Question 1

As an open economy,Canadian national saving can be less than Canadian investment.

Accepted Answer

A) True 
 B)False

Question 2

How can one derive the identity that saving equals the sum of domestic investment and net capital outflow from the national income accounting identity?

Accepted Answer

Start from the national income accountin

Question 3

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Accepted Answer

A)  1 / 3 
B)  1 
C)  3 
D)  10 
A)  1 / 3 
B)  1 
C)  3 
D)  10

Question 4

Refer to the Table 12-1.What countries' goods are more expensive than Canadian goods?

Accepted Answer

A)  Bolivia and Morocco 
B)  Japan,Norway,and Thailand 
C)  Japan and Morocco 
D)  Thailand and Norway 
A)  Bolivia and Morocco 
B)  Japan,Norway,and Thailand 
C)  Japan and Morocco 
D)  Thailand and Norway

Question 5

For many questions in macroeconomics,international issues are peripheral.

Accepted Answer

A) True 
 B)False

Question 6

What imbalance does net capital outflow measure?

Accepted Answer

A)  an imbalance between a country's production and expenditure 
B)  an imbalance between a country's investment and saving 
C)  an imbalance between a country's sale of goods and services abroad and buying of foreign goods and services 
D)  an imbalance between a country's sale of domestic assets abroad and domestic purchase of foreign assets 
A)  an imbalance between a country's production and expenditure 
B)  an imbalance between a country's investment and saving 
C)  an imbalance between a country's sale of goods and services abroad and buying of foreign goods and services 
D)  an imbalance between a country's sale of domestic assets abroad and domestic purchase of foreign assets

Question 7

How has the introduction of the euro affected arbitrage?

Accepted Answer

A)  It has eliminated the possibility of arbitrage within Europe. 
B)  It has eliminated the possibility of arbitrage based on exchange-rate differences within Europe. 
C)  It has increased the possibilities for arbitrage within Europe. 
D)  It has not affected the possibilities for arbitrage within Europe. 
A)  It has eliminated the possibility of arbitrage within Europe. 
B)  It has eliminated the possibility of arbitrage based on exchange-rate differences within Europe. 
C)  It has increased the possibilities for arbitrage within Europe. 
D)  It has not affected the possibilities for arbitrage within Europe.

Question 8

When Deborah,a Canadian living in Canada,purchases Prada boots made in Florence,what is this purchase?

Accepted Answer

A)  both a Canadian and an Italian import 
B)  a Canadian export and an Italian import 
C)  a Canadian import and an Italian export 
D)  both a Canadian and an Italian export 
A)  both a Canadian and an Italian import 
B)  a Canadian export and an Italian import 
C)  a Canadian import and an Italian export 
D)  both a Canadian and an Italian export

Question 9

How do you measure the current account balance?

Accepted Answer

A)  net exports - inflow of interest payments 
B)  net exports - net inflow of dividends and interest payments 
C)  net exports + net inflow of dividends and interest payments 
D)  net inflow of dividends and interest payments - net exports 
A)  net exports - inflow of interest payments 
B)  net exports - net inflow of dividends and interest payments 
C)  net exports + net inflow of dividends and interest payments 
D)  net inflow of dividends and interest payments - net exports

Question 10

Suppose that the real exchange rate between Canada and Tanzania is defined in terms of baskets of goods.What will increase the real exchange rate (that is,increase the number of baskets of Tanzanian goods a basket of Canadian goods buys)?

Accepted Answer

A)  an increase in the number of Tanzanian shillings that can be purchased with a dollar 
B)  an increase in the price in Canadian dollars of Tanzanian goods 
C)  an increase in the price in Tanzanian shillings of Tanzanian goods 
D)  a decrease in the number of Tanzanian shillings that can be purchased with a dollar 
A)  an increase in the number of Tanzanian shillings that can be purchased with a dollar 
B)  an increase in the price in Canadian dollars of Tanzanian goods 
C)  an increase in the price in Tanzanian shillings of Tanzanian goods 
D)  a decrease in the number of Tanzanian shillings that can be purchased with a dollar

Question 11

Which of the following best describes the cross-border net flow of dividends and interest payments?

Accepted Answer

A)  part of the current account balance 
B)  part of net capital outflow 
C)  part of net exports 
D)  part of foreign direct investment 
A)  part of the current account balance 
B)  part of net capital outflow 
C)  part of net exports 
D)  part of foreign direct investment

Question 12

Which statement best defines net capital outflow?

Accepted Answer

A)  It is the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B)  It is the purchase of foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C)  It is the purchase of domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D)  It is the purchase of domestic assets by foreign residents minus the purchase of foreign assets by domestic residents. 
A)  It is the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B)  It is the purchase of foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C)  It is the purchase of domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D)  It is the purchase of domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

Question 13

A firm in India sells spices to a Canadian chain of culinary stores.Which statement best identifies the effects of this transaction?

Accepted Answer

A)  It increases Canadian and Indian net exports. 
B)  It decreases Canadian and Indian net exports. 
C)  It increases Canadian net exports and decreases Indian net exports. 
D)  It decreases Canadian net exports and increases Indian net exports. 
A)  It increases Canadian and Indian net exports. 
B)  It decreases Canadian and Indian net exports. 
C)  It increases Canadian net exports and decreases Indian net exports. 
D)  It decreases Canadian net exports and increases Indian net exports.

Question 14

Suppose Canada sells goose down parkas to the United States.What are the effects of this transaction?

Accepted Answer

A)  U.S.net exports increase,and U.S.net capital outflow increases. 
B)  U.S.net exports increase,and U.S.net capital outflow decreases. 
C)  U.S.net exports decrease,and U.S.net capital outflow increases. 
D)  U.S.net exports decrease,and U.S.net capital outflow decreases. 
A)  U.S.net exports increase,and U.S.net capital outflow increases. 
B)  U.S.net exports increase,and U.S.net capital outflow decreases. 
C)  U.S.net exports decrease,and U.S.net capital outflow increases. 
D)  U.S.net exports decrease,and U.S.net capital outflow decreases.

Question 15

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada.What are the effects of this transaction?

Accepted Answer

A)  It increases Saudi net capital outflow and increases Canadian net exports. 
B)  It increases Saudi net capital outflow and decreases Canadian net exports. 
C)  It decreases Saudi net capital outflow and increases Canadian net exports. 
D)  It decreases Saudi net capital outflow and decreases Canadian net exports. 
A)  It increases Saudi net capital outflow and increases Canadian net exports. 
B)  It increases Saudi net capital outflow and decreases Canadian net exports. 
C)  It decreases Saudi net capital outflow and increases Canadian net exports. 
D)  It decreases Saudi net capital outflow and decreases Canadian net exports.

Question 16

For an economy as a whole,net exports must equal minus one times net capital outflow.

Accepted Answer

A) True 
 B)False

Question 17

What partly caused the increase in international trade in Canada since 1989?

Accepted Answer

A)  an increase in Canadian GDP 
B)  an appreciation of the dollar 
C)  better quality of Canadian products 
D)  the free trade agreement between Canada and the United States 
A)  an increase in Canadian GDP 
B)  an appreciation of the dollar 
C)  better quality of Canadian products 
D)  the free trade agreement between Canada and the United States

Question 18

How did the real interest rates paid on long-term government debt in Canada and the United States compare with each other over the period from 1984 to 2015?

Accepted Answer

A)  The average real interest rate was 3.4 percent in Canada and 4.4 percent in the United States. 
B)  The average real interest rate was 3.7 percent in Canada and 3.0 percent in the United States. 
C)  The average real interest rate was 5.7 percent in Canada and 6.7 percent in the United States. 
D)  The average real interest rate was 6.7 percent in Canada and 5.7 percent in the United States. 
A)  The average real interest rate was 3.4 percent in Canada and 4.4 percent in the United States. 
B)  The average real interest rate was 3.7 percent in Canada and 3.0 percent in the United States. 
C)  The average real interest rate was 5.7 percent in Canada and 6.7 percent in the United States. 
D)  The average real interest rate was 6.7 percent in Canada and 5.7 percent in the United States.

Question 19

Suppose the price level in Canada (P)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same,while the price level abroad increases from P1* to P2*.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

Accepted Answer

The percentage change in the real exchan

Question 20

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S.gasoline,1 litre of U.S.gasoline costs $0.45 U.S.,and a litre of Canadian gas costs $1.30 Canadian.What is the nominal exchange rate?

Accepted Answer

A)  0.38 U.S.dollars per Canadian dollar 
B)  0.45 U.S.dollars per Canadian dollar 
C)  0.69 U.S.dollars per Canadian dollar 
D)  1.30 U.S.dollars per Canadian dollar 
A)  0.38 U.S.dollars per Canadian dollar 
B)  0.45 U.S.dollars per Canadian dollar 
C)  0.69 U.S.dollars per Canadian dollar 
D)  1.30 U.S.dollars per Canadian dollar

As an open economy,Canadian national saving can be less than Canadian investment.

How can one derive the identity that saving equals the sum of domestic investment and net capital outflow from the national income accounting identity?

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Refer to the Table 12-1.What countries' goods are more expensive than Canadian goods?

For many questions in macroeconomics,international issues are peripheral.

What imbalance does net capital outflow measure?

How has the introduction of the euro affected arbitrage?

When Deborah,a Canadian living in Canada,purchases Prada boots made in Florence,what is this purchase?

How do you measure the current account balance?

Suppose that the real exchange rate between Canada and Tanzania is defined in terms of baskets of goods.What will increase the real exchange rate (that is,increase the number of baskets of Tanzanian goods a basket of Canadian goods buys)?

Which of the following best describes the cross-border net flow of dividends and interest payments?

Which statement best defines net capital outflow?

A firm in India sells spices to a Canadian chain of culinary stores.Which statement best identifies the effects of this transaction?

Suppose Canada sells goose down parkas to the United States.What are the effects of this transaction?

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada.What are the effects of this transaction?

For an economy as a whole,net exports must equal minus one times net capital outflow.

What partly caused the increase in international trade in Canada since 1989?

How did the real interest rates paid on long-term government debt in Canada and the United States compare with each other over the period from 1984 to 2015?

Suppose the price level in Canada (P)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same,while the price level abroad increases from P1* to P2*.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S.gasoline,1 litre of U.S.gasoline costs $0.45 U.S.,and a litre of Canadian gas costs $1.30 Canadian.What is the nominal exchange rate?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 12: Open-Economy Macroeconomics: Basic Concepts

As an open economy,Canadian national saving can be less than Canadian investment.

How can one derive the identity that saving equals the sum of domestic investment and net capital outflow from the national income accounting identity?

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

Refer to the Table 12-1.What countries' goods are more expensive than Canadian goods?

For many questions in macroeconomics,international issues are peripheral.

What imbalance does net capital outflow measure?

How has the introduction of the euro affected arbitrage?

When Deborah,a Canadian living in Canada,purchases Prada boots made in Florence,what is this purchase?

How do you measure the current account balance?

Suppose that the real exchange rate between Canada and Tanzania is defined in terms of baskets of goods.What will increase the real exchange rate (that is,increase the number of baskets of Tanzanian goods a basket of Canadian goods buys)?

Which of the following best describes the cross-border net flow of dividends and interest payments?

Which statement best defines net capital outflow?

A firm in India sells spices to a Canadian chain of culinary stores.Which statement best identifies the effects of this transaction?

Suppose Canada sells goose down parkas to the United States.What are the effects of this transaction?

A citizen of Ethiopia uses previously obtained Canadian dollars to purchase lamb from Canada.What are the effects of this transaction?

For an economy as a whole,net exports must equal minus one times net capital outflow.

What partly caused the increase in international trade in Canada since 1989?

How did the real interest rates paid on long-term government debt in Canada and the United States compare with each other over the period from 1984 to 2015?

Suppose the price level in Canada (P)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same,while the price level abroad increases from P1* to P2*.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S.gasoline,1 litre of U.S.gasoline costs $0.45 U.S.,and a litre of Canadian gas costs $1.30 Canadian.What is the nominal exchange rate?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters