Question 1

If the exchange rate changes from 100 yen per dollar to 105 yen per dollar, then the dollar has:

Accepted Answer

A)  depreciated 
B)  appreciated 
C)  devalued 
D)  revalued 
A)  depreciated 
B)  appreciated 
C)  devalued 
D)  revalued B

Question 2

Which of the following factors does not affect a country's exports, imports and net exports?

Accepted Answer

A)  Transportation costs 
B)  The government's international trade policy 
C)  Exchange rates 
D)  All of the above affect exports, imports and net exports 
E)  None of the above affect a country's exports, imports and net exports 
A)  Transportation costs 
B)  The government's international trade policy 
C)  Exchange rates 
D)  All of the above affect exports, imports and net exports 
E)  None of the above affect a country's exports, imports and net exports D

Question 3

Net foreign investment measures:

Accepted Answer

A)  foreign assets held by domestic residents 
B)  investment plus saving 
C)  the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners 
D)  none of the above 
A)  foreign assets held by domestic residents 
B)  investment plus saving 
C)  the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners 
D)  none of the above C

Question 4

According to the World Bank, trade has been the only force that has enabled poorer countries to increase their uptake of technology.

Accepted Answer

A) True 
 B)False

Question 5

Balanced trade is:

Accepted Answer

A)  a situation in which the value of a country's exports equals the value of its production 
B)  a situation in which the value of a country's exports equals the value of its imports 
C)  a situation in which the value of a country's imports equals the value of its consumption 
D)  none of the above 
A)  a situation in which the value of a country's exports equals the value of its production 
B)  a situation in which the value of a country's exports equals the value of its imports 
C)  a situation in which the value of a country's imports equals the value of its consumption 
D)  none of the above

Question 6

The law of one price states that:

Accepted Answer

A)  a good must sell at the price fixed by law 
B)  a good cannot sell for a price greater than the legal price ceiling 
C)  domestic producers of a good are guaranteed a subsidy by law 
D)  a good must sell at the same price at all locations 
A)  a good must sell at the price fixed by law 
B)  a good cannot sell for a price greater than the legal price ceiling 
C)  domestic producers of a good are guaranteed a subsidy by law 
D)  a good must sell at the same price at all locations

Question 7

General price levels in any country change to:

Accepted Answer

A)  balance demand for goods and supply of goods 
B)  balance demand for services and supply of services 
C)  balance demand for money and supply of money 
D)  balance demand for goods and services, and supply of goods and services 
A)  balance demand for goods and supply of goods 
B)  balance demand for services and supply of services 
C)  balance demand for money and supply of money 
D)  balance demand for goods and services, and supply of goods and services

Question 8

The trade balance is:

Accepted Answer

A)  domestically produced goods and services that are sold abroad 
B)  foreign-produced goods that are sold domestically 
C)  net exports 
D)  all goods and services available inside the country 
A)  domestically produced goods and services that are sold abroad 
B)  foreign-produced goods that are sold domestically 
C)  net exports 
D)  all goods and services available inside the country

Question 9

The nominal exchange rate is the:

Accepted Answer

A)  nominal interest rate in one country divided by the nominal interest rate in the other country 
B)  price of a good in one country divided by the price of the same good in another country 
C)  rate at which a person can trade the currency of one country for the currency of another 
D)  all of the above 
A)  nominal interest rate in one country divided by the nominal interest rate in the other country 
B)  price of a good in one country divided by the price of the same good in another country 
C)  rate at which a person can trade the currency of one country for the currency of another 
D)  all of the above

Question 10

International trade is based on the:

Accepted Answer

A)  theory of absolute advantage 
B)  theory of resource advantage 
C)  theory of comparative advantage 
D)  theory of military advantage 
A)  theory of absolute advantage 
B)  theory of resource advantage 
C)  theory of comparative advantage 
D)  theory of military advantage

Question 11

What would be the motives for foreign financial interests to invest in Australia in the i) short term and ii) long term?

Accepted Answer

i) a potential to earn growth

Question 12

Which of the following items may demonstrate limitations of the purchasing-power parity?

Accepted Answer

A)  When certain goods are not easily tradeable 
B)  When goods are not perfect substitutes 
C)  Consumer preferences may change over time 
D)  All of the above. 
A)  When certain goods are not easily tradeable 
B)  When goods are not perfect substitutes 
C)  Consumer preferences may change over time 
D)  All of the above.

Question 13

List five factors that may influence a country's demand for goods traded?

Accepted Answer

Any from: the income from the

Question 14

The real exchange rate using the CPI measures:

Accepted Answer

A)  the nominal exchange rate minus inflation 
B)  the price of a basket of goods and services available domestically relative to a basket of goods and services available abroad 
C)  the price of a basket of goods and services available domestically relative to a different basket of goods and services available domestically 
D)  the price of a domestic good relative to the same foreign good 
A)  the nominal exchange rate minus inflation 
B)  the price of a basket of goods and services available domestically relative to a basket of goods and services available abroad 
C)  the price of a basket of goods and services available domestically relative to a different basket of goods and services available domestically 
D)  the price of a domestic good relative to the same foreign good

Question 15

Which of the following is not strongly affected by international trade?

Accepted Answer

A)  Net foreign investment 
B)  Exchange rates 
C)  Domestic inflation 
D)  All of the above are strongly affected by international trade 
A)  Net foreign investment 
B)  Exchange rates 
C)  Domestic inflation 
D)  All of the above are strongly affected by international trade

Question 16

If the nominal exchange rate is 70 yen per dollar, and a tonne of wheat sells for $100 in Australia, and for 14 000 yen in Japan, then the real exchange rate is:

Accepted Answer

A)  2 
B)  0.7 
C)  0.5 
D)  20 000 
A)  2 
B)  0.7 
C)  0.5 
D)  20 000

Question 17

Appreciation of a currency will lead to:

Accepted Answer

A)  an increase in net exports 
B)  a reduction in net exports 
C)  no change in net exports 
D)  any of the above is equally likely 
A)  an increase in net exports 
B)  a reduction in net exports 
C)  no change in net exports 
D)  any of the above is equally likely

Question 18

Ceteris paribus, an increase in the level of imports desired by a nation's households leads to a decrease in GDP.

Accepted Answer

A) True 
 B)False

Question 19

The nominal exchange rate is the real exchange rate adjusted for the:

Accepted Answer

A)  price level in the domestic country 
B)  price levels in the two countries 
C)  income level in the domestic country 
D)  income levels in the two countries 
E)  price level in the foreign country 
A)  price level in the domestic country 
B)  price levels in the two countries 
C)  income level in the domestic country 
D)  income levels in the two countries 
E)  price level in the foreign country

Question 20

When the Big Mac in the Euro costs more than it does in converted US dollars we can say the currency _____.

Accepted Answer

A)  should not be measured in this way 
B)  is difficult to value, as currencies are volatile 
C)  is undervalued 
D)  is overvalued 
A)  should not be measured in this way 
B)  is difficult to value, as currencies are volatile 
C)  is undervalued 
D)  is overvalued

Exam 31: Open-Economy Macroeconomics: Basic Concepts

If the exchange rate changes from 100 yen per dollar to 105 yen per dollar, then the dollar has:

Which of the following factors does not affect a country's exports, imports and net exports?

Net foreign investment measures:

According to the World Bank, trade has been the only force that has enabled poorer countries to increase their uptake of technology.

Balanced trade is:

The law of one price states that:

General price levels in any country change to:

The trade balance is:

The nominal exchange rate is the:

International trade is based on the:

What would be the motives for foreign financial interests to invest in Australia in the i) short term and ii) long term?

Which of the following items may demonstrate limitations of the purchasing-power parity?

List five factors that may influence a country's demand for goods traded?

The real exchange rate using the CPI measures:

Which of the following is not strongly affected by international trade?

If the nominal exchange rate is 70 yen per dollar, and a tonne of wheat sells for $100 in Australia, and for 14 000 yen in Japan, then the real exchange rate is:

Appreciation of a currency will lead to:

Ceteris paribus, an increase in the level of imports desired by a nation's households leads to a decrease in GDP.

The nominal exchange rate is the real exchange rate adjusted for the:

When the Big Mac in the Euro costs more than it does in converted US dollars we can say the currency _____.

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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