Question 1

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Accepted Answer

A) True 
 B)False

Question 2

Since the 1970s in Australia, net primary income has been:

Accepted Answer

A) positive due to export earnings. 
B) mostly negative, but occasionally positive due to dividends on shares going overseas. 
C) negative as imports have usually exceeded exports. 
D) negative due to interest repayments on foreign debt. 
A) positive due to export earnings. 
B) mostly negative, but occasionally positive due to dividends on shares going overseas. 
C) negative as imports have usually exceeded exports. 
D) negative due to interest repayments on foreign debt.

Question 3

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by:

Accepted Answer

A) raising imports, reducing exports, and reducing the balance of trade on goods and services. 
B) reducing imports, raising exports, and reducing the balance of trade on goods and services. 
C) reducing imports, raising exports, and increasing the balance of trade on goods and services. 
D) raising imports, reducing exports, and increasing the balance of trade on goods and services. 
A) raising imports, reducing exports, and reducing the balance of trade on goods and services. 
B) reducing imports, raising exports, and reducing the balance of trade on goods and services. 
C) reducing imports, raising exports, and increasing the balance of trade on goods and services. 
D) raising imports, reducing exports, and increasing the balance of trade on goods and services.

Question 4

If the value of goods and services exported from Australia is smaller than the value of goods and services imported, then:

Accepted Answer

A) Australia's balance of payments will be in deficit. 
B) Australia's balance of trade on goods and services will be in deficit. 
C) Australia will have a current account surplus. 
D) Australia will have a financial account deficit. 
A) Australia's balance of payments will be in deficit. 
B) Australia's balance of trade on goods and services will be in deficit. 
C) Australia will have a current account surplus. 
D) Australia will have a financial account deficit.

Question 5

Assume that the exchange rate between the dollar and the yen is ¥60 = $1. Suppose the exchange rate changes to ¥100 = $1. Because of the change:

Accepted Answer

A) Australian exports should increase and Australian imports should increase. 
B) Australian exports should decrease and Australian imports should increase. 
C) Australian exports should increase and Australian imports should decrease. 
D) Australian exports should decrease and Australian imports should decrease. 
A) Australian exports should increase and Australian imports should increase. 
B) Australian exports should decrease and Australian imports should increase. 
C) Australian exports should increase and Australian imports should decrease. 
D) Australian exports should decrease and Australian imports should decrease.

Question 6

In an open economy, contractionary monetary policy will have a secondary effect on GDP because:

Accepted Answer

A) net exports will fall due to the lower foreign exchange value of the dollar. 
B) net exports will rise due to the lower foreign exchange value of the dollar. 
C) net exports will fall due to the higher foreign exchange value of the dollar. 
D) net exports will rise due to the higher foreign exchange value of the dollar. 
A) net exports will fall due to the lower foreign exchange value of the dollar. 
B) net exports will rise due to the lower foreign exchange value of the dollar. 
C) net exports will fall due to the higher foreign exchange value of the dollar. 
D) net exports will rise due to the higher foreign exchange value of the dollar.

Question 7

Suppose that health experts discover that French red wine lowers cholesterol. How will this affect the demand and supply of dollars in exchange for euros? Illustrate with a graph and explain. Will the dollar appreciate or depreciate?
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_____________________________________________________________________________________________

Accepted Answer

@#IMG-DLM& The positive health effects of French r

Question 8

An excess demand for dollars in exchange for yen will cause:

Accepted Answer

A) no change in the exchange rate of the yen to the dollar. 
B) the dollar to appreciate relative to the yen. 
C) the yen to appreciate against all major currencies. 
D) the dollar to decline in value relative to the yen. 
A) no change in the exchange rate of the yen to the dollar. 
B) the dollar to appreciate relative to the yen. 
C) the yen to appreciate against all major currencies. 
D) the dollar to decline in value relative to the yen.

Question 9

Why does continued foreign investment in Australian shares and bonds, and foreign companies continuing to build businesses in Australia, result in a current account deficit in Australia?
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_____________________________________________________________________________________________

Accepted Answer

The willingness of foreign investors and

Question 10

The large current account deficits in Australia mean that:

Accepted Answer

A) foreign investors accumulate more Australian assets than Australian investors accumulate foreign assets. 
B) private savings have been at historically high levels. 
C) foreign investors lack confidence in the strength of the Australian economy and the buying power of Australian consumers. 
D) there has been little or no foreign investment in Australia. 
A) foreign investors accumulate more Australian assets than Australian investors accumulate foreign assets. 
B) private savings have been at historically high levels. 
C) foreign investors lack confidence in the strength of the Australian economy and the buying power of Australian consumers. 
D) there has been little or no foreign investment in Australia.

Question 11

A goods trade deficit indicates that a:

Accepted Answer

A) country imports more than it exports. 
B) country imports less than it exports. 
C) country's imports equal its exports. 
D) country's trade has decreased on average. 
A) country imports more than it exports. 
B) country imports less than it exports. 
C) country's imports equal its exports. 
D) country's trade has decreased on average.

Question 12

Show the impact that a relative increase in Australian interest rates will have on the exchange rate of Chinese yuan for dollars. Explain what this will do to the level of goods imported from China to Australia and discuss the effect it will have on Australia's current account.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The exchange rate is determined by suppl

Question 13

Since the 1960s, Australia's interest repayments on foreign debt as a proportion of GDP has normally been between the range of:

Accepted Answer

A) 1% and 2%. 
B) 5% and 20%. 
C) 2% and 4%. 
D) 20% and 40%. 
A) 1% and 2%. 
B) 5% and 20%. 
C) 2% and 4%. 
D) 20% and 40%.

Question 14

Which of the following is not a non-produced, non-financial asset?

Accepted Answer

A) a copyright 
B) a patent 
C) a share in a company 
D) a right to a natural resource 
A) a copyright 
B) a patent 
C) a share in a company 
D) a right to a natural resource

Question 15

Refer to Figure 14.2 for the following questions.
Figure 14.2
  
-Refer to Figure 14.2. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming ceteris paribus, 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 16

If an Australian company sells insurance to a foreign company, how does this affect Australia's balance of payments?

Accepted Answer

A) It increases exports of services. 
B) It increases capital inflows. 
C) It increases imports of goods. 
D) It lowers the balance on the current account. 
A) It increases exports of services. 
B) It increases capital inflows. 
C) It increases imports of goods. 
D) It lowers the balance on the current account.

Question 17

Which of the following transactions would be included in Germany's current account?

Accepted Answer

A) A German citizen purchases 100 shares in Qantas. 
B) An Australian citizen purchases 100 shares in Germany's BMW company. 
C) A German citizen purchases a new Volkswagen made in Germany. 
D) An Australian citizen purchases a new Mercedes-Benz car made in Germany. 
A) A German citizen purchases 100 shares in Qantas. 
B) An Australian citizen purchases 100 shares in Germany's BMW company. 
C) A German citizen purchases a new Volkswagen made in Germany. 
D) An Australian citizen purchases a new Mercedes-Benz car made in Germany.

Question 18

The 'nominal exchange rate' is the:

Accepted Answer

A) value of one country's currency over time. 
B) average value of one country's currency over one quarter. 
C) value of one country's currency in terms of another country's currency. 
D) value of one country's currency in terms of another country's currency adjusted for the price level. 
A) value of one country's currency over time. 
B) average value of one country's currency over one quarter. 
C) value of one country's currency in terms of another country's currency. 
D) value of one country's currency in terms of another country's currency adjusted for the price level.

Question 19

A federal budget deficit can lead to a(n):

Accepted Answer

A) appreciation of the dollar and an increase in net exports. 
B) depreciation of the dollar and a decline in net exports. 
C) appreciation of the dollar and a decline in net exports. 
D) depreciation of the dollar and an increase in net exports. 
A) appreciation of the dollar and an increase in net exports. 
B) depreciation of the dollar and a decline in net exports. 
C) appreciation of the dollar and a decline in net exports. 
D) depreciation of the dollar and an increase in net exports.

Question 20

If Australia exports more than it imports, then:

Accepted Answer

A) Australia's balance of payments will be in deficit. 
B) Australia's balance of trade on goods and services will be positive. 
C) Australia will have a current account surplus. 
D) Australia will have a financial account deficit. 
A) Australia's balance of payments will be in deficit. 
B) Australia's balance of trade on goods and services will be positive. 
C) Australia will have a current account surplus. 
D) Australia will have a financial account deficit.

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Since the 1970s in Australia, net primary income has been:

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by:

If the value of goods and services exported from Australia is smaller than the value of goods and services imported, then:

Assume that the exchange rate between the dollar and the yen is ¥60 = $1. Suppose the exchange rate changes to ¥100 = $1. Because of the change:

In an open economy, contractionary monetary policy will have a secondary effect on GDP because:

Suppose that health experts discover that French red wine lowers cholesterol. How will this affect the demand and supply of dollars in exchange for euros? Illustrate with a graph and explain. Will the dollar appreciate or depreciate? _ _

An excess demand for dollars in exchange for yen will cause:

Why does continued foreign investment in Australian shares and bonds, and foreign companies continuing to build businesses in Australia, result in a current account deficit in Australia? _ _

The large current account deficits in Australia mean that:

A goods trade deficit indicates that a:

Show the impact that a relative increase in Australian interest rates will have on the exchange rate of Chinese yuan for dollars. Explain what this will do to the level of goods imported from China to Australia and discuss the effect it will have on Australia's current account. _ _

Since the 1960s, Australia's interest repayments on foreign debt as a proportion of GDP has normally been between the range of:

Which of the following is not a non-produced, non-financial asset?

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming ceteris paribus, how would this be represented?

If an Australian company sells insurance to a foreign company, how does this affect Australia's balance of payments?

Which of the following transactions would be included in Germany's current account?

The 'nominal exchange rate' is the:

A federal budget deficit can lead to a(n):

If Australia exports more than it imports, then:

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

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Exam 14: Macroeconomics in an Open Economy

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Since the 1970s in Australia, net primary income has been:

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by:

If the value of goods and services exported from Australia is smaller than the value of goods and services imported, then:

Assume that the exchange rate between the dollar and the yen is ¥60 = $1. Suppose the exchange rate changes to ¥100 = $1. Because of the change:

In an open economy, contractionary monetary policy will have a secondary effect on GDP because:

An excess demand for dollars in exchange for yen will cause:

The large current account deficits in Australia mean that:

A goods trade deficit indicates that a:

Since the 1960s, Australia's interest repayments on foreign debt as a proportion of GDP has normally been between the range of:

Which of the following is not a non-produced, non-financial asset?

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming ceteris paribus, how would this be represented?

If an Australian company sells insurance to a foreign company, how does this affect Australia's balance of payments?

Which of the following transactions would be included in Germany's current account?

The 'nominal exchange rate' is the:

A federal budget deficit can lead to a(n):

If Australia exports more than it imports, then:

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