Question 1

Any ________ by Australian residents from overseas are ________ additions to the current account.

Accepted Answer

A)  payments received; negative 
B)  payments made; positive 
C)  payments made; negative 
D)  payments received; neutral 
A)  payments received; negative 
B)  payments made; positive 
C)  payments made; negative 
D)  payments received; neutral

Question 2

Since the 1970s in Australia,net primary income has been

Accepted Answer

A)  positive due to export earnings. 
B)  mostly negative, but occasionally positive due to dividends on shares going overseas. 
C)  negative as imports have usually exceeded exports. 
D)  negative due to interest repayments on foreign debt. 
A)  positive due to export earnings. 
B)  mostly negative, but occasionally positive due to dividends on shares going overseas. 
C)  negative as imports have usually exceeded exports. 
D)  negative due to interest repayments on foreign debt.

Question 3

If currency traders expect the value of the dollar to rise,what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Accepted Answer

A)  Demand for dollars will increase and supply of dollars will decrease. 
B)  Demand for dollars will increase and supply of dollars will increase. 
C)  Demand for dollars will decrease and supply of dollars will increase. 
D)  Demand for dollars will decrease and supply of dollars will decrease. 
A)  Demand for dollars will increase and supply of dollars will decrease. 
B)  Demand for dollars will increase and supply of dollars will increase. 
C)  Demand for dollars will decrease and supply of dollars will increase. 
D)  Demand for dollars will decrease and supply of dollars will decrease.

Question 4

Experiences of other countries show support for the twin deficits hypothesis.

Accepted Answer

A) True 
 B)False

Question 5

An excess demand for dollars in exchange for yen will cause

Accepted Answer

A)  no change in the exchange rate of the yen to the dollar. 
B)  the dollar to appreciate relative to the yen. 
C)  the yen to appreciate against all major currencies. 
D)  the dollar to decline in value relative to the yen. 
A)  no change in the exchange rate of the yen to the dollar. 
B)  the dollar to appreciate relative to the yen. 
C)  the yen to appreciate against all major currencies. 
D)  the dollar to decline in value relative to the yen.

Question 6

A current account deficit must be exactly offset by a capital and financial account surplus.

Accepted Answer

A) True 
 B)False

Question 7

What factors occur in the real world that prevent 'purchasing power parity' from occurring fully in the long run?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Not all products are traded internationa

Question 8

Which of the following is a true statement describing expansionary fiscal policy's impact in open and closed economies?

Accepted Answer

A)  Expansionary fiscal policy crowds out only investment spending and purchases of consumer durables in an open economy. 
B)  Expansionary fiscal policy crowds out investment spending, purchases of consumer durables, and net exports in an open economy. 
C)  Expansionary fiscal policy crowds out investment spending, purchases of consumer durables, and net exports in a closed economy. 
D)  Expansionary fiscal policy does not crowd out investment spending and purchases of consumer durables in an open economy. 
A)  Expansionary fiscal policy crowds out only investment spending and purchases of consumer durables in an open economy. 
B)  Expansionary fiscal policy crowds out investment spending, purchases of consumer durables, and net exports in an open economy. 
C)  Expansionary fiscal policy crowds out investment spending, purchases of consumer durables, and net exports in a closed economy. 
D)  Expansionary fiscal policy does not crowd out investment spending and purchases of consumer durables in an open economy.

Question 9

The large current account deficits in Australia mean that:

Accepted Answer

A)  foreign investors accumulate more Australian assets than Australian investors accumulate foreign assets. 
B)  private savings have been at historically high levels. 
C)  foreign investors lack confidence in the strength of the Australian economy and the buying power of Australian consumers. 
D)  there has been little or no foreign investment in Australia. 
A)  foreign investors accumulate more Australian assets than Australian investors accumulate foreign assets. 
B)  private savings have been at historically high levels. 
C)  foreign investors lack confidence in the strength of the Australian economy and the buying power of Australian consumers. 
D)  there has been little or no foreign investment in Australia.

Question 10

Which of the following is an item in Australia's financial account?

Accepted Answer

A)  Net secondary income 
B)  Net primary income 
C)  Net exports of goods and services 
D)  The change in private Australian assets abroad 
A)  Net secondary income 
B)  Net primary income 
C)  Net exports of goods and services 
D)  The change in private Australian assets abroad

Question 11

If CAB = current account balance,I = private sector investment,S = national saving and NX = net exports,then _________.

Accepted Answer

A)  CAB + I = S 
B)  CAB + NX = S 
C)  I = CAB − S 
D)  CAB = I + NX 
A)  CAB + I = S 
B)  CAB + NX = S 
C)  I = CAB − S 
D)  CAB = I + NX

Question 12

Suppose a tablet computer costs $200 in Australia and 25 000 in Japan.Suppose the exchange rate is $1 = 100 yen.According to purchasing power parity,what should happen to the exchange rate in the long run? What will be the new exchange rate?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

If purchasing power parity holds,then in

Question 13

The current account balance equals _________.

Accepted Answer

A)  exports of goods − imports of goods + net primary income + net secondary income 
B)  exports of services − imports of services + net primary income + net secondary income 
C)  balance of trade on goods and services + net primary income + net secondary income 
D)  exports of services − imports of services + balance of trade on goods and services + net secondary income 
A)  exports of goods − imports of goods + net primary income + net secondary income 
B)  exports of services − imports of services + net primary income + net secondary income 
C)  balance of trade on goods and services + net primary income + net secondary income 
D)  exports of services − imports of services + balance of trade on goods and services + net secondary income

Question 14

Show the impact that a relative increase in Australian interest rates will have on the exchange rate of Chinese yuan for dollars.Explain what this will do to the level of goods imported from China to Australia and discuss the effect it will have on Australia's current account.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The exchange rate is determined by suppl

Question 15

If the _______________ for dollars __________,the market value of the dollar will ________ relative to other currencies around the world.

Accepted Answer

A)  demand; increases; depreciate 
B)  supply; increases; depreciate 
C)  demand; decreases; appreciate 
D)  supply; decreases; depreciate 
A)  demand; increases; depreciate 
B)  supply; increases; depreciate 
C)  demand; decreases; appreciate 
D)  supply; decreases; depreciate

Question 16

Graph the demand for and supply of Australian dollars for euros.Suppose the Reserve Bank of Australia decides to follow a contractionary monetary policy.Show graphically and explain the effect of this policy on the demand and supply of dollars and the resulting change in the exchange rate of euros for dollars.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

@#IMG-DLM&_TB6606_00 Contractionary monetary polic

Any by Australian residents from overseas are additions to the current account.

Since the 1970s in Australia,net primary income has been

If currency traders expect the value of the dollar to rise,what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Experiences of other countries show support for the twin deficits hypothesis.

An excess demand for dollars in exchange for yen will cause

A current account deficit must be exactly offset by a capital and financial account surplus.

What factors occur in the real world that prevent 'purchasing power parity' from occurring fully in the long run? _ _

Which of the following is a true statement describing expansionary fiscal policy's impact in open and closed economies?

The large current account deficits in Australia mean that:

Which of the following is an item in Australia's financial account?

If CAB = current account balance,I = private sector investment,S = national saving and NX = net exports,then _________.

Suppose a tablet computer costs $200 in Australia and 25 000 in Japan.Suppose the exchange rate is $1 = 100 yen.According to purchasing power parity,what should happen to the exchange rate in the long run? What will be the new exchange rate? _ _

The current account balance equals _________.

Show the impact that a relative increase in Australian interest rates will have on the exchange rate of Chinese yuan for dollars.Explain what this will do to the level of goods imported from China to Australia and discuss the effect it will have on Australia's current account. _ _

If the _____ for dollars ,the market value of the dollar will relative to other currencies around the world.

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

Any ________ by Australian residents from overseas are ________ additions to the current account.

Since the 1970s in Australia,net primary income has been

If currency traders expect the value of the dollar to rise,what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Experiences of other countries show support for the twin deficits hypothesis.

An excess demand for dollars in exchange for yen will cause

A current account deficit must be exactly offset by a capital and financial account surplus.

Which of the following is a true statement describing expansionary fiscal policy's impact in open and closed economies?

The large current account deficits in Australia mean that:

Which of the following is an item in Australia's financial account?

If CAB = current account balance,I = private sector investment,S = national saving and NX = net exports,then _________.

The current account balance equals _________.

If the _______________ for dollars __________,the market value of the dollar will ________ relative to other currencies around the world.

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

Any by Australian residents from overseas are additions to the current account.

If the _____ for dollars ,the market value of the dollar will relative to other currencies around the world.