Question 1

When Canadians decrease their demand for Japanese goods,

Accepted Answer

A) the demand for Canadian dollars will rise, and the demand for yen will rise. 
B) the demand for Canadian dollars will fall, and the demand for yen will rise. 
C) the supply of Canadian dollars will rise, and the demand for yen will rise. 
D) the supply of Canadian dollars will fall, and the demand for yen will fall. 
E) the supply of Canadian dollars will fall, and the demand for yen will not change. 
A) the demand for Canadian dollars will rise, and the demand for yen will rise. 
B) the demand for Canadian dollars will fall, and the demand for yen will rise. 
C) the supply of Canadian dollars will rise, and the demand for yen will rise. 
D) the supply of Canadian dollars will fall, and the demand for yen will fall. 
E) the supply of Canadian dollars will fall, and the demand for yen will not change.

Question 2

How does a decrease in the federal budget deficit affect the demand for Canadian dollars and the supply of Canadian dollars on the foreign exchange market?

Accepted Answer

A) The demand for Canadian dollars falls, and the supply of Canadian dollars falls. 
B) The demand for Canadian dollars rises, and the supply of Canadian dollars rises. 
C) The demand for Canadian dollars rises, and the supply of Canadian dollars falls. 
D) The demand for Canadian dollars falls, and the supply of Canadian dollars rises. 
A) The demand for Canadian dollars falls, and the supply of Canadian dollars falls. 
B) The demand for Canadian dollars rises, and the supply of Canadian dollars rises. 
C) The demand for Canadian dollars rises, and the supply of Canadian dollars falls. 
D) The demand for Canadian dollars falls, and the supply of Canadian dollars rises.

Question 3

If net exports are positive,

Accepted Answer

A) net foreign investment is also positive. 
B) capital inflows must be greater than capital outflows. 
C) the currency will appreciate. 
D) net foreign investment is negative. 
E) Both A and B are correct. 
A) net foreign investment is also positive. 
B) capital inflows must be greater than capital outflows. 
C) the currency will appreciate. 
D) net foreign investment is negative. 
E) Both A and B are correct.

Question 4

How is the impact of expansionary fiscal policy different in an open economy than in a closed economy?

Accepted Answer

In a closed economy, expansionary fiscal

Question 5

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

Accepted Answer

A) A German citizen purchases 100 shares of Boeing stock. 
B) A Canadian citizen purchases 100 shares of BMW stock. 
C) A German citizen purchases a new Volkswagen made in Germany. 
D) An Canadian citizen purchases a new Volkswagen made in Germany. 
E) BMW purchases a patent from Ford. 
A) A German citizen purchases 100 shares of Boeing stock. 
B) A Canadian citizen purchases 100 shares of BMW stock. 
C) A German citizen purchases a new Volkswagen made in Germany. 
D) An Canadian citizen purchases a new Volkswagen made in Germany. 
E) BMW purchases a patent from Ford.

Question 6

What effect does a depreciation of the dollar have on real GDP in Canada in the short run?

Accepted Answer

A) Real GDP will fall. 
B) Real GDP will rise. 
C) Real GDP will be unaffected by the depreciation of the dollar. 
D) Real GDP will be unchanged, but nominal GDP will rise. 
E) Real GDP will fall, but nominal GDP will rise. 
A) Real GDP will fall. 
B) Real GDP will rise. 
C) Real GDP will be unaffected by the depreciation of the dollar. 
D) Real GDP will be unchanged, but nominal GDP will rise. 
E) Real GDP will fall, but nominal GDP will rise.

Question 7

Which of the following would you expect to increase both interest rates and exchange rates?

Accepted Answer

A) expansionary monetary policy 
B) contractionary monetary policy 
C) expansionary fiscal policy 
D) contractionary fiscal policy 
E) Both B and C will increase both interest rates and exchange rates. 
A) expansionary monetary policy 
B) contractionary monetary policy 
C) expansionary fiscal policy 
D) contractionary fiscal policy 
E) Both B and C will increase both interest rates and exchange rates.

Question 8

Net foreign investment is a measure of net capital outflows, equal to capital outflows minus capital inflows in a given period of accounting.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

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

Question 11

If Canada is a "net lender" abroad, ________.(Assume that the capital account is zero and net transfers are zero.)

Accepted Answer

A) Canada must be exporting less than it is importing 
B) net capital flows must be positive 
C) domestic saving is greater than domestic investment 
D) net foreign investment must be negative 
E) Canada's net exports is lower than it should be 
A) Canada must be exporting less than it is importing 
B) net capital flows must be positive 
C) domestic saving is greater than domestic investment 
D) net foreign investment must be negative 
E) Canada's net exports is lower than it should be

Question 12

If a country has a ________ exchange rate, its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.

Accepted Answer

A) floating 
B) flexible 
C) fixed 
D) managed 
E) all of the above 
A) floating 
B) flexible 
C) fixed 
D) managed 
E) all of the above

Question 13

The federal budget deficit and the trade balance are often referred to as the

Accepted Answer

A) balance of payments. 
B) duelling depreciators. 
C) twin deficits. 
D) national debt. 
E) dynamic duo. 
A) balance of payments. 
B) duelling depreciators. 
C) twin deficits. 
D) national debt. 
E) dynamic duo.

Question 14

What impact might a decrease in the Canadian federal budget deficit have on interest rates and exchange rates in the market for the Canadian dollar? (Assume the exchange rate is stated in terms of foreign currency per Canadian dollar.)

Accepted Answer

A) Interest rates and exchange rates increase. 
B) Interest rates increase and exchange rates decrease. 
C) Interest rates decrease and exchange rates increase. 
D) Interest rates and exchange rates decrease. 
E) Interest rates decrease and the exchange rate remains constant. 
A) Interest rates and exchange rates increase. 
B) Interest rates increase and exchange rates decrease. 
C) Interest rates decrease and exchange rates increase. 
D) Interest rates and exchange rates decrease. 
E) Interest rates decrease and the exchange rate remains constant.

Question 15

Saving exceeds domestic investment in Japan, which generates a financial account deficit in Japan's balance of payments.

Accepted Answer

A) True 
 B)False

Question 16

When Canadians increase their demand for Japanese goods,

Accepted Answer

A) the demand for dollars will rise, and the demand for yen will rise. 
B) the demand for dollars will fall, and the demand for yen will rise. 
C) the supply of dollars will rise, and the demand for yen will rise. 
D) the supply of dollars will fall, and the demand for yen will fall. 
A) the demand for dollars will rise, and the demand for yen will rise. 
B) the demand for dollars will fall, and the demand for yen will rise. 
C) the supply of dollars will rise, and the demand for yen will rise. 
D) the supply of dollars will fall, and the demand for yen will fall.

Question 17

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. 
E) Japan's public savings is greater than investment. 
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. 
E) Japan's public savings is greater than investment.

Question 18

An appreciating yen makes Japanese products

Accepted Answer

A) more expensive in foreign markets. 
B) less expensive in foreign markets. 
C) more expensive in the Japanese market. 
D) more expensive in both foreign markets and the Japanese market. 
E) more popular outside Japan. 
A) more expensive in foreign markets. 
B) less expensive in foreign markets. 
C) more expensive in the Japanese market. 
D) more expensive in both foreign markets and the Japanese market. 
E) more popular outside Japan.

Question 19

If the balance on the current account in Canada is $75 billion, which of the following is most likely to be true?

Accepted Answer

A) The balance on the financial account is negative. 
B) The trade balance is negative. 
C) Net foreign investment is negative. 
D) The balance on the capital account is positive. 
E) The balance of trade is negative. 
A) The balance on the financial account is negative. 
B) The trade balance is negative. 
C) Net foreign investment is negative. 
D) The balance on the capital account is positive. 
E) The balance of trade is negative.

Question 20

If Canada has negative net exports, 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. 
E) Domestic public savings must be greater than domestic private savings. 
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. 
E) Domestic public savings must be greater than domestic private savings.

When Canadians decrease their demand for Japanese goods,

How does a decrease in the federal budget deficit affect the demand for Canadian dollars and the supply of Canadian dollars on the foreign exchange market?

If net exports are positive,

How is the impact of expansionary fiscal policy different in an open economy than in a closed economy?

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

What effect does a depreciation of the dollar have on real GDP in Canada in the short run?

Which of the following would you expect to increase both interest rates and exchange rates?

Net foreign investment is a measure of net capital outflows, equal to capital outflows minus capital inflows in a given period of accounting.

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.

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

If Canada is a "net lender" abroad, ________.(Assume that the capital account is zero and net transfers are zero.)

If a country has a ________ exchange rate, its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.

The federal budget deficit and the trade balance are often referred to as the

What impact might a decrease in the Canadian federal budget deficit have on interest rates and exchange rates in the market for the Canadian dollar? (Assume the exchange rate is stated in terms of foreign currency per Canadian dollar.)

Saving exceeds domestic investment in Japan, which generates a financial account deficit in Japan's balance of payments.

When Canadians increase their demand for Japanese goods,

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

An appreciating yen makes Japanese products

If the balance on the current account in Canada is $75 billion, which of the following is most likely to be true?

If Canada has negative net exports, which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

The International Financial System

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Exam 14: Macroeconomics in an Open Economy

When Canadians decrease their demand for Japanese goods,

How does a decrease in the federal budget deficit affect the demand for Canadian dollars and the supply of Canadian dollars on the foreign exchange market?

If net exports are positive,

How is the impact of expansionary fiscal policy different in an open economy than in a closed economy?

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

What effect does a depreciation of the dollar have on real GDP in Canada in the short run?

Which of the following would you expect to increase both interest rates and exchange rates?

Net foreign investment is a measure of net capital outflows, equal to capital outflows minus capital inflows in a given period of accounting.

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.

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

If Canada is a "net lender" abroad, ________.(Assume that the capital account is zero and net transfers are zero.)

If a country has a ________ exchange rate, its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.

The federal budget deficit and the trade balance are often referred to as the

What impact might a decrease in the Canadian federal budget deficit have on interest rates and exchange rates in the market for the Canadian dollar? (Assume the exchange rate is stated in terms of foreign currency per Canadian dollar.)

Saving exceeds domestic investment in Japan, which generates a financial account deficit in Japan's balance of payments.

When Canadians increase their demand for Japanese goods,

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

An appreciating yen makes Japanese products

If the balance on the current account in Canada is $75 billion, which of the following is most likely to be true?

If Canada has negative net exports, which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

The International Financial System

Filters