Question 1

What is the relationship among the current account,the financial account,and the balance of payments?

Accepted Answer

Leaving aside the statistical

Question 2

When a U.S.investor buys a bond issued in a foreign country,

Accepted Answer

A)  the balance on the capital account decreases. 
B)  the balance on the current account decreases. 
C)  the balance on the financial account decreases. 
D)  the balance of trade decreases. 
A)  the balance on the capital account decreases. 
B)  the balance on the current account decreases. 
C)  the balance on the financial account decreases. 
D)  the balance of trade decreases.

Question 3

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP. What is Canada's foreign investment as a percentage of GDP?

Accepted Answer

A)  1.15% 
B)  2.3% 
C)  15.3% 
D)  23.7% 
A)  1.15% 
B)  2.3% 
C)  15.3% 
D)  23.7%

Question 4

An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.

Accepted Answer

A) True 
 B)False

Question 5

A federal budget deficit ________ interest rates,which ________ exchange rates (foreign currency per domestic currency),and ________ the balance of trade.

Accepted Answer

A)  raises; raises; reduces 
B)  reduces; raises; reduces 
C)  raises; reduces; reduces 
D)  reduces; reduces; raises 
A)  raises; raises; reduces 
B)  reduces; raises; reduces 
C)  raises; reduces; reduces 
D)  reduces; reduces; raises

Question 6

If the dollar depreciates against the Indian rupee,

Accepted Answer

A)  Indian imports to the U.S. become less expensive. 
B)  U.S. exports to India become less expensive. 
C)  U.S. exports to India become more expensive. 
D)  The value of Indian imports to the United States does not change. 
A)  Indian imports to the U.S. become less expensive. 
B)  U.S. exports to India become less expensive. 
C)  U.S. exports to India become more expensive. 
D)  The value of Indian imports to the United States does not change.

Question 7

In an open economy,the current account balance equals ________.(Assume that the capital account is zero and net transfers are zero.)

Accepted Answer

A)  net foreign investment + domestic investment 
B)  net capital outflows 
C)  the financial account balance + net income on investments 
D)  net foreign investment 
A)  net foreign investment + domestic investment 
B)  net capital outflows 
C)  the financial account balance + net income on investments 
D)  net foreign investment

Question 8

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Accepted Answer

A)  financial account balance. 
B)  current account balance. 
C)  balance of trade. 
D)  capital account balance. 
A)  financial account balance. 
B)  current account balance. 
C)  balance of trade. 
D)  capital account balance.

Question 9

Figure 29-1
  
-Refer to Figure 29-1. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Accepted Answer

A)  interest rates rise in England 
B)  interest rates rise in the United States 
C)  real income rises in the United States 
D)  real income falls in England 
A)  interest rates rise in England 
B)  interest rates rise in the United States 
C)  real income rises in the United States 
D)  real income falls in England

Question 10

Investment (I)in the United States may increase with either an increase in national saving or an increase in net foreign investment.

Accepted Answer

A) True 
 B)False

Question 11

The current account includes records of a country's

Accepted Answer

A)  net exports. 
B)  net investment income. 
C)  net transfers. 
D)  All of the above are included in an economy's current account. 
A)  net exports. 
B)  net investment income. 
C)  net transfers. 
D)  All of the above are included in an economy's current account.

Question 12

Assume the United States is the "domestic" country and Switzerland is the "foreign" country.Which of the following might decrease the real exchange rate between the United States and Switzerland?

Accepted Answer

A)  a depreciation of the franc 
B)  an appreciation of the dollar 
C)  a decrease in the price level in the United States 
D)  a decrease in the price level in Switzerland 
A)  a depreciation of the franc 
B)  an appreciation of the dollar 
C)  a decrease in the price level in the United States 
D)  a decrease in the price level in Switzerland

Question 13

A Canadian oil company hires geological survey services from the United States.If all else remains equal,this will

Accepted Answer

A)  increase net exports. 
B)  increase the balance of trade. 
C)  decrease the current account balance. 
D)  increase the financial account. 
A)  increase net exports. 
B)  increase the balance of trade. 
C)  decrease the current account balance. 
D)  increase the financial account.

Question 14

Based in the United States,McDonald's is a global company with about ________ of its sales coming from within the United States.

Accepted Answer

A)  one-fourth 
B)  one-third 
C)  one-half 
D)  two-thirds 
A)  one-fourth 
B)  one-third 
C)  one-half 
D)  two-thirds

Question 15

If foreign holdings of U.S.dollars decrease,holding all else constant,

Accepted Answer

A)  the balance on the U.S. financial account will decrease. 
B)  the balance on the U.S. current account will decrease. 
C)  the balance on the U.S. capital account will decrease. 
D)  the U.S. balance of trade will decrease. 
A)  the balance on the U.S. financial account will decrease. 
B)  the balance on the U.S. current account will decrease. 
C)  the balance on the U.S. capital account will decrease. 
D)  the U.S. balance of trade will decrease.

Question 16

Figure 29-3
  
-Refer to Figure 29-3. Currency speculators believe that the value of the euro will decrease relative to the dollar.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 17

If the United States has a net export deficit,which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Accepted Answer

A)  The balance on the financial account must equal the balance on the current account. 
B)  Net foreign investment must be negative as well. 
C)  Domestic private saving must be less than net foreign investment. 
D)  Domestic public saving must be less than net foreign investment. 
A)  The balance on the financial account must equal the balance on the current account. 
B)  Net foreign investment must be negative as well. 
C)  Domestic private saving must be less than net foreign investment. 
D)  Domestic public saving must be less than net foreign investment.

Question 18

Figure 29-3
  
-Refer to Figure 29-3. The 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 19

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

Accepted Answer

A)  A German citizen purchases 100 shares of Texas Instruments stock. 
B)  An American citizen purchases 100 shares of BMW stock. 
C)  A German citizen purchases a new Volkswagen made in Germany. 
D)  An American citizen purchases a new Volkswagen made in Germany. 
A)  A German citizen purchases 100 shares of Texas Instruments stock. 
B)  An American citizen purchases 100 shares of BMW stock. 
C)  A German citizen purchases a new Volkswagen made in Germany. 
D)  An American citizen purchases a new Volkswagen made in Germany.

Question 20

Figure 29-2
  
-If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

Accepted Answer

A)  $2.14 
B)  $2.24 
C)  $2.57 
D)  $4.76 
A)  $2.14 
B)  $2.24 
C)  $2.57 
D)  $4.76

What is the relationship among the current account,the financial account,and the balance of payments?

When a U.S.investor buys a bond issued in a foreign country,

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP. What is Canada's foreign investment as a percentage of GDP?

An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.

A federal budget deficit interest rates,which exchange rates (foreign currency per domestic currency),and the balance of trade.

If the dollar depreciates against the Indian rupee,

In an open economy,the current account balance equals ________.(Assume that the capital account is zero and net transfers are zero.)

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Figure 29-1 -Refer to Figure 29-1. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Investment (I)in the United States may increase with either an increase in national saving or an increase in net foreign investment.

The current account includes records of a country's

Assume the United States is the "domestic" country and Switzerland is the "foreign" country.Which of the following might decrease the real exchange rate between the United States and Switzerland?

A Canadian oil company hires geological survey services from the United States.If all else remains equal,this will

Based in the United States,McDonald's is a global company with about ________ of its sales coming from within the United States.

If foreign holdings of U.S.dollars decrease,holding all else constant,

Figure 29-3 -Refer to Figure 29-3. Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

If the United States has a net export deficit,which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Figure 29-3 -Refer to Figure 29-3. The appreciation of the dollar is represented as a movement from

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

Figure 29-2 -If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

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

What is the relationship among the current account,the financial account,and the balance of payments?

When a U.S.investor buys a bond issued in a foreign country,

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP. What is Canada's foreign investment as a percentage of GDP?

An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.

A federal budget deficit ________ interest rates,which ________ exchange rates (foreign currency per domestic currency),and ________ the balance of trade.

If the dollar depreciates against the Indian rupee,

In an open economy,the current account balance equals ________.(Assume that the capital account is zero and net transfers are zero.)

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Figure 29-1 -Refer to Figure 29-1. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Investment (I)in the United States may increase with either an increase in national saving or an increase in net foreign investment.

The current account includes records of a country's

Assume the United States is the "domestic" country and Switzerland is the "foreign" country.Which of the following might decrease the real exchange rate between the United States and Switzerland?

A Canadian oil company hires geological survey services from the United States.If all else remains equal,this will

Based in the United States,McDonald's is a global company with about ________ of its sales coming from within the United States.

If foreign holdings of U.S.dollars decrease,holding all else constant,

Figure 29-3 -Refer to Figure 29-3. Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

If the United States has a net export deficit,which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Figure 29-3 -Refer to Figure 29-3. The appreciation of the dollar is represented as a movement from

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

Figure 29-2 -If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

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

A federal budget deficit interest rates,which exchange rates (foreign currency per domestic currency),and the balance of trade.