Accepted Answer

A)  A Polish company opens a shipbuilding plant in Halifax. 
B)  A Bolivian bank buys Canadian corporate bonds. 
C)  A Canadian bank buys Peruvian corporate bonds. 
D)  A Canadian canning company opens a plant in Ecuador. 
A)  A Polish company opens a shipbuilding plant in Halifax. 
B)  A Bolivian bank buys Canadian corporate bonds. 
C)  A Canadian bank buys Peruvian corporate bonds. 
D)  A Canadian canning company opens a plant in Ecuador.

Question 9

A country with no imports necessarily has zero net exports.

Accepted Answer

A) True 
 B)False

Question 10

According to purchasing-power parity, if prices in Canada increase by a larger 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 11

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada. What are 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.

Question 12

About what percentage of GDP are Canadian imports?

Accepted Answer

A)  less than 13 percent 
B)  about 14 percent 
C)  about 37 percent 
D)  about 67 percent 
A)  less than 13 percent 
B)  about 14 percent 
C)  about 37 percent 
D)  about 67 percent

Question 13

Suppose that a country exports $300 million of goods and services and imports $180 million of goods and services. What is the value of that country's net exports?

Accepted Answer

A)  $-120 million 
B)  $120 million 
C)  $300 million 
D)  $380 million 
A)  $-120 million 
B)  $120 million 
C)  $300 million 
D)  $380 million

Question 14

For many questions in macroeconomics, international issues are peripheral.

Accepted Answer

A) True 
 B)False

Question 15

If the Canadian real exchange rate appreciates, what will most likely happen?

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

When Canada imports more than it exports, it must also buy domestic assets from foreigners.

Accepted Answer

A) True 
 B)False

Question 18

If the Canadian real exchange rate appreciates, what 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 19

If the exchange rate changes from 130 yen per dollar to 150 yen per dollar, what has happened to the dollar?

Accepted Answer

A)  It has appreciated and so buys more Japanese goods. 
B)  It has appreciated and so buys fewer Japanese goods. 
C)  It has depreciated and so buys more Japanese goods. 
D)  It has depreciated and so buys fewer Japanese goods. 
A)  It has appreciated and so buys more Japanese goods. 
B)  It has appreciated and so buys fewer Japanese goods. 
C)  It has depreciated and so buys more Japanese goods. 
D)  It has depreciated and so buys fewer Japanese goods.

Question 20

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S. gasoline, 1 litre of U.S. gasoline costs $0.45 U.S., and a litre of Canadian gas costs $1.30 Canadian. What is the nominal exchange rate?

Accepted Answer

A)  0.38 U.S. dollars per Canadian dollar 
B)  0.45 U.S. dollars per Canadian dollar 
C)  0.69 U.S. dollars per Canadian dollar 
D)  1.30 U.S. dollars per Canadian dollar 
A)  0.38 U.S. dollars per Canadian dollar 
B)  0.45 U.S. dollars per Canadian dollar 
C)  0.69 U.S. dollars per Canadian dollar 
D)  1.30 U.S. dollars per Canadian dollar

If a Swiss chocolate maker opens a factory in Canada. What is this an example of?

If Canada buys cameras from Japan, both Canadian net exports and Canadian net capital outflow decrease.

How do we find the real exchange rate from the nominal exchange rate?

Since 1999, what caused most of the change of Canadian net capital outflow as a percent of GDP?

Suppose that the dollar buys less cotton in Canada than in Egypt. How could traders make a profit?

What do net exports measure?

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

Which of the following would be Canadian foreign direct investment?

A country with no imports necessarily has zero net exports.

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

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

About what percentage of GDP are Canadian imports?

Suppose that a country exports $300 million of goods and services and imports $180 million of goods and services. What is the value of that country's net exports?

For many questions in macroeconomics, international issues are peripheral.

If the Canadian real exchange rate appreciates, what will most likely happen?

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

When Canada imports more than it exports, it must also buy domestic assets from foreigners.

If the Canadian real exchange rate appreciates, what will most likely happen?

If the exchange rate changes from 130 yen per dollar to 150 yen per dollar, what has happened to the dollar?

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S. gasoline, 1 litre of U.S. gasoline costs $0.45 U.S., and a litre of Canadian gas costs $1.30 Canadian. What is the nominal exchange rate?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations 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

If a Swiss chocolate maker opens a factory in Canada. What is this an example of?

If Canada buys cameras from Japan, both Canadian net exports and Canadian net capital outflow decrease.

How do we find the real exchange rate from the nominal exchange rate?

Since 1999, what caused most of the change of Canadian net capital outflow as a percent of GDP?

Suppose that the dollar buys less cotton in Canada than in Egypt. How could traders make a profit?

What do net exports measure?

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

Which of the following would be Canadian foreign direct investment?

A country with no imports necessarily has zero net exports.

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

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

About what percentage of GDP are Canadian imports?

Suppose that a country exports $300 million of goods and services and imports $180 million of goods and services. What is the value of that country's net exports?

For many questions in macroeconomics, international issues are peripheral.

If the Canadian real exchange rate appreciates, what will most likely happen?

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

When Canada imports more than it exports, it must also buy domestic assets from foreigners.

If the Canadian real exchange rate appreciates, what will most likely happen?

If the exchange rate changes from 130 yen per dollar to 150 yen per dollar, what has happened to the dollar?

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S. gasoline, 1 litre of U.S. gasoline costs $0.45 U.S., and a litre of Canadian gas costs $1.30 Canadian. What is the nominal exchange rate?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations 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