Question 1

From 1980-1987,U.S.net capital outflow as a percent of GDP became a

Accepted Answer

A) larger positive number. 
B) smaller positive number. 
C) larger negative number. 
D) smaller negative number. 
A) larger positive number. 
B) smaller positive number. 
C) larger negative number. 
D) smaller negative number.

Question 2

When a French vineyard establishes a distribution center in the U.S.,U.S.net capital outflow

Accepted Answer

A) increases because the foreign company makes a portfolio investment in the U.S. 
B) declines because the foreign company makes a portfolio investment in the U.S. 
C) increases because the foreign company makes a direct investment in capital in the U.S. 
D) declines because the foreign company makes a direct investment in capital in the U.S. 
A) increases because the foreign company makes a portfolio investment in the U.S. 
B) declines because the foreign company makes a portfolio investment in the U.S. 
C) increases because the foreign company makes a direct investment in capital in the U.S. 
D) declines because the foreign company makes a direct investment in capital in the U.S.

Question 3

Suppose that a country imports $100 million of goods and services and exports $75 million of goods and services,what is the value of net exports?

Accepted Answer

A) $175 million 
B) $75 million 
C) $25 million 
D) -$25 million 
A) $175 million 
B) $75 million 
C) $25 million 
D) -$25 million

Question 4

According to purchasing-power parity,if prices in the United States increase by a smaller percentage than prices in Poland,then

Accepted Answer

A) the real exchange defined as Polish goods per unit of U.S.goods rises. 
B) the real exchange defined as Polish goods per unit of U.S.goods falls. 
C) the nominal exchange rate defined as Polish currency per dollar rises. 
D) the nominal exchange rate defined as Polish currency per dollar falls. 
A) the real exchange defined as Polish goods per unit of U.S.goods rises. 
B) the real exchange defined as Polish goods per unit of U.S.goods falls. 
C) the nominal exchange rate defined as Polish currency per dollar rises. 
D) the nominal exchange rate defined as Polish currency per dollar falls.

Question 5

If a country has a trade deficit

Accepted Answer

A) it has positive net exports and positive net capital outflow. 
B) it has positive net exports and negative net capital outflow. 
C) it has negative net exports and positive net capital outflow. 
D) it has negative net exports and negative net capital outflow. 
A) it has positive net exports and positive net capital outflow. 
B) it has positive net exports and negative net capital outflow. 
C) it has negative net exports and positive net capital outflow. 
D) it has negative net exports and negative net capital outflow.

Question 6

How do the nominal exchange rate and the real exchange rate differ?

Accepted Answer

The nominal exchange rate is the rate at

Question 7

If a country has a trade surplus

Accepted Answer

A) it has positive net exports and positive net capital outflow. 
B) it has positive net exports and negative net capital outflow. 
C) it has negative net exports and positive net capital outflow. 
D) it has negative net exports and negative net capital outflow. 
A) it has positive net exports and positive net capital outflow. 
B) it has positive net exports and negative net capital outflow. 
C) it has negative net exports and positive net capital outflow. 
D) it has negative net exports and negative net capital outflow.

Question 8

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

Accepted Answer

That it is equal to one.The nu

Question 9

A U.S.firm buys cement mixers from China and pays for them with U.S.dollars.

Accepted Answer

A) The purchase of the cement mixers increases U.S.net exports and the payment with dollars increases U.S.net capital outflow. 
B) The purchase of cement mixers increases U.S.net exports and the payment with dollars decreases U.S.net capital outflow. 
C) The purchase of cement mixers decreases U.S.net exports and the payment with dollars increases U.S.net capital outflow. 
D) The purchase of cement mixers decreases U.S.net exports and the payment with dollars decreases U.S.net capital outflow. 
A) The purchase of the cement mixers increases U.S.net exports and the payment with dollars increases U.S.net capital outflow. 
B) The purchase of cement mixers increases U.S.net exports and the payment with dollars decreases U.S.net capital outflow. 
C) The purchase of cement mixers decreases U.S.net exports and the payment with dollars increases U.S.net capital outflow. 
D) The purchase of cement mixers decreases U.S.net exports and the payment with dollars decreases U.S.net capital outflow.

Question 10

All saving in the U.S.economy shows up as

Accepted Answer

A) investment in the U.S.economy. 
B) U.S.net capital outflow. 
C) either investment in the U.S.economy or U.S.net capital outflow. 
D) None of the above is correct. 
A) investment in the U.S.economy. 
B) U.S.net capital outflow. 
C) either investment in the U.S.economy or U.S.net capital outflow. 
D) None of the above is correct.

Question 11

The exchange rate is about 17 Nicaraguan cordoba per dollar.According to purchasing-power parity,this exchange rate would rise if

Accepted Answer

A) the price level in either the United States or Nicaragua rose. 
B) the price level in either the United States or Nicaragua fell. 
C) the price level in the United States rose or the price level in Nicaragua fell. 
D) the price level in the United States fell or the price level in Nicaragua rose. 
A) the price level in either the United States or Nicaragua rose. 
B) the price level in either the United States or Nicaragua fell. 
C) the price level in the United States rose or the price level in Nicaragua fell. 
D) the price level in the United States fell or the price level in Nicaragua rose.

Question 12

Which of the following would be U.S.foreign direct investment?

Accepted Answer

A) Your U.S.based mutual fund buys stock in Eastern European companies. 
B) A U.S.citizen opens and operates a law firm in Norway. 
C) A Swiss bank buys a U.S.government bond. 
D) A German tractor factory opens a plant in Waterloo, Iowa. 
A) Your U.S.based mutual fund buys stock in Eastern European companies. 
B) A U.S.citizen opens and operates a law firm in Norway. 
C) A Swiss bank buys a U.S.government bond. 
D) A German tractor factory opens a plant in Waterloo, Iowa.

Question 13

If the U.S.real exchange rate appreciates,U.S.exports

Accepted Answer

A) increase and U.S.imports decrease. 
B) decrease and U.S.imports increase. 
C) and U.S.imports both increase. 
D) and U.S.imports both decrease. 
A) increase and U.S.imports decrease. 
B) decrease and U.S.imports increase. 
C) and U.S.imports both increase. 
D) and U.S.imports both decrease.

Question 14

Suppose that the dollar buys fewer bananas in Honduras than in Guatemala.Traders could make a profit by

Accepted Answer

A) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras. 
B) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala. 
C) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala. 
D) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras. 
A) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras. 
B) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala. 
C) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala. 
D) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.

Question 15

A German company sells cameras to a retailer in the United States.These sales by themselves

Accepted Answer

A) have no affect on U.S.net exports and increase German net exports. 
B) decrease U.S.net exports and increase German net exports. 
C) increase U.S.and German net exports. 
D) increase U.S.net exports and decrease German net exports. 
A) have no affect on U.S.net exports and increase German net exports. 
B) decrease U.S.net exports and increase German net exports. 
C) increase U.S.and German net exports. 
D) increase U.S.net exports and decrease German net exports.

Question 16

If the United States had negative net exports,it

Accepted Answer

A) sold more abroad than it purchased abroad and has a trade surplus. 
B) sold more abroad than it purchased abroad and has a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit. 
A) sold more abroad than it purchased abroad and has a trade surplus. 
B) sold more abroad than it purchased abroad and has a trade deficit. 
C) bought more abroad than it sold abroad and had a trade surplus. 
D) bought more abroad than it sold abroad and had a trade deficit.

Question 17

U.S.exports make up less than 20 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 18

Foreign citizens would be more likely to engage in foreign portfolio investment in the U.S.if,compared to their country's assets,U.S.assets had

Accepted Answer

A) a higher interest rate and a higher default risk. 
B) a higher interest rate and a lower default risk. 
C) a lower interest rate and higher default risk. 
D) a lower interest rate and a lower default risk. 
A) a higher interest rate and a higher default risk. 
B) a higher interest rate and a lower default risk. 
C) a lower interest rate and higher default risk. 
D) a lower interest rate and a lower default risk.

Question 19

In 2004 economists were concerned that if foreign investors suddenly moved away from U.S.dollar denominated investments then

Accepted Answer

A) stock prices and interest rates would rise. 
B) stock prices and interest rates would fall. 
C) stocks prices would rise and interest rates would fall. 
D) stocks prices would fall and interest rates would rise. 
A) stock prices and interest rates would rise. 
B) stock prices and interest rates would fall. 
C) stocks prices would rise and interest rates would fall. 
D) stocks prices would fall and interest rates would rise.

Question 20

U.S.based John Deere sells machinery to a South African country that pays with South African currency (the rand).

Accepted Answer

A) This increases U.S.net capital outflow because the U.S.acquires foreign assets. 
B) This decreases U.S.net capital outflow because the U.S.acquires foreign assets. 
C) This increases U.S.net capital outflow because the U.S.sells capital goods. 
D) This decreases U.S.net capital outflow because the U.S.sells capital goods. 
A) This increases U.S.net capital outflow because the U.S.acquires foreign assets. 
B) This decreases U.S.net capital outflow because the U.S.acquires foreign assets. 
C) This increases U.S.net capital outflow because the U.S.sells capital goods. 
D) This decreases U.S.net capital outflow because the U.S.sells capital goods.

Exam 31: Open-Economy Macroeconomics: Basic Concepts

From 1980-1987,U.S.net capital outflow as a percent of GDP became a

When a French vineyard establishes a distribution center in the U.S.,U.S.net capital outflow

Suppose that a country imports $100 million of goods and services and exports $75 million of goods and services,what is the value of net exports?

According to purchasing-power parity,if prices in the United States increase by a smaller percentage than prices in Poland,then

If a country has a trade deficit

How do the nominal exchange rate and the real exchange rate differ?

If a country has a trade surplus

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

A U.S.firm buys cement mixers from China and pays for them with U.S.dollars.

All saving in the U.S.economy shows up as

The exchange rate is about 17 Nicaraguan cordoba per dollar.According to purchasing-power parity,this exchange rate would rise if

Which of the following would be U.S.foreign direct investment?

If the U.S.real exchange rate appreciates,U.S.exports

Suppose that the dollar buys fewer bananas in Honduras than in Guatemala.Traders could make a profit by

A German company sells cameras to a retailer in the United States.These sales by themselves

If the United States had negative net exports,it

U.S.exports make up less than 20 percent of GDP.

Foreign citizens would be more likely to engage in foreign portfolio investment in the U.S.if,compared to their country's assets,U.S.assets had

In 2004 economists were concerned that if foreign investors suddenly moved away from U.S.dollar denominated investments then

U.S.based John Deere sells machinery to a South African country that pays with South African currency (the rand).

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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