Question 1

The impact of crowding out

Accepted Answer

A)  is larger in a closed economy as compared to an open economy. 
B)  is larger in an open economy as compared to a closed economy. 
C)  is larger in an open economy as compared to a closed economy when fiscal policy is contractionary. 
D)  is larger in a closed economy as compared to an open economy when fiscal policy is contractionary. 
A)  is larger in a closed economy as compared to an open economy. 
B)  is larger in an open economy as compared to a closed economy. 
C)  is larger in an open economy as compared to a closed economy when fiscal policy is contractionary. 
D)  is larger in a closed economy as compared to an open economy when fiscal policy is contractionary.

Question 2

Since 1999,the capital account has recorded

Accepted Answer

A)  transactions that affect net capital flows in the economy. 
B)  relatively minor transactions, such as migrants' transfers, and sales and purchases of nonproduced, nonfinancial assets. 
C)  transactions that affect the balance of trade or the balance of services. 
D)  statistical discrepancy between the current account and the financial account. 
A)  transactions that affect net capital flows in the economy. 
B)  relatively minor transactions, such as migrants' transfers, and sales and purchases of nonproduced, nonfinancial assets. 
C)  transactions that affect the balance of trade or the balance of services. 
D)  statistical discrepancy between the current account and the financial account.

Question 3

What is the relationship between the balance of trade and the current account balance?

Accepted Answer

The balance of trade measures the differ

Question 4

Overall since 2002,the U.S.dollar has ________ relative to other currencies.

Accepted Answer

A)  gained value 
B)  lost value 
C)  maintained its value 
D)  erratically gained and lost value every year 
A)  gained value 
B)  lost value 
C)  maintained its value 
D)  erratically gained and lost value every year

Question 5

The United States has had negative net exports since 1975.This means that the United States has ________ since 1975.

Accepted Answer

A)  had a financial account surplus 
B)  had a net capital outflow 
C)  had positive net foreign investment 
D)  had a current account surplus 
A)  had a financial account surplus 
B)  had a net capital outflow 
C)  had positive net foreign investment 
D)  had a current account surplus

Question 6

If you know that a country's net foreign investment is negative,what does that tell you about the relationship between the country's national saving and private investment?

Accepted Answer

For any country,national saving must equ

Question 7

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

Accepted Answer

A)  A Japanese citizen purchases 50 shares of Google stock. 
B)  An American citizen purchases 50 shares of Toshiba stock. 
C)  A Japanese citizen purchases a new Toyota made in Japan. 
D)  An American citizen purchases a new Toyota made in Japan. 
A)  A Japanese citizen purchases 50 shares of Google stock. 
B)  An American citizen purchases 50 shares of Toshiba stock. 
C)  A Japanese citizen purchases a new Toyota made in Japan. 
D)  An American citizen purchases a new Toyota made in Japan.

Question 8

Which of the following will not shift the demand for the euro to the right?

Accepted Answer

A)  an increase in interest rates in the European Union 
B)  an increase in incomes in countries that buy goods from the European Union 
C)  expectations among speculators that the price of the euro will rise in the future 
D)  a decrease in the demand for European goods 
A)  an increase in interest rates in the European Union 
B)  an increase in incomes in countries that buy goods from the European Union 
C)  expectations among speculators that the price of the euro will rise in the future 
D)  a decrease in the demand for European goods

Question 9

Which of the following is not "crowded out" by higher interest rates as a result of expansionary fiscal policy?

Accepted Answer

A)  consumption 
B)  private investment 
C)  net exports 
D)  government spending 
A)  consumption 
B)  private investment 
C)  net exports 
D)  government spending

Question 10

An economy that has interactions in trade or finance with other economies is referred to as

Accepted Answer

A)  an open economy. 
B)  a closed economy. 
C)  a trade-balanced economy. 
D)  a net foreign investment economy. 
A)  an open economy. 
B)  a closed economy. 
C)  a trade-balanced economy. 
D)  a net foreign investment economy.

Question 11

The level of saving in Japan has historically been high relative to the level of domestic investment.Based on this information,we would expect that

Accepted Answer

A)  Japan's net foreign investment has been relatively low. 
B)  Japan's net exports have been relatively high. 
C)  Japan's capital inflows are positive. 
D)  Japan's private saving is greater than its public saving. 
A)  Japan's net foreign investment has been relatively low. 
B)  Japan's net exports have been relatively high. 
C)  Japan's capital inflows are positive. 
D)  Japan's private saving is greater than its public saving.

Question 12

Which of the following would cause the dollar to appreciate?

Accepted Answer

A)  an increase in the demand for dollars 
B)  a decrease in the demand for dollars 
C)  an increase in the supply of dollars 
D)  an increase in the demand for imports from foreign countries 
A)  an increase in the demand for dollars 
B)  a decrease in the demand for dollars 
C)  an increase in the supply of dollars 
D)  an increase in the demand for imports from foreign countries

Question 13

Explain how "net capital flows" are related to "net foreign investment," "net foreign direct investment," and "net foreign portfolio investment."

Accepted Answer

Net capital flows measure the difference

Question 14

Table 29-1
  
-Refer to Table 29-1.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?

Accepted Answer

A)  0.10 dollars per peso and 2.00 dollars per pound 
B)  1.00 dollars per peso and 20.00 dollars per pound 
C)  0.01 dollars per peso and 0.20 dollars per pound 
D)  0.10 dollars per peso and 5.00 dollars per pound 
E)  0.01 dollars per peso and 0.50 dollars per pound 
A)  0.10 dollars per peso and 2.00 dollars per pound 
B)  1.00 dollars per peso and 20.00 dollars per pound 
C)  0.01 dollars per peso and 0.20 dollars per pound 
D)  0.10 dollars per peso and 5.00 dollars per pound 
E)  0.01 dollars per peso and 0.50 dollars per pound

Question 15

Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8,

Accepted Answer

A)  the prices of U.S. goods and services have increased by 53% relative to France. 
B)  the prices of U.S. goods and services have increased by 3% relative to France. 
C)  the prices of U.S. goods and services have decreased by 16% relative to France. 
D)  the prices of U.S. goods and services have increased by 20% relative to France. 
A)  the prices of U.S. goods and services have increased by 53% relative to France. 
B)  the prices of U.S. goods and services have increased by 3% relative to France. 
C)  the prices of U.S. goods and services have decreased by 16% relative to France. 
D)  the prices of U.S. goods and services have increased by 20% relative to France.

Question 16

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

Accepted Answer

A)  The dollar will appreciate. 
B)  The dollar will depreciate. 
C)  There will be a decrease in the demand for dollars. 
D)  There will be a decrease in the supply of dollars. 
A)  The dollar will appreciate. 
B)  The dollar will depreciate. 
C)  There will be a decrease in the demand for dollars. 
D)  There will be a decrease in the supply of dollars.

Question 17

How would a decrease in the U.S.budget deficit affect the exchange rate in the market for dollars?

Accepted Answer

A)  The exchange rate will increase. 
B)  The exchange rate will decrease. 
C)  The exchange rate will not be affected by a change in the budget deficit. 
D)  The impact of the decrease in the budget deficit on the exchange rate cannot be predicted. 
A)  The exchange rate will increase. 
B)  The exchange rate will decrease. 
C)  The exchange rate will not be affected by a change in the budget deficit. 
D)  The impact of the decrease in the budget deficit on the exchange rate cannot be predicted.

Question 18

Net foreign investment is equal to

Accepted Answer

A)  capital inflows minus capital outflows. 
B)  foreign direct investment. 
C)  the balance of trade. 
D)  net foreign portfolio investment plus net foreign direct investment. 
A)  capital inflows minus capital outflows. 
B)  foreign direct investment. 
C)  the balance of trade. 
D)  net foreign portfolio investment plus net foreign direct investment.

Question 19

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would result in a trade surplus for the United States?

Accepted Answer

A)  Exports of goods = $450 billion Imports of goods = $400 billion Exports of services = $200 billion Imports of services = $250 billion 
B)  Exports of goods = $450 billion Imports of goods = $450 billion Exports of services = $200 billion Imports of services = $250 billion 
C)  Exports of goods = $450 billion Imports of goods = $460 billion Exports of services = $200 billion Imports of services = $100 billion 
D)  Exports of goods = $450 billion Imports of goods = $490 billion Exports of services = $200 billion Imports of services = $100 billion 
A)  Exports of goods = $450 billion Imports of goods = $400 billion Exports of services = $200 billion Imports of services = $250 billion 
B)  Exports of goods = $450 billion Imports of goods = $450 billion Exports of services = $200 billion Imports of services = $250 billion 
C)  Exports of goods = $450 billion Imports of goods = $460 billion Exports of services = $200 billion Imports of services = $100 billion 
D)  Exports of goods = $450 billion Imports of goods = $490 billion Exports of services = $200 billion Imports of services = $100 billion

The impact of crowding out

Since 1999,the capital account has recorded

What is the relationship between the balance of trade and the current account balance?

Overall since 2002,the U.S.dollar has ________ relative to other currencies.

The United States has had negative net exports since 1975.This means that the United States has ________ since 1975.

If you know that a country's net foreign investment is negative,what does that tell you about the relationship between the country's national saving and private investment?

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

Which of the following will not shift the demand for the euro to the right?

Which of the following is not "crowded out" by higher interest rates as a result of expansionary fiscal policy?

An economy that has interactions in trade or finance with other economies is referred to as

The level of saving in Japan has historically been high relative to the level of domestic investment.Based on this information,we would expect that

Which of the following would cause the dollar to appreciate?

Explain how "net capital flows" are related to "net foreign investment," "net foreign direct investment," and "net foreign portfolio investment."

Table 29-1 -Refer to Table 29-1.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?

Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8,

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

How would a decrease in the U.S.budget deficit affect the exchange rate in the market for dollars?

Net foreign investment is equal to

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Which of the following would result in a trade surplus for the United States?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

The International Financial System

Filters

Exam 18: Macroeconomics in an Open Economy

The impact of crowding out

Since 1999,the capital account has recorded

What is the relationship between the balance of trade and the current account balance?

Overall since 2002,the U.S.dollar has ________ relative to other currencies.

The United States has had negative net exports since 1975.This means that the United States has ________ since 1975.

If you know that a country's net foreign investment is negative,what does that tell you about the relationship between the country's national saving and private investment?

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

Which of the following will not shift the demand for the euro to the right?

Which of the following is not "crowded out" by higher interest rates as a result of expansionary fiscal policy?

An economy that has interactions in trade or finance with other economies is referred to as

The level of saving in Japan has historically been high relative to the level of domestic investment.Based on this information,we would expect that

Which of the following would cause the dollar to appreciate?

Explain how "net capital flows" are related to "net foreign investment," "net foreign direct investment," and "net foreign portfolio investment."

Table 29-1 -Refer to Table 29-1.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?

Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8,

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

How would a decrease in the U.S.budget deficit affect the exchange rate in the market for dollars?

Net foreign investment is equal to

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Which of the following would result in a trade surplus for the United States?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

The International Financial System

Filters