Question 1

Which of the following would result in a trade surplus for the United States?

Accepted Answer

A) Exports of goods = $725 billion Imports of goods = $790 billion
Exports of services = $350 billion
Imports of services = $260 billion 
B) Exports of goods = $625 billion Imports of goods = $625 billion
Exports of services = $300 billion
Imports of services = $375 billion 
C) Exports of goods = $550 billion Imports of goods = $575 billion
Exports of services = $275 billion
Imports of services = $300 billion 
D) None of the above will result in a trade surplus. 
A) Exports of goods = $725 billion Imports of goods = $790 billion
Exports of services = $350 billion
Imports of services = $260 billion 
B) Exports of goods = $625 billion Imports of goods = $625 billion
Exports of services = $300 billion
Imports of services = $375 billion 
C) Exports of goods = $550 billion Imports of goods = $575 billion
Exports of services = $275 billion
Imports of services = $300 billion 
D) None of the above will result in a trade surplus.

Question 2

If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

Accepted Answer

A) $2.14 
B) $2.24 
C) $2.57 
D) $4.76 
A) $2.14 
B) $2.24 
C) $2.57 
D) $4.76

Question 3

Since 1999,the U.S.________ account has recorded relatively minor transactions,such as migrants' transfers,and sales and purchases of nonproduced,nonfinancial assets.

Accepted Answer

A) current 
B) capital 
C) financial 
D) balance of trade account 
A) current 
B) capital 
C) financial 
D) balance of trade account

Question 4

National saving equals

Accepted Answer

A) income - taxes - consumption. 
B) taxes - government spending. 
C) income - consumption - government spending. 
D) private saving + public saving - net foreign investment. 
A) income - taxes - consumption. 
B) taxes - government spending. 
C) income - consumption - government spending. 
D) private saving + public saving - net foreign investment.

Question 5

Net foreign investment minus net foreign portfolio investment is equal to

Accepted Answer

A) capital outflows. 
B) net foreign financial investment. 
C) the balance of trade. 
D) net foreign direct investment. 
A) capital outflows. 
B) net foreign financial investment. 
C) the balance of trade. 
D) net foreign direct investment.

Question 6

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) national 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) national saving is less than domestic investment. 
D) net foreign investment must be positive.

Question 7

If net foreign investment in the United States is positive,how must national saving and domestic investment be related? (Assume that the capital account is zero and net transfers are zero. )

Accepted Answer

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

Question 8

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

Accepted Answer

A) both the peso and dollar have appreciated. 
B) both the peso and dollar have depreciated. 
C) the peso has appreciated and the dollar has depreciated. 
D) the peso has depreciated and the dollar has appreciated. 
A) both the peso and dollar have appreciated. 
B) both the peso and dollar have depreciated. 
C) the peso has appreciated and the dollar has depreciated. 
D) the peso has depreciated and the dollar has appreciated.

Question 9

Suppose the government cuts taxes.We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets.

Accepted Answer

A) rise;appreciate 
B) rise;depreciate 
C) fall;depreciate 
D) fall;appreciate 
A) rise;appreciate 
B) rise;depreciate 
C) fall;depreciate 
D) fall;appreciate

Question 10

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy

Accepted Answer

A) it is likely to decrease GDP too much and cause a recession 
B) it is likely to decrease GDP too little and inflation will persist 
C) it is likely to increase GDP too much and inflation will persist 
D) it is likely to increase GDP too little and cause a recession 
A) it is likely to decrease GDP too much and cause a recession 
B) it is likely to decrease GDP too little and inflation will persist 
C) it is likely to increase GDP too much and inflation will persist 
D) it is likely to increase GDP too little and cause a recession

Question 11

What is the difference between net exports and the current account balance?

Accepted Answer

The current account

Question 12

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 13

Figure 29-1  
-Refer to Figure 29-1.The depreciation of the dollar is represented as a movement from

Accepted Answer

A) B to A. 
B) D to C. 
C) B to C. 
D) A to C. 
E) A to B. 
A) B to A. 
B) D to C. 
C) B to C. 
D) A to C. 
E) A to B.

Question 14

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 kimono you're looking at costs 14,000 yen,under which of the following exchange rates would you be willing to purchase the kimono? (Assume no taxes or duties are associated with the purchase. )

Accepted Answer

A) 24.5 yen per dollar 
B) 65 yen per dollar 
C) 80 yen per dollar 
D) You would purchase the new kimono at any of the above exchange rates. 
A) 24.5 yen per dollar 
B) 65 yen per dollar 
C) 80 yen per dollar 
D) You would purchase the new kimono at any of the above exchange rates.

Question 15

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

Accepted Answer

A) It would not change. 
B) It would rise and exceed national saving. 
C) It would rise to a level equal to net foreign investment. 
D) It would fall to a level equal to national saving. 
A) It would not change. 
B) It would rise and exceed national saving. 
C) It would rise to a level equal to net foreign investment. 
D) It would fall to a level equal to national saving.

Question 16

Figure 29-1  
-Refer to Figure 29-1.The depreciation of the euro is represented as a movement from

Accepted Answer

A) D to A. 
B) C to D. 
C) B to C. 
D) B to A. 
A) D to A. 
B) C to D. 
C) B to C. 
D) B to A.

Question 17

The price of ________ in terms of ________ is referred to as the real exchange rate.

Accepted Answer

A) foreign goods;foreign services 
B) domestic goods;the domestic currency 
C) domestic goods;domestic services 
D) domestic goods;foreign goods 
A) foreign goods;foreign services 
B) domestic goods;the domestic currency 
C) domestic goods;domestic services 
D) domestic goods;foreign goods

Question 18

Explain why the budget deficit and the trade deficit are sometimes referred to as the "twin deficits."

Accepted Answer

When the government runs a budget defici

Question 19

Which of the following would cause the dollar to appreciate?

Accepted Answer

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

Question 20

Saving exceeds domestic investment in Japan,which generates a financial account deficit in Japan's balance of payments.

Accepted Answer

A) True 
 B)False

Exam 29: Macroeconomics in an Open Economy

Which of the following would result in a trade surplus for the United States?

If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

Since 1999,the U.S.________ account has recorded relatively minor transactions,such as migrants' transfers,and sales and purchases of nonproduced,nonfinancial assets.

National saving equals

Net foreign investment minus net foreign portfolio investment is equal to

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

If net foreign investment in the United States is positive,how must national saving and domestic investment be related? (Assume that the capital account is zero and net transfers are zero. )

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

Suppose the government cuts taxes.We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets.

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy

What is the difference between net exports and the current account balance?

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

Figure 29-1 -Refer to Figure 29-1.The depreciation of the dollar is represented as a movement from

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

Figure 29-1 -Refer to Figure 29-1.The depreciation of the euro is represented as a movement from

The price of ________ in terms of ________ is referred to as the real exchange rate.

Explain why the budget deficit and the trade deficit are sometimes referred to as the "twin deficits."

Which of the following would cause the dollar to appreciate?

Saving exceeds domestic investment in Japan,which generates a financial account deficit in Japan's balance of payments.

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

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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

Suppose the government cuts taxes.We would expect interest rates to and the dollar to in foreign exchange markets.

The price of in terms of is referred to as the real exchange rate.