Question 1

Ceteris paribus,an appreciation of the dollar will increase net exports in Australia.

Accepted Answer

A) True 
 B)False

Question 2

Explain the difference between a 'floating exchange rate',a 'managed float',and a 'fixed exchange rate'.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

In a floating exchange rate system,there

Question 3

Assume that the exchange rate between the dollar and the yen is ¥100 = $1.Suppose the exchange rate changes to ¥150 = $1.What is the price in yen of a $200 iPod before and after the exchange rate change?

Accepted Answer

A)  ¥20 000 before; ¥15 000 after 
B)  ¥20 000 before; ¥30 000 after 
C)  ¥300 before; ¥150 after 
D)  ¥300 before; ¥200 after 
A)  ¥20 000 before; ¥15 000 after 
B)  ¥20 000 before; ¥30 000 after 
C)  ¥300 before; ¥150 after 
D)  ¥300 before; ¥200 after

Question 4

An example of a 'fixed exchange rate system' is

Accepted Answer

A)  a floating currency exchange rate system. 
B)  the gold standard. 
C)  a managed float exchange rate system. 
D)  an exchange rate system where currencies are determined by the market. 
A)  a floating currency exchange rate system. 
B)  the gold standard. 
C)  a managed float exchange rate system. 
D)  an exchange rate system where currencies are determined by the market.

Question 5

Suppose that China wants to fix its exchange rate for US dollars below the equilibrium exchange rate,making the yuan undervalued against the US dollar and many other currencies.How does that benefit China? Does it harm anyone in China?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

By pegging the exchange rate below the e

Question 6

Under the Bretton Woods System,Germany did not want to revalue its currency because the revaluation would

Accepted Answer

A)  make imports more expensive to Germans. 
B)  rapidly increase the money supply, causing inflation. 
C)  make exported goods more expensive. 
D)  cause a recession. 
A)  make imports more expensive to Germans. 
B)  rapidly increase the money supply, causing inflation. 
C)  make exported goods more expensive. 
D)  cause a recession.

Question 7

The quantity supplied of dollars is likely to ________ when the exchange rate of yen per dollar ________.

Accepted Answer

A)  not change; rises 
B)  rise; rises 
C)  not change; falls 
D)  rise; falls 
A)  not change; rises 
B)  rise; rises 
C)  not change; falls 
D)  rise; falls

Question 8

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by

Accepted Answer

A)  raising imports, reducing exports, and reducing the balance of trade on goods and services. 
B)  reducing imports, raising exports, and reducing the balance of trade on goods and services. 
C)  reducing imports, raising exports, and increasing the balance of trade on goods and services. 
D)  raising imports, reducing exports, and increasing the balance of trade on goods and services. 
A)  raising imports, reducing exports, and reducing the balance of trade on goods and services. 
B)  reducing imports, raising exports, and reducing the balance of trade on goods and services. 
C)  reducing imports, raising exports, and increasing the balance of trade on goods and services. 
D)  raising imports, reducing exports, and increasing the balance of trade on goods and services.

Question 9

Which of the following is a 'capital outflow' from Australia?

Accepted Answer

A)  A Chinese investor buys an Australian government bond. 
B)  An Indian firm buys and builds a factory in Australia. 
C)  An Australian investor buys a Japanese bond. 
D)  An Australian firm buys an Australian government bond. 
A)  A Chinese investor buys an Australian government bond. 
B)  An Indian firm buys and builds a factory in Australia. 
C)  An Australian investor buys a Japanese bond. 
D)  An Australian firm buys an Australian government bond.

Question 10

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Accepted Answer

A) True 
 B)False

Question 11

Refer to Figure 20.4 for the following questions.
Figure 20.4  
-Which of the following would cause the change depicted in Figure 20.4? Note that the figure depicts the quantity of euros traded.

Accepted Answer

A)  Australian productivity falls relative to European productivity. 
B)  Australians decrease their preferences for goods produced in the European Union (EU) relative to Australian goods. 
C)  The EU increases its quotas on Italian wine. 
D)  The price level of goods produced in the EU decreases relative to the price level of goods produced in Australia. 
A)  Australian productivity falls relative to European productivity. 
B)  Australians decrease their preferences for goods produced in the European Union (EU) relative to Australian goods. 
C)  The EU increases its quotas on Italian wine. 
D)  The price level of goods produced in the EU decreases relative to the price level of goods produced in Australia.

Question 12

What determined the exchange rates among currencies under the gold standard and what caused the gold standard to collapse?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Under the gold standard,the exchange rat

Question 13

If foreign holdings of Australian dollars decrease,holding all else constant,the

Accepted Answer

A)  balance on Australia's financial account will decrease. 
B)  balance on Australia's current account will decrease. 
C)  balance on Australia's capital account will decrease. 
D)  Australian balance of trade on goods and services will decrease. 
A)  balance on Australia's financial account will decrease. 
B)  balance on Australia's current account will decrease. 
C)  balance on Australia's capital account will decrease. 
D)  Australian balance of trade on goods and services will decrease.

Question 14

Which of the following is not a source of demand for Japanese yen?

Accepted Answer

A)  A Japanese firm that wants to purchase Australian beef. 
B)  A Chinese person who wants to buy Japanese financial securities. 
C)  A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D)  An Australian bank that wants to buy a Japanese bond. 
A)  A Japanese firm that wants to purchase Australian beef. 
B)  A Chinese person who wants to buy Japanese financial securities. 
C)  A currency trader who thinks the value of the yen will be greater in the future relative to its value today. 
D)  An Australian bank that wants to buy a Japanese bond.

Question 15

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms,then

Accepted Answer

A)  production costs in China fall, quantity demanded for Chinese products rises and the value of yuan falls against the dollar. 
B)  production costs in China rise, quantity demanded for Chinese products falls and the value of yuan falls against the dollar. 
C)  production costs in China fall, quantity demanded for Chinese products rises and the value of yuan rises against the dollar. 
D)  production costs in China rise, quantity demanded for Chinese products rises and the value of yuan rises against the dollar. 
A)  production costs in China fall, quantity demanded for Chinese products rises and the value of yuan falls against the dollar. 
B)  production costs in China rise, quantity demanded for Chinese products falls and the value of yuan falls against the dollar. 
C)  production costs in China fall, quantity demanded for Chinese products rises and the value of yuan rises against the dollar. 
D)  production costs in China rise, quantity demanded for Chinese products rises and the value of yuan rises against the dollar.

Question 16

According to the theory of 'purchasing power parity',the foreign exchange market will

Accepted Answer

A)  no longer demand Australian dollars if the inflation rate in Australia is higher than the inflation rates in other countries. 
B)  undervalue the Australian dollar if inflation in Australia is higher than the inflation rates in other countries. 
C)  adjust the value of currencies to reflect differing inflation rates between countries. 
D)  result in an increase in the supply of dollars whenever Australia's inflation rate is lower than the inflation rates in other countries. 
A)  no longer demand Australian dollars if the inflation rate in Australia is higher than the inflation rates in other countries. 
B)  undervalue the Australian dollar if inflation in Australia is higher than the inflation rates in other countries. 
C)  adjust the value of currencies to reflect differing inflation rates between countries. 
D)  result in an increase in the supply of dollars whenever Australia's inflation rate is lower than the inflation rates in other countries.

Question 17

Refer to Figure 20.2 for the following questions.
Figure 20.2  
-Refer to Figure 20.2.Assume that Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from ________.

Accepted Answer

A)  D2 to D1 
B)  D1 to D2 
C)  S2 to S1 
D)  S1 to S2 
A)  D2 to D1 
B)  D1 to D2 
C)  S2 to S1 
D)  S1 to S2

Question 18

Assume that the exchange rate between the dollar and the euro is €1 = $1.Suppose the exchange rate changes to €1.25 = $1.What is the price in dollars of a €200 pair of Italian shoes before and after the exchange rate change?

Accepted Answer

A)  $200 before; $160 after 
B)  $200 before; $250 after 
C)  $160 before; $125 after 
D)  $125 before; $160 after 
A)  $200 before; $160 after 
B)  $200 before; $250 after 
C)  $160 before; $125 after 
D)  $125 before; $160 after

Question 19

Since the 1980s in Australia,the balance on goods and services has

Accepted Answer

A)  usually been positive. 
B)  usually been negative. 
C)  led to a current account surplus. 
D)  led to capital flows out of the financial account. 
A)  usually been positive. 
B)  usually been negative. 
C)  led to a current account surplus. 
D)  led to capital flows out of the financial account.

Question 20

Suppose that an Xbox One X costs $150 in the United States and £75 in Great Britain.Suppose the exchange rate is $US1 = £1.Does purchasing power parity suggest that the dollar should appreciate or depreciate against the pound? What will happen if consumers in Great Britain like the Xbox One X less than US consumers?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Purchasing power parity states that in t

Ceteris paribus,an appreciation of the dollar will increase net exports in Australia.

Explain the difference between a 'floating exchange rate',a 'managed float',and a 'fixed exchange rate'. _ _

Assume that the exchange rate between the dollar and the yen is ¥100 = $1.Suppose the exchange rate changes to ¥150 = $1.What is the price in yen of a $200 iPod before and after the exchange rate change?

An example of a 'fixed exchange rate system' is

Suppose that China wants to fix its exchange rate for US dollars below the equilibrium exchange rate,making the yuan undervalued against the US dollar and many other currencies.How does that benefit China? Does it harm anyone in China? _ _

Under the Bretton Woods System,Germany did not want to revalue its currency because the revaluation would

The quantity supplied of dollars is likely to when the exchange rate of yen per dollar .

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by

Which of the following is a 'capital outflow' from Australia?

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Refer to Figure 20.4 for the following questions. Figure 20.4 -Which of the following would cause the change depicted in Figure 20.4? Note that the figure depicts the quantity of euros traded.

What determined the exchange rates among currencies under the gold standard and what caused the gold standard to collapse? _ _

If foreign holdings of Australian dollars decrease,holding all else constant,the

Which of the following is not a source of demand for Japanese yen?

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms,then

According to the theory of 'purchasing power parity',the foreign exchange market will

Refer to Figure 20.2 for the following questions. Figure 20.2 -Refer to Figure 20.2.Assume that Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from ________.

Assume that the exchange rate between the dollar and the euro is €1 = $1.Suppose the exchange rate changes to €1.25 = $1.What is the price in dollars of a €200 pair of Italian shoes before and after the exchange rate change?

Since the 1980s in Australia,the balance on goods and services has

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

Exam 20: Macroeconomics in an Open Economy

Ceteris paribus,an appreciation of the dollar will increase net exports in Australia.

Explain the difference between a 'floating exchange rate',a 'managed float',and a 'fixed exchange rate'. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Assume that the exchange rate between the dollar and the yen is ¥100 = $1.Suppose the exchange rate changes to ¥150 = $1.What is the price in yen of a $200 iPod before and after the exchange rate change?

An example of a 'fixed exchange rate system' is

Under the Bretton Woods System,Germany did not want to revalue its currency because the revaluation would

The quantity supplied of dollars is likely to ________ when the exchange rate of yen per dollar ________.

A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by

Which of the following is a 'capital outflow' from Australia?

Adoption of the euro as both a medium of exchange and unit of account in the EU countries serves to increase competition among European firms and decrease individual countries' monetary policy options when confronted by recessions and booms.

Refer to Figure 20.4 for the following questions. Figure 20.4 -Which of the following would cause the change depicted in Figure 20.4? Note that the figure depicts the quantity of euros traded.

If foreign holdings of Australian dollars decrease,holding all else constant,the

Which of the following is not a source of demand for Japanese yen?

Suppose that average productivity of Chinese firms increases more rapidly than the average productivity of Australian firms,then

According to the theory of 'purchasing power parity',the foreign exchange market will

Refer to Figure 20.2 for the following questions. Figure 20.2 -Refer to Figure 20.2.Assume that Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from ________.

Assume that the exchange rate between the dollar and the euro is €1 = $1.Suppose the exchange rate changes to €1.25 = $1.What is the price in dollars of a €200 pair of Italian shoes before and after the exchange rate change?

Since the 1980s in Australia,the balance on goods and services has

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

Explain the difference between a 'floating exchange rate',a 'managed float',and a 'fixed exchange rate'. _ _

The quantity supplied of dollars is likely to when the exchange rate of yen per dollar .