Question 1

As Australia's net foreign investment is negative, domestic investment must be greater than national saving.

Accepted Answer

A) True 
 B)False

Question 2

Since the 1980s in Australia, the balance on goods and services has:

Accepted Answer

A) usually been positive. 
B) usually been negative. 
C) led to a current account surplus. 
D) led to capital flows out of the financial account. 
A) usually been positive. 
B) usually been negative. 
C) led to a current account surplus. 
D) led to capital flows out of the financial account.

Question 3

When can foreign debt become a problem for a country?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

When the interest repayments on the debt

Question 4

Which of the following is not included in the financial account?

Accepted Answer

A) an increase in private Australian asset holdings in foreign countries 
B) an increase in foreign government asset holdings in foreign countries 
C) an increase in foreign private asset holdings in Australia 
D) income received from investments made overseas 
A) an increase in private Australian asset holdings in foreign countries 
B) an increase in foreign government asset holdings in foreign countries 
C) an increase in foreign private asset holdings in Australia 
D) income received from investments made overseas

Question 5

Australia usually operates with a large current account deficit.

Accepted Answer

A) True 
 B)False

Question 6

Graph the demand and supply of Australian dollars for euros. Currency speculators think that the value of the dollar relative to the euro is going to fall in the future. Show graphically and explain the effect of this change in currency traders' expectations on the demand and supply of dollars and the resulting change in the exchange rate of euros for Australian dollars.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

@#IMG-DLM& The economy begins at point A with the

Question 7

What is the savings and investment equation? If S > I, then what is true of net foreign investment? Explain, using the savings and investment equation.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The savings and investment equation is:

Question 8

The 'balance of payments' includes all of the following accounts except the:

Accepted Answer

A) current account. 
B) financial account. 
C) capital account. 
D) national debt account. 
A) current account. 
B) financial account. 
C) capital account. 
D) national debt account.

Question 9

What effect does an open economy have on the effectiveness of monetary policy and fiscal policy?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Monetary policy is more effective in an

Question 10

When Australia sends money to the Philippines to help typhoon survivors, the transaction is recorded in the:

Accepted Answer

A) capital account. 
B) current account. 
C) financial account. 
D) foreign exchange account. 
A) capital account. 
B) current account. 
C) financial account. 
D) foreign exchange account.

Question 11

In 2015/2016, Australia:

Accepted Answer

A) had a trade surplus due to the booming mining sector. 
B) had less income flowing overseas than was coming into Australia. 
C) had a trade deficit due to a fall in commodity prices. 
D) imported more services than it exported. 
A) had a trade surplus due to the booming mining sector. 
B) had less income flowing overseas than was coming into Australia. 
C) had a trade deficit due to a fall in commodity prices. 
D) imported more services than it exported.

Question 12

Refer to Figure 14.2 for the following questions.
Figure 14.2
  
-Refer to Figure 14.2. Suppose that interest rates in Australia fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

Accepted Answer

A) Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B) Supply would increase, demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease, demand would increase and the economy moves from A to D to C. 
D) Supply would increase, demand would increase and the economy moves from D to A to B. 
A) Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B) Supply would increase, demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease, demand would increase and the economy moves from A to D to C. 
D) Supply would increase, demand would increase and the economy moves from D to A to B.

Question 13

What is the difference between 'net exports' and the 'current account balance'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

'Net exports' refers to the balance betw

Question 14

If the current account balance is negative:

Accepted Answer

A) net foreign investment is also negative. 
B) capital inflows must be less than capital outflows. 
C) net foreign investment is positive. 
D) Both A and B are correct. 
A) net foreign investment is also negative. 
B) capital inflows must be less than capital outflows. 
C) net foreign investment is positive. 
D) Both A and B are correct.

Question 15

In recent decades, Australia has incurred overall balance of payments deficits.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a source of demand for Japanese yen?

Accepted Answer

A) A Japanese firm that wants to purchase Australian beef. 
B) A Chinese person who wants to buy Japanese financial securities. 
C) A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D) An Australian bank that wants to buy a Japanese bond. 
A) A Japanese firm that wants to purchase Australian beef. 
B) A Chinese person who wants to buy Japanese financial securities. 
C) A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D) An Australian bank that wants to buy a Japanese bond.

Question 17

Refer to Figure 14.2 for the following questions.
Figure 14.2
  
-Refer to Figure 14.2. An appreciation of the dollar is represented as a movement from:

Accepted Answer

A) B to A. 
B) D to C. 
C) C to B. 
D) C to A. 
A) B to A. 
B) D to C. 
C) C to B. 
D) C to A.

Question 18

If the balance on the current account is $8.42 billion and the balance on the financial account is $7.53 billion, what is the balance on the capital account, assuming no statistical discrepancy?

Accepted Answer

A) $0 billion 
B) $0.89 billion 
C) -$0.89 billion 
D) -$15.95 billion 
A) $0 billion 
B) $0.89 billion 
C) -$0.89 billion 
D) -$15.95 billion

Question 19

The real exchange rate is the amount of an overseas currency that can be purchased with the local (domestic)currency.

Accepted Answer

A) True 
 B)False

Question 20

If Australia's current account is in deficit, net foreign investment must be negative by the same amount.

Accepted Answer

A) True 
 B)False

As Australia's net foreign investment is negative, domestic investment must be greater than national saving.

Since the 1980s in Australia, the balance on goods and services has:

When can foreign debt become a problem for a country? _ _

Which of the following is not included in the financial account?

Australia usually operates with a large current account deficit.

What is the savings and investment equation? If S > I, then what is true of net foreign investment? Explain, using the savings and investment equation. _ _

The 'balance of payments' includes all of the following accounts except the:

What effect does an open economy have on the effectiveness of monetary policy and fiscal policy? _ _

When Australia sends money to the Philippines to help typhoon survivors, the transaction is recorded in the:

In 2015/2016, Australia:

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. Suppose that interest rates in Australia fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

What is the difference between 'net exports' and the 'current account balance'? _ _

If the current account balance is negative:

In recent decades, Australia has incurred overall balance of payments deficits.

Which of the following is not a source of demand for Japanese yen?

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. An appreciation of the dollar is represented as a movement from:

If the balance on the current account is $8.42 billion and the balance on the financial account is $7.53 billion, what is the balance on the capital account, assuming no statistical discrepancy?

The real exchange rate is the amount of an overseas currency that can be purchased with the local (domestic)currency.

If Australia's current account is in deficit, net foreign investment must be negative by the same amount.

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

The International Financial System

Filters

Exam 14: Macroeconomics in an Open Economy

As Australia's net foreign investment is negative, domestic investment must be greater than national saving.

Since the 1980s in Australia, the balance on goods and services has:

When can foreign debt become a problem for a country? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following is not included in the financial account?

Australia usually operates with a large current account deficit.

The 'balance of payments' includes all of the following accounts except the:

What effect does an open economy have on the effectiveness of monetary policy and fiscal policy? _____________________________________________________________________________________________ _____________________________________________________________________________________________

When Australia sends money to the Philippines to help typhoon survivors, the transaction is recorded in the:

In 2015/2016, Australia:

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. Suppose that interest rates in Australia fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

What is the difference between 'net exports' and the 'current account balance'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

If the current account balance is negative:

In recent decades, Australia has incurred overall balance of payments deficits.

Which of the following is not a source of demand for Japanese yen?

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. An appreciation of the dollar is represented as a movement from:

If the balance on the current account is $8.42 billion and the balance on the financial account is $7.53 billion, what is the balance on the capital account, assuming no statistical discrepancy?

The real exchange rate is the amount of an overseas currency that can be purchased with the local (domestic)currency.

If Australia's current account is in deficit, net foreign investment must be negative by the same amount.

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Economic Growth, the Financial System and Business Cycles

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

The International Financial System

Filters

When can foreign debt become a problem for a country? _ _

What effect does an open economy have on the effectiveness of monetary policy and fiscal policy? _ _

What is the difference between 'net exports' and the 'current account balance'? _ _