Question 1

If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?

Accepted Answer

A)  P = e/P* 
B)  1 = e/P* 
C)  e = P*/P 
D)  None of the above is correct. 
A)  P = e/P* 
B)  1 = e/P* 
C)  e = P*/P 
D)  None of the above is correct.

Question 2

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

Accepted Answer

A)  U.S. net exports but not US net capital outflow 
B)  U.S. net capital outflow but not U.S. net exports 
C)  U.S. net exports and U.S. net capital outflow 
D)  neither U.S. net exports nor U.S. net capital outflow 
A)  U.S. net exports but not US net capital outflow 
B)  U.S. net capital outflow but not U.S. net exports 
C)  U.S. net exports and U.S. net capital outflow 
D)  neither U.S. net exports nor U.S. net capital outflow

Question 3

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

Accepted Answer

A)  40 and your purchase will increase Brazil's net exports. 
B)  10 and your purchase will increase Brazil's net exports. 
C)  40 and your purchase will decrease Brazil's net exports. 
D)  10 and your purchase will decrease Brazil's net exports. 
A)  40 and your purchase will increase Brazil's net exports. 
B)  10 and your purchase will increase Brazil's net exports. 
C)  40 and your purchase will decrease Brazil's net exports. 
D)  10 and your purchase will decrease Brazil's net exports.

Question 4

An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. What is the nominal exchange rate if purchasing-power parity holds?

Accepted Answer

A)  2.0 
B)  1.0 
C)  .50 
D)  None of the above is correct. 
A)  2.0 
B)  1.0 
C)  .50 
D)  None of the above is correct.

Question 5

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

Accepted Answer

A)  increase U.S. net capital outflow because Germans obtain U.S. assets. 
B)  decrease U.S. net capital outflow because Germans obtain U.S. assets. 
C)  increase U.S. net capital outflow because the U.S. buys capital goods. 
D)  decrease U.S. net capital outflow because the U.S. buys capital goods. 
A)  increase U.S. net capital outflow because Germans obtain U.S. assets. 
B)  decrease U.S. net capital outflow because Germans obtain U.S. assets. 
C)  increase U.S. net capital outflow because the U.S. buys capital goods. 
D)  decrease U.S. net capital outflow because the U.S. buys capital goods.

Question 6

An increase in U.S. sales of movies to other countries raises U.S.

Accepted Answer

A)  exports and so raises the U.S. trade balance. 
B)  exports and so reduces the U.S. trade balance. 
C)  imports and so raises the U.S. trade balance. 
D)  imports and so reduces the U.S. trade balance. 
A)  exports and so raises the U.S. trade balance. 
B)  exports and so reduces the U.S. trade balance. 
C)  imports and so raises the U.S. trade balance. 
D)  imports and so reduces the U.S. trade balance.

Question 7

Which types of economies interact with other economies?

Accepted Answer

A)  only closed economies 
B)  only open economies 
C)  closed economies and open economies 
D)  neither closed nor open economies 
A)  only closed economies 
B)  only open economies 
C)  closed economies and open economies 
D)  neither closed nor open economies

Question 8

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

Accepted Answer

A)  $280 billion 
B)  $780 billion 
C)  $890 billion 
D)  $1,170 billion 
A)  $280 billion 
B)  $780 billion 
C)  $890 billion 
D)  $1,170 billion

Question 9

If a country has a trade surplus then

Accepted Answer

A) S > I and Y > C + I + G. B) S > I and Y C + I + G. D) S < I and Y < C + I + G. A) S > I and Y > C + I + G. B) S > I and Y C + I + G. D) S < I and Y < C + I + G.

Question 10

Suppose a country's net capital outflow does not change, but its investment rises by $250 billion.

Accepted Answer

A)  Its saving must have risen by $250 billion so its net exports have risen. 
B)  Its saving must have risen by $250 billion, but its net exports are unchanged. 
C)  Its saving must have fallen by $250 billion, so its net exports have fallen. 
D)  Its saving must have fallen by $250 billion, but its net exports are unchanged. 
A)  Its saving must have risen by $250 billion so its net exports have risen. 
B)  Its saving must have risen by $250 billion, but its net exports are unchanged. 
C)  Its saving must have fallen by $250 billion, so its net exports have fallen. 
D)  Its saving must have fallen by $250 billion, but its net exports are unchanged.

Question 11

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?

Accepted Answer

A)  400 yen per pound 
B)  250 yen per pound 
C)  100 yen per pound 
D)  40 yen per pound 
A)  400 yen per pound 
B)  250 yen per pound 
C)  100 yen per pound 
D)  40 yen per pound

Question 12

The price level in Country A is 250. The price level in Country B is 300. If purchasing-power parity holds, what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Accepted Answer

The answer of The price level in Country A is...

Question 13

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States. Other things the same,

Accepted Answer

A)  this will increases U.S. net capital outflow and decrease Canadian net capital outflow. 
B)  this will decreases U.S. net capital outflow and increase Canadian net capital outflow. 
C)  this will only increase U.S. net capital outflow. 
D)  this will only increase Canadian net capital outflow. 
A)  this will increases U.S. net capital outflow and decrease Canadian net capital outflow. 
B)  this will decreases U.S. net capital outflow and increase Canadian net capital outflow. 
C)  this will only increase U.S. net capital outflow. 
D)  this will only increase Canadian net capital outflow.

Question 14

Other things the same, if the U.S. real exchange rate appreciates, U.S. net exports

Accepted Answer

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

Question 15

If purchasing-power parity holds, a bushel of rice costs $10 in the U.S., and the nominal exchange rate is 25 Thai baht per dollar, what is the price of rice in Thailand?

Accepted Answer

A)  400 baht 
B)  250 bhat 
C)  100 bhat 
D)  None of the above is correct. 
A)  400 baht 
B)  250 bhat 
C)  100 bhat 
D)  None of the above is correct.

Question 16

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports

Accepted Answer

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

Question 17

From 2000 to 2012 the U.S. had a trade

Accepted Answer

A)  surplus and a large net capital inflow. 
B)  surplus and a large net capital outflow. 
C)  deficit and a large net capital inflow. 
D)  deficit and a large net capital outflow. 
A)  surplus and a large net capital inflow. 
B)  surplus and a large net capital outflow. 
C)  deficit and a large net capital inflow. 
D)  deficit and a large net capital outflow.

Question 18

Which of the following is an example of U.S. foreign portfolio investment?

Accepted Answer

A)  Albert, a German citizen, buys stock in a U.S. computer company. 
B)  Larry, a citizen of Ireland, opens a fish and chips restaurant in the United States. 
C)  Nancy, a U.S. citizen, buys bonds issued by a Japanese bank. 
D)  Dustin, a U.S. citizen, opens a country-western tavern in New Zealand. 
A)  Albert, a German citizen, buys stock in a U.S. computer company. 
B)  Larry, a citizen of Ireland, opens a fish and chips restaurant in the United States. 
C)  Nancy, a U.S. citizen, buys bonds issued by a Japanese bank. 
D)  Dustin, a U.S. citizen, opens a country-western tavern in New Zealand.

Question 19

Table 31-1
  
-Refer to Table 31-1. What are Bolivia's imports?

Accepted Answer

A)  $60 billion 
B)  $35 billion 
C)  $40 billion 
D)  None of the above are correct. 
A)  $60 billion 
B)  $35 billion 
C)  $40 billion 
D)  None of the above are correct.

Question 20

If a country's exports were 500 billion pesos and its imports were 300 billion pesos, what would its trade balance be?

Accepted Answer

a 200 bill

If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. What is the nominal exchange rate if purchasing-power parity holds?

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

An increase in U.S. sales of movies to other countries raises U.S.

Which types of economies interact with other economies?

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

If a country has a trade surplus then

Suppose a country's net capital outflow does not change, but its investment rises by $250 billion.

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?

The price level in Country A is 250. The price level in Country B is 300. If purchasing-power parity holds, what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States. Other things the same,

Other things the same, if the U.S. real exchange rate appreciates, U.S. net exports

If purchasing-power parity holds, a bushel of rice costs $10 in the U.S., and the nominal exchange rate is 25 Thai baht per dollar, what is the price of rice in Thailand?

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports

From 2000 to 2012 the U.S. had a trade

Which of the following is an example of U.S. foreign portfolio investment?

Table 31-1 -Refer to Table 31-1. What are Bolivia's imports?

If a country's exports were 500 billion pesos and its imports were 300 billion pesos, what would its trade balance be?

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

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Exam 13: Open-Economy Macroeconomics: Basic Concepts

If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. What is the nominal exchange rate if purchasing-power parity holds?

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

An increase in U.S. sales of movies to other countries raises U.S.

Which types of economies interact with other economies?

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

If a country has a trade surplus then

Suppose a country's net capital outflow does not change, but its investment rises by $250 billion.

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?

The price level in Country A is 250. The price level in Country B is 300. If purchasing-power parity holds, what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States. Other things the same,

Other things the same, if the U.S. real exchange rate appreciates, U.S. net exports

If purchasing-power parity holds, a bushel of rice costs $10 in the U.S., and the nominal exchange rate is 25 Thai baht per dollar, what is the price of rice in Thailand?

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports

From 2000 to 2012 the U.S. had a trade

Which of the following is an example of U.S. foreign portfolio investment?

Table 31-1 -Refer to Table 31-1. What are Bolivia's imports?

If a country's exports were 500 billion pesos and its imports were 300 billion pesos, what would its trade balance be?

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

Filters