Question 1

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 
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

Question 2

When the market value of the dollar rises relative to other currencies around the world,we say that

Accepted Answer

A) the dollar has appreciated. 
B) the dollar has depreciated. 
C) the demand for dollars has increased. 
D) the supply of dollars has increased. 
A) the dollar has appreciated. 
B) the dollar has depreciated. 
C) the demand for dollars has increased. 
D) the supply of dollars has increased.

Question 3

Figure 18-1  
-Refer to Figure 18-1.Suppose that the U.S.government deficit decreases,causing interest rates in the United States to fall relative to those in the European Union.Assuming all else remains constant,how would this be represented?

Accepted Answer

A) Supply would decrease,demand would increase and the economy moves from A to D to C. 
B) Demand would decrease and the economy moves from B to A. 
C) Demand would increase and the economy moves from A to B. 
D) Supply would increase,demand would increase and the economy moves from D to A to B. 
A) Supply would decrease,demand would increase and the economy moves from A to D to C. 
B) Demand would decrease and the economy moves from B to A. 
C) Demand would increase and the economy moves from A to B. 
D) Supply would increase,demand would increase and the economy moves from D to A to B.

Question 4

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

Accepted Answer

A) both the peso and dollar have appreciated. 
B) both the peso and dollar have depreciated. 
C) the peso has appreciated and the dollar has depreciated. 
D) the peso has depreciated and the dollar has appreciated. 
A) both the peso and dollar have appreciated. 
B) both the peso and dollar have depreciated. 
C) the peso has appreciated and the dollar has depreciated. 
D) the peso has depreciated and the dollar has appreciated.

Question 5

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency.)

Accepted Answer

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

Question 6

In 2016,global revenue for Amazon was $550 million lower when measured in dollars than when measured in local currencies.The reason for this discrepancy is the value of the

Accepted Answer

A) euro decreased relative to the British pound. 
B) British pound increased relative to the U.S.dollar. 
C) U.S.dollar increased relative to most other currencies. 
D) U.S.dollar decreased relative to the Japanese yen. 
A) euro decreased relative to the British pound. 
B) British pound increased relative to the U.S.dollar. 
C) U.S.dollar increased relative to most other currencies. 
D) U.S.dollar decreased relative to the Japanese yen.

Question 7

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 8

Figure 18-1  
-Refer to Figure 18-1.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 9

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

Accepted Answer

Leaving aside the statistical

Question 10

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy.

Accepted Answer

A) it is likely to decrease GDP too much and cause a recession 
B) it is likely to decrease GDP too little and inflation will persist 
C) it is likely to increase GDP too much and inflation will persist 
D) it is likely to increase GDP too little and cause a recession 
A) it is likely to decrease GDP too much and cause a recession 
B) it is likely to decrease GDP too little and inflation will persist 
C) it is likely to increase GDP too much and inflation will persist 
D) it is likely to increase GDP too little and cause a recession

Question 11

Explain the relationship between net exports and net foreign investment.

Accepted Answer

Net exports equal net foreign investment

Question 12

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

Accepted Answer

A) 8.8 
B) 10.2 
C) 10.8 
D) 11.4 
A) 8.8 
B) 10.2 
C) 10.8 
D) 11.4

Question 13

What's the difference between the nominal exchange rate and the real exchange rate?

Accepted Answer

The nominal exchange rate measures the v

Question 14

A decrease in the demand for American-made goods will

Accepted Answer

A) increase the supply of dollars in the foreign exchange market. 
B) decrease the supply of dollars in the foreign exchange market. 
C) increase the demand for dollars in the foreign exchange market. 
D) decrease the demand for dollars in the foreign exchange market. 
A) increase the supply of dollars in the foreign exchange market. 
B) decrease the supply of dollars in the foreign exchange market. 
C) increase the demand for dollars in the foreign exchange market. 
D) decrease the demand for dollars in the foreign exchange market.

Question 15

According to the saving and investment equation,if net foreign investment falls by $35 million

Accepted Answer

A) national saving in excess of domestic investment will decrease by $35 million. 
B) national savings will rise by $35 million. 
C) domestic investment will fall by $35 million. 
D) national saving in excess of domestic investment will rise by $35 million. 
A) national saving in excess of domestic investment will decrease by $35 million. 
B) national savings will rise by $35 million. 
C) domestic investment will fall by $35 million. 
D) national saving in excess of domestic investment will rise by $35 million.

Question 16

An increase in United States net foreign direct investment would occur if

Accepted Answer

A) United States citizens have increased the value of foreign stocks and bonds they own. 
B) United States citizens have increased their building or purchasing of facilities in foreign countries. 
C) net foreign investment increases. 
D) net capital flows decrease. 
A) United States citizens have increased the value of foreign stocks and bonds they own. 
B) United States citizens have increased their building or purchasing of facilities in foreign countries. 
C) net foreign investment increases. 
D) net capital flows decrease.

Question 17

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to shift to the ________,increasing the exchange rate and the value of the yen.

Accepted Answer

A) supply; right 
B) supply; left 
C) demand; right 
D) demand; left 
A) supply; right 
B) supply; left 
C) demand; right 
D) demand; left

Question 18

Suppose China decides to sell a vast majority of their large holdings of U.S.Treasury bonds.If you are thinking of refinancing your house,how would China's action affect your decision to refinance?

Accepted Answer

A) You would want to refinance as soon as possible as interest rates should rise. 
B) You would want to wait to refinance as interest rates should rise. 
C) You would want to wait to refinance as interest rates should fall. 
D) China's actions should not affect your decision to refinance in any way. 
A) You would want to refinance as soon as possible as interest rates should rise. 
B) You would want to wait to refinance as interest rates should rise. 
C) You would want to wait to refinance as interest rates should fall. 
D) China's actions should not affect your decision to refinance in any way.

Question 19

If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.

Accepted Answer

A) decrease; decrease 
B) decrease; increase 
C) increase; decrease 
D) increase; increase 
A) decrease; decrease 
B) decrease; increase 
C) increase; decrease 
D) increase; increase

Question 20

The decline in the value of the dollar in the first half of 2017 resulted in ________ dollar prices for goods imported into the United States and ________ prices in foreign currencies for U.S.goods exported to other countries.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

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

When the market value of the dollar rises relative to other currencies around the world,we say that

Figure 18-1 -Refer to Figure 18-1.Suppose that the U.S.government deficit decreases,causing interest rates in the United States to fall relative to those in the European Union.Assuming all else remains constant,how would this be represented?

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency.)

In 2016,global revenue for Amazon was $550 million lower when measured in dollars than when measured in local currencies.The reason for this discrepancy is the value of the

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

Figure 18-1 -Refer to Figure 18-1.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?

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

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy.

Explain the relationship between net exports and net foreign investment.

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

What's the difference between the nominal exchange rate and the real exchange rate?

A decrease in the demand for American-made goods will

According to the saving and investment equation,if net foreign investment falls by $35 million

An increase in United States net foreign direct investment would occur if

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the curve for the yen to shift to the ,increasing the exchange rate and the value of the yen.

Suppose China decides to sell a vast majority of their large holdings of U.S.Treasury bonds.If you are thinking of refinancing your house,how would China's action affect your decision to refinance?

If the Fed pursues an expansionary monetary policy,investment in the United States will and net exports will .

The decline in the value of the dollar in the first half of 2017 resulted in dollar prices for goods imported into the United States and prices in foreign currencies for U.S.goods exported to other countries.

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

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

When the market value of the dollar rises relative to other currencies around the world,we say that

Figure 18-1 -Refer to Figure 18-1.Suppose that the U.S.government deficit decreases,causing interest rates in the United States to fall relative to those in the European Union.Assuming all else remains constant,how would this be represented?

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency.)

In 2016,global revenue for Amazon was $550 million lower when measured in dollars than when measured in local currencies.The reason for this discrepancy is the value of the

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

Figure 18-1 -Refer to Figure 18-1.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?

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

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy.

Explain the relationship between net exports and net foreign investment.

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

What's the difference between the nominal exchange rate and the real exchange rate?

A decrease in the demand for American-made goods will

According to the saving and investment equation,if net foreign investment falls by $35 million

An increase in United States net foreign direct investment would occur if

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to shift to the ________,increasing the exchange rate and the value of the yen.

Suppose China decides to sell a vast majority of their large holdings of U.S.Treasury bonds.If you are thinking of refinancing your house,how would China's action affect your decision to refinance?

If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.

The decline in the value of the dollar in the first half of 2017 resulted in ________ dollar prices for goods imported into the United States and ________ prices in foreign currencies for U.S.goods exported to other countries.

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

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the curve for the yen to shift to the ,increasing the exchange rate and the value of the yen.

If the Fed pursues an expansionary monetary policy,investment in the United States will and net exports will .

The decline in the value of the dollar in the first half of 2017 resulted in dollar prices for goods imported into the United States and prices in foreign currencies for U.S.goods exported to other countries.