Question 1

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

Accepted Answer

A) Canadian savers would prefer to buy foreign assets. 
B) Canadian savers would prefer to wait until the real interest rate falls to equal the world interest rate. 
C) Canadian savers would sell their Canadian assets and buy foreign assets instead. 
D) Canadian savers would sell their foreign assets and buy Canadian assets instead. 
A) Canadian savers would prefer to buy foreign assets. 
B) Canadian savers would prefer to wait until the real interest rate falls to equal the world interest rate. 
C) Canadian savers would sell their Canadian assets and buy foreign assets instead. 
D) Canadian savers would sell their foreign assets and buy Canadian assets instead.

Question 2

In which situation must domestic saving equal investment?

Accepted Answer

A) in both closed and open economies 
B) in closed economies, but not open economies 
C) in open economies, but not closed economies 
D) in neither closed nor open economies 
A) in both closed and open economies 
B) in closed economies, but not open economies 
C) in open economies, but not closed economies 
D) in neither closed nor open economies

Question 3

Table 31-1
  
-Refer to Table 31-1. Which currency (ies) is (are) less valuable than predicted by the doctrine of purchasing-power parity?

Accepted Answer

A) the boliviano 
B) the yen and kroner 
C) the baht and kroner 
D) the baht 
A) the boliviano 
B) the yen and kroner 
C) the baht and kroner 
D) the baht

Question 4

Which of the following would be Canadian foreign direct investment?

Accepted Answer

A) A Polish company opens a shipbuilding plant in Canada. 
B) A Bolivian bank buys Canadian corporate bonds. 
C) A Canadian bank buys Bolivian corporate bonds. 
D) A Canadian canning factory opens a plant in Ecuador. 
A) A Polish company opens a shipbuilding plant in Canada. 
B) A Bolivian bank buys Canadian corporate bonds. 
C) A Canadian bank buys Bolivian corporate bonds. 
D) A Canadian canning factory opens a plant in Ecuador.

Question 5

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

Accepted Answer

A) both a Canadian and an Italian import 
B) a Canadian export and an Italian import 
C) a Canadian import and an Italian export 
D) neither an export nor an import for either country 
A) both a Canadian and an Italian import 
B) a Canadian export and an Italian import 
C) a Canadian import and an Italian export 
D) neither an export nor an import for either country

Question 6

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Accepted Answer

A) Canadian net exports increase, and Canadian net capital outflow increases. 
B) Canadian net exports increase, and Canadian net capital outflow decreases. 
C) Canadian net exports decrease, and Canadian net capital outflow increases. 
D) Canadian net exports decrease, and Canadian net capital outflow decreases. 
A) Canadian net exports increase, and Canadian net capital outflow increases. 
B) Canadian net exports increase, and Canadian net capital outflow decreases. 
C) Canadian net exports decrease, and Canadian net capital outflow increases. 
D) Canadian net exports decrease, and Canadian net capital outflow decreases.

Question 7

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Accepted Answer

A) that labour can easily move across Canada's borders 
B) that purchasing-power parity holds in Canada 
C) that Canada's net foreign investment is zero 
D) that investors' funds can easily move across Canada's borders 
A) that labour can easily move across Canada's borders 
B) that purchasing-power parity holds in Canada 
C) that Canada's net foreign investment is zero 
D) that investors' funds can easily move across Canada's borders

Question 8

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Accepted Answer

Purchasing-power parity asserts that the

Question 9

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002) for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

Accepted Answer

A) The dollar appreciated, increasing the trade balance. 
B) The dollar depreciated, decreasing the trade balance. 
C) The dollar appreciated, decreasing the trade balance. 
D) The dollar depreciated, increasing the trade balance. 
A) The dollar appreciated, increasing the trade balance. 
B) The dollar depreciated, decreasing the trade balance. 
C) The dollar appreciated, decreasing the trade balance. 
D) The dollar depreciated, increasing the trade balance.

Question 10

In which of the following situations must national saving rise?

Accepted Answer

A) Both domestic investment and net capital outflow increase. 
B) Domestic investment increases and net capital outflow decreases. 
C) Domestic investment decreases and net capital outflow increases. 
D) Net exports decrease and domestic investment is unchanged. 
A) Both domestic investment and net capital outflow increase. 
B) Domestic investment increases and net capital outflow decreases. 
C) Domestic investment decreases and net capital outflow increases. 
D) Net exports decrease and domestic investment is unchanged.

Question 11

Which of the following is the formula for a closed economy's GDP?

Accepted Answer

A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX 
A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX

Question 12

How has Canadian national saving changed in recent history?

Accepted Answer

A) It remained positive from 1999 to 2008. 
B) It decreased below 10 percent toward the end of the 1990s. 
C) It had a historic high in early 1990s. 
D) It has been decreasing since 1991. 
A) It remained positive from 1999 to 2008. 
B) It decreased below 10 percent toward the end of the 1990s. 
C) It had a historic high in early 1990s. 
D) It has been decreasing since 1991.

Question 13

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances?
a.The Canadian nominal exchange rate depreciates.
b.Canadian domestic prices increase.
c.Prices in the rest of the world rise.

Accepted Answer

a.The Canadian real exchange r

Question 14

Which of the following is the formula for an open economy's GDP?

Accepted Answer

A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX 
A) Y = C + I + G 
B) Y = C + I + G + T 
C) Y = C + I + G + S 
D) Y = C + I + G + NX

Question 15

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Accepted Answer

A) True 
 B)False

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

In which situation must domestic saving equal investment?

Table 31-1 -Refer to Table 31-1. Which currency (ies) is (are) less valuable than predicted by the doctrine of purchasing-power parity?

Which of the following would be Canadian foreign direct investment?

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002) for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

In which of the following situations must national saving rise?

Which of the following is the formula for a closed economy's GDP?

How has Canadian national saving changed in recent history?

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances? a.The Canadian nominal exchange rate depreciates. b.Canadian domestic prices increase. c.Prices in the rest of the world rise.

Which of the following is the formula for an open economy's GDP?

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 12: Open-Economy Macroeconomics: Basic Concepts

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

In which situation must domestic saving equal investment?

Table 31-1 -Refer to Table 31-1. Which currency (ies) is (are) less valuable than predicted by the doctrine of purchasing-power parity?

Which of the following would be Canadian foreign direct investment?

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002) for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

In which of the following situations must national saving rise?

Which of the following is the formula for a closed economy's GDP?

How has Canadian national saving changed in recent history?

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances? a.The Canadian nominal exchange rate depreciates. b.Canadian domestic prices increase. c.Prices in the rest of the world rise.

Which of the following is the formula for an open economy's GDP?

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters