Question 1

Suppose Paul,a Romanian citizen,builds a telescope factory in Israel.What are the effects of these expenditures?

Accepted Answer

A)  They increase Romanian and Israeli net capital outflow. 
B)  They increase Romanian net capital outflow,but decrease Israeli net capital outflow. 
C)  They decrease Romanian net capital outflow,but increase Israeli net capital outflow. 
D)  They increase Romanian net capital outflow,but Israeli net capital outflow remains unchanged. 
A)  They increase Romanian and Israeli net capital outflow. 
B)  They increase Romanian net capital outflow,but decrease Israeli net capital outflow. 
C)  They decrease Romanian net capital outflow,but increase Israeli net capital outflow. 
D)  They increase Romanian net capital outflow,but Israeli net capital outflow remains unchanged.

Question 2

What is the logic behind the theory of purchasing-power parity?

Accepted Answer

The logic behind purchasing-power parity

Question 3

Since 1999,what caused most of the change of Canadian net capital outflow as a percent of GDP?

Accepted Answer

A)  decrease in private investment 
B)  increase in national saving 
C)  decrease in U.S.investment 
D)  decrease in national saving 
A)  decrease in private investment 
B)  increase in national saving 
C)  decrease in U.S.investment 
D)  decrease in national saving

Question 4

In 2009,approximately what was Canadian net capital outflow as a percent of GDP?

Accepted Answer

A)  -4.5 percent 
B)  -2.5 percent 
C)  2.5 percent 
D)  4.5 percent 
A)  -4.5 percent 
B)  -2.5 percent 
C)  2.5 percent 
D)  4.5 percent

Question 5

A country's exports are $500 billion,and imports are $700 billion.What is the country's trade balance?

Accepted Answer

A)  $200 billion deficit 
B)  $200 billion surplus 
C)  $1200 billion deficit 
D)  $1200 billion surplus 
A)  $200 billion deficit 
B)  $200 billion surplus 
C)  $1200 billion deficit 
D)  $1200 billion surplus

Question 6

Suppose that a country has $120 billion of national saving and $80 billion of domestic investment.Is this possible? Where did the other $40 billion of national saving go?

Accepted Answer

This is possible for an open economy.The

Question 7

Starting from a trade surplus,what would create a trade deficit?

Accepted Answer

A)  a decline in saving and investment 
B)  a rise in saving and investment 
C)  a decline in saving and a rise in investment 
D)  a rise in saving and a decline in investment 
A)  a decline in saving and investment 
B)  a rise in saving and investment 
C)  a decline in saving and a rise in investment 
D)  a rise in saving and a decline in investment

Question 8

When a country's central bank decreases the money supply,which statement best predicts the consequences?

Accepted Answer

A)  Its price level rises,and its currency appreciates relative to other currencies in the world. 
B)  Its price level falls,and its currency appreciates relative to other currencies in the world. 
C)  Its price level rises,and its currency depreciates relative to other currencies in the world. 
D)  Its price level falls,and its currency depreciates relative to other currencies in the world. 
A)  Its price level rises,and its currency appreciates relative to other currencies in the world. 
B)  Its price level falls,and its currency appreciates relative to other currencies in the world. 
C)  Its price level rises,and its currency depreciates relative to other currencies in the world. 
D)  Its price level falls,and its currency depreciates relative to other currencies in the world.

Question 9

A U.S.textbook publishing company sells texts to Canadian students.What are the effects of these sales?

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 10

In every economy,national saving equals domestic investment plus net capital outflow.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the nominal exchange rate is 95 yen / dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

Accepted Answer

A)  -9 yen / dollar 
B)  -1.1 yen / dollar 
C)  1.1 yen / dollar 
D)  9 yen / dollar 
A)  -9 yen / dollar 
B)  -1.1 yen / dollar 
C)  1.1 yen / dollar 
D)  9 yen / dollar

Question 12

A Canadian firm buys couscous from Morocco and pays for it with Canadian dollars.What are the effects of this transaction?

Accepted Answer

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

Question 13

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

Accepted Answer

A)  The real exchange rate,defined as Algerian goods per unit of Canadian goods,rises. 
B)  The real exchange rate,defined as Algerian goods per unit of Canadian goods,falls. 
C)  The nominal exchange rate,defined as Algerian currency per dollar,rises. 
D)  The nominal exchange rate,defined as Algerian currency per dollar,falls. 
A)  The real exchange rate,defined as Algerian goods per unit of Canadian goods,rises. 
B)  The real exchange rate,defined as Algerian goods per unit of Canadian goods,falls. 
C)  The nominal exchange rate,defined as Algerian currency per dollar,rises. 
D)  The nominal exchange rate,defined as Algerian currency per dollar,falls.

Question 14

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

Accepted Answer

By definition,the real exchange rate is

Question 15

A country sells more to people overseas than it buys from them.Which statement best identifies the effects of these transactions?

Accepted Answer

A)  The country will have a trade surplus and positive net exports. 
B)  The country will have a trade surplus and negative net exports. 
C)  The country will have a trade deficit and positive net exports. 
D)  The country will have a trade deficit and negative net exports. 
A)  The country will have a trade surplus and positive net exports. 
B)  The country will have a trade surplus and negative net exports. 
C)  The country will have a trade deficit and positive net exports. 
D)  The country will have a trade deficit and negative net exports.

Question 16

Mogans,a citizen of Denmark,sells Danish cheese and meat in Canada.Which statement best identifies the effects of these sales on net exports?

Accepted Answer

A)  They increase Canadian net exports and have no effect on Danish net exports. 
B)  They decrease Canadian net exports and have no effect on Danish net exports. 
C)  They increase Canadian net exports and decrease Danish net exports. 
D)  They decrease Canadian net exports and increase Danish net exports. 
A)  They increase Canadian net exports and have no effect on Danish net exports. 
B)  They decrease Canadian net exports and have no effect on Danish net exports. 
C)  They increase Canadian net exports and decrease Danish net exports. 
D)  They decrease Canadian net exports and increase Danish net exports.

Question 17

What does purchasing-power parity imply about the real exchange rate?

Accepted Answer

If purchasing-power

Question 18

If a Canadian manufacturer of linens purchases cotton from Egypt,what are the effects of this transaction?

Accepted Answer

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

Question 19

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

Accepted Answer

A)  It increases Canadian net capital outflow by more than the value of the bond. 
B)  It increases Canadian net capital outflow by the value of the bond. 
C)  It does not change Canadian net capital outflow. 
D)  It decreases Canadian net capital outflow. 
A)  It increases Canadian net capital outflow by more than the value of the bond. 
B)  It increases Canadian net capital outflow by the value of the bond. 
C)  It does not change Canadian net capital outflow. 
D)  It decreases Canadian net capital outflow.

Question 20

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

Accepted Answer

A) True 
 B)False

Suppose Paul,a Romanian citizen,builds a telescope factory in Israel.What are the effects of these expenditures?

What is the logic behind the theory of purchasing-power parity?

Since 1999,what caused most of the change of Canadian net capital outflow as a percent of GDP?

In 2009,approximately what was Canadian net capital outflow as a percent of GDP?

A country's exports are $500 billion,and imports are $700 billion.What is the country's trade balance?

Suppose that a country has $120 billion of national saving and $80 billion of domestic investment.Is this possible? Where did the other $40 billion of national saving go?

Starting from a trade surplus,what would create a trade deficit?

When a country's central bank decreases the money supply,which statement best predicts the consequences?

A U.S.textbook publishing company sells texts to Canadian students.What are the effects of these sales?

In every economy,national saving equals domestic investment plus net capital outflow.

Suppose the nominal exchange rate is 95 yen / dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

A Canadian firm buys couscous from Morocco and pays for it with Canadian dollars.What are the effects of this transaction?

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

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

A country sells more to people overseas than it buys from them.Which statement best identifies the effects of these transactions?

Mogans,a citizen of Denmark,sells Danish cheese and meat in Canada.Which statement best identifies the effects of these sales on net exports?

What does purchasing-power parity imply about the real exchange rate?

If a Canadian manufacturer of linens purchases cotton from Egypt,what are the effects of this transaction?

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

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

Suppose Paul,a Romanian citizen,builds a telescope factory in Israel.What are the effects of these expenditures?

What is the logic behind the theory of purchasing-power parity?

Since 1999,what caused most of the change of Canadian net capital outflow as a percent of GDP?

In 2009,approximately what was Canadian net capital outflow as a percent of GDP?

A country's exports are $500 billion,and imports are $700 billion.What is the country's trade balance?

Suppose that a country has $120 billion of national saving and $80 billion of domestic investment.Is this possible? Where did the other $40 billion of national saving go?

Starting from a trade surplus,what would create a trade deficit?

When a country's central bank decreases the money supply,which statement best predicts the consequences?

A U.S.textbook publishing company sells texts to Canadian students.What are the effects of these sales?

In every economy,national saving equals domestic investment plus net capital outflow.

Suppose the nominal exchange rate is 95 yen / dollar,the price of beef in Japan is ¥1200,and the price of beef in Canada is $14.Using the purchasing-power parity theory,approximately how much should you expect the exchange rate to change by?

A Canadian firm buys couscous from Morocco and pays for it with Canadian dollars.What are the effects of this transaction?

According to purchasing-power parity,if prices in Canada increase by a smaller percentage than prices in Algeria,how does the exchange rate change?

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

A country sells more to people overseas than it buys from them.Which statement best identifies the effects of these transactions?

Mogans,a citizen of Denmark,sells Danish cheese and meat in Canada.Which statement best identifies the effects of these sales on net exports?

What does purchasing-power parity imply about the real exchange rate?

If a Canadian manufacturer of linens purchases cotton from Egypt,what are the effects of this transaction?

Jill,a Canadian citizen,uses some previously obtained euros to purchase a bond issued by a French vineyard.How does this transaction affect Canadian net capital outflow?

Perhaps the most dramatic change in the Canadian economy over the past five decades has been the increasing relative importance of international trade and finance.

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