Question 1

Which of the following is an example of foreign direct investment in China?

Accepted Answer

A) U.S.auto entrepreneur Elon Musk buys stock in Tata Motors of Mumbai,India. 
B) Chinese Shenzen Airlines company buys a small U.S.midwest airline company,Air Chicago. 
C) The U.S.company Wal-Mart buys a warehouse in Shanghai. 
D) The bank of China purchases U.S.Treasury bonds. 
E) A U.S.foreign exchange speculator buys $200,000 worth of the Chinese currency the yuan. 
A) U.S.auto entrepreneur Elon Musk buys stock in Tata Motors of Mumbai,India. 
B) Chinese Shenzen Airlines company buys a small U.S.midwest airline company,Air Chicago. 
C) The U.S.company Wal-Mart buys a warehouse in Shanghai. 
D) The bank of China purchases U.S.Treasury bonds. 
E) A U.S.foreign exchange speculator buys $200,000 worth of the Chinese currency the yuan.

Question 2

The current account deficits incurred by the United States in the 1980s were caused,in the opinion of many economists,by

Accepted Answer

A) federal budget deficits. 
B) "flight to quality" as foreign investors favored U.S.investments. 
C) a sharp decline in private saving. 
D) Both B and C are correct. 
A) federal budget deficits. 
B) "flight to quality" as foreign investors favored U.S.investments. 
C) a sharp decline in private saving. 
D) Both B and C are correct.

Question 3

An increase in the government budget deficit will not lead to a current account deficit if domestic investment declines.

Accepted Answer

A) True 
 B)False

Question 4

The balance of payments includes which three accounts?

Accepted Answer

A) the current account,the financial account,and the capital account 
B) the capital flows account,the financial account,and the trade account 
C) the net investment account,the net exports account,and the net transfers account 
D) the balance of trade account,the net foreign investment account,and statistical discrepancy 
A) the current account,the financial account,and the capital account 
B) the capital flows account,the financial account,and the trade account 
C) the net investment account,the net exports account,and the net transfers account 
D) the balance of trade account,the net foreign investment account,and statistical discrepancy

Question 5

If the dollar appreciates,how will aggregate demand in the United States be affected?

Accepted Answer

A) Aggregate demand will shift to the right as exports increase. 
B) Aggregate demand will shift to the right as imports increase. 
C) Aggregate demand will shift to the left as imports increase. 
D) Aggregate demand will shift to the left as exports increase. 
A) Aggregate demand will shift to the right as exports increase. 
B) Aggregate demand will shift to the right as imports increase. 
C) Aggregate demand will shift to the left as imports increase. 
D) Aggregate demand will shift to the left as exports increase.

Question 6

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

Accepted Answer

A) Domestic investment and national saving must also be negative. 
B) Domestic investment must be greater than national saving. 
C) Domestic investment must be less than national saving. 
D) Domestic investment can be greater than or less than national saving. 
A) Domestic investment and national saving must also be negative. 
B) Domestic investment must be greater than national saving. 
C) Domestic investment must be less than national saving. 
D) Domestic investment can be greater than or less than national saving.

Question 7

If foreign holdings of U.S.dollars decrease,holding all else constant,

Accepted Answer

A) the balance on the U.S.financial account will decrease. 
B) the balance on the U.S.current account will decrease. 
C) the balance on the U.S.capital account will decrease. 
D) the U.S.balance of trade will decrease. 
A) the balance on the U.S.financial account will decrease. 
B) the balance on the U.S.current account will decrease. 
C) the balance on the U.S.capital account will decrease. 
D) the U.S.balance of trade will decrease.

Question 8

If the United States is a "net borrower" from abroad,

Accepted Answer

A) the United States must be exporting more than it is importing. 
B) net capital flows must be negative. 
C) domestic saving is less than domestic investment. 
D) net foreign investment must be positive. 
A) the United States must be exporting more than it is importing. 
B) net capital flows must be negative. 
C) domestic saving is less than domestic investment. 
D) net foreign investment must be positive.

Question 9

Holding all else constant,a rise in interest rates in the United States will cause the dollar to appreciate in international exchange markets.

Accepted Answer

A) True 
 B)False

Question 10

If net exports are equal to net foreign investment,

Accepted Answer

A) the balance of payments is zero. 
B) the current account balance is equal to the negative of the financial account balance. 
C) net capital inflows are equal to imports minus exports. 
D) All of the above are true when net exports are equal to net foreign investment. 
A) the balance of payments is zero. 
B) the current account balance is equal to the negative of the financial account balance. 
C) net capital inflows are equal to imports minus exports. 
D) All of the above are true when net exports are equal to net foreign investment.

Question 11

Which of the following would decrease the balance on the current account?

Accepted Answer

A) a decrease in foreign direct investment 
B) a decrease in the amount of aid money the government sends abroad 
C) a decrease in imports 
D) None of the above will increase the balance on the current account. 
A) a decrease in foreign direct investment 
B) a decrease in the amount of aid money the government sends abroad 
C) a decrease in imports 
D) None of the above will increase the balance on the current account.

Question 12

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 13

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

Accepted Answer

A) an increase in the exchange rate 
B) a decrease in the interest rate 
C) a decrease in aggregate demand 
D) an increase in net exports 
A) an increase in the exchange rate 
B) a decrease in the interest rate 
C) a decrease in aggregate demand 
D) an increase in net exports

Question 14

Which of the following would cause the dollar to depreciate?

Accepted Answer

A) an increase in the demand for dollars 
B) a decrease in the demand for dollars 
C) a decrease in the supply of dollars 
D) a decrease in the demand for imports from foreign countries 
A) an increase in the demand for dollars 
B) a decrease in the demand for dollars 
C) a decrease in the supply of dollars 
D) a decrease in the demand for imports from foreign countries

Question 15

When a foreign investor buys a bond issued in the United States,

Accepted Answer

A) the balance on the capital account increases. 
B) the balance on the current account increases. 
C) the balance on the financial account increases. 
D) the balance of trade increases. 
A) the balance on the capital account increases. 
B) the balance on the current account increases. 
C) the balance on the financial account increases. 
D) the balance of trade increases.

Question 16

The level of saving in the United States has historically been low relative to the level of domestic investment.Based on this information,we would expect that

Accepted Answer

A) U.S.net foreign investment has been relatively high. 
B) U.S.net exports have been relatively low. 
C) U.S.capital inflows are negative. 
D) U.S.private saving is less than its public saving. 
A) U.S.net foreign investment has been relatively high. 
B) U.S.net exports have been relatively low. 
C) U.S.capital inflows are negative. 
D) U.S.private saving is less than its public saving.

Question 17

Why is the U.S.trade deficit almost always larger than the U.S.current account deficit?

Accepted Answer

The U.S.trade deficit is almos

Question 18

If the United States has a net export surplus,which of the following must be true?

Accepted Answer

A) The balance on the financial account must equal the balance on the current account. 
B) Net foreign investment must be positive as well. 
C) Domestic private saving must be greater than net foreign investment. 
D) Domestic public saving must be greater than net foreign investment. 
A) The balance on the financial account must equal the balance on the current account. 
B) Net foreign investment must be positive as well. 
C) Domestic private saving must be greater than net foreign investment. 
D) Domestic public saving must be greater than net foreign investment.

Question 19

You're traveling in Japan and are thinking about buying a new kimono.You've decided you'd be willing to pay $175 for a new kimono,but kimonos in Japan are all priced in yen.If the exchange rate is 89 yen per dollar,what is the highest price in yen you'd be willing to pay for a kimono? (Assume no taxes or duties are associated with the purchase.)

Accepted Answer

A) 1.97 yen 
B) 330.75 yen 
C) 15,575 yen 
D) 19,425 yen 
A) 1.97 yen 
B) 330.75 yen 
C) 15,575 yen 
D) 19,425 yen

Question 20

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

Accepted Answer

A) The dollar will appreciate. 
B) The dollar will depreciate. 
C) There will be a decrease in the demand for dollars. 
D) There will be a decrease in the supply of dollars. 
A) The dollar will appreciate. 
B) The dollar will depreciate. 
C) There will be a decrease in the demand for dollars. 
D) There will be a decrease in the supply of dollars.

Which of the following is an example of foreign direct investment in China?

The current account deficits incurred by the United States in the 1980s were caused,in the opinion of many economists,by

An increase in the government budget deficit will not lead to a current account deficit if domestic investment declines.

The balance of payments includes which three accounts?

If the dollar appreciates,how will aggregate demand in the United States be affected?

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

If foreign holdings of U.S.dollars decrease,holding all else constant,

If the United States is a "net borrower" from abroad,

Holding all else constant,a rise in interest rates in the United States will cause the dollar to appreciate in international exchange markets.

If net exports are equal to net foreign investment,

Which of the following would decrease the balance on the current account?

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

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

Which of the following would cause the dollar to depreciate?

When a foreign investor buys a bond issued in the United States,

The level of saving in the United States has historically been low relative to the level of domestic investment.Based on this information,we would expect that

Why is the U.S.trade deficit almost always larger than the U.S.current account deficit?

If the United States has a net export surplus,which of the following must be true?

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

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

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Exam 18: Macroeconomics in an Open Economy

Which of the following is an example of foreign direct investment in China?

The current account deficits incurred by the United States in the 1980s were caused,in the opinion of many economists,by

An increase in the government budget deficit will not lead to a current account deficit if domestic investment declines.

The balance of payments includes which three accounts?

If the dollar appreciates,how will aggregate demand in the United States be affected?

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

If foreign holdings of U.S.dollars decrease,holding all else constant,

If the United States is a "net borrower" from abroad,

Holding all else constant,a rise in interest rates in the United States will cause the dollar to appreciate in international exchange markets.

If net exports are equal to net foreign investment,

Which of the following would decrease the balance on the current account?

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

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

Which of the following would cause the dollar to depreciate?

When a foreign investor buys a bond issued in the United States,

The level of saving in the United States has historically been low relative to the level of domestic investment.Based on this information,we would expect that

Why is the U.S.trade deficit almost always larger than the U.S.current account deficit?

If the United States has a net export surplus,which of the following must be true?

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

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