Question 1

A country sells more to foreign countries than it buys from them. It has

Accepted Answer

A)  a trade surplus and positive net exports. 
B)  a trade surplus and negative net exports. 
C)  a trade deficit and positive net exports. 
D)  a trade deficit and negative net exports. 
A)  a trade surplus and positive net exports. 
B)  a trade surplus and negative net exports. 
C)  a trade deficit and positive net exports. 
D)  a trade deficit and negative net exports.

Question 2

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has

Accepted Answer

A)  positive net exports with Australia and a trade surplus with Australia. 
B)  positive net exports with Australia and a trade deficit with Australia. 
C)  negative net exports with Australia and a trade surplus with Australia. 
D)  negative net exports with Australia and a trade deficit with Australia. 
A)  positive net exports with Australia and a trade surplus with Australia. 
B)  positive net exports with Australia and a trade deficit with Australia. 
C)  negative net exports with Australia and a trade surplus with Australia. 
D)  negative net exports with Australia and a trade deficit with Australia.

Question 3

Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to an)

Accepted Answer

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

Question 4

A U.S. mutual fund uses $1 million to buy yen from a Japanese bank. It then uses these yen to buy stocks in a Japanese electronics firm. The Japanese electronic firm then exchanges the $1 million dollars of yen for dollars from a U.S. bank. It uses these dollars to buy equipment manufactured by a company located in the U.S. As a result of these exchanges, by how much, if at all, and in which direction does:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports

Question 5

Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would be computed as how many French goods per U.S. goods?

Accepted Answer

A)  one 
B)  the price of the U.S. goods 
C)  the number of euros that can be bought with one U.S. dollar 
D)  None of the above is correct. 
A)  one 
B)  the price of the U.S. goods 
C)  the number of euros that can be bought with one U.S. dollar 
D)  None of the above is correct.

Question 6

A Finnish corporation builds a factory the produces ceiling fans in the United States. This is an example of Finish

Accepted Answer

A)  foreign direct investment that increases Finnish net capital outflow. 
B)  foreign direct investment that decreases Finnish net capital outflow. 
C)  foreign portfolio investment that increases Finnish net capital outflow. 
D)  foreign portfolio investment that decreases Finnish net capital outflow. 
A)  foreign direct investment that increases Finnish net capital outflow. 
B)  foreign direct investment that decreases Finnish net capital outflow. 
C)  foreign portfolio investment that increases Finnish net capital outflow. 
D)  foreign portfolio investment that decreases Finnish net capital outflow.

Question 7

Other things the same, an increase in the real exchange rate raises U.S. net exports.

Accepted Answer

A) True 
 B)False

Question 8

If a country has a trade surplus

Accepted Answer

A)  it has positive net exports and positive net capital outflow. 
B)  it has positive net exports and negative net capital outflow. 
C)  it has negative net exports and positive net capital outflow. 
D)  it has negative net exports and negative net capital outflow. 
A)  it has positive net exports and positive net capital outflow. 
B)  it has positive net exports and negative net capital outflow. 
C)  it has negative net exports and positive net capital outflow. 
D)  it has negative net exports and negative net capital outflow.

Question 9

Which of the following is correct?

Accepted Answer

A)  NCO + C = NX 
B)  NCO = NX 
C)  NX - NCO = S 
D)  NX + NCO = C 
A)  NCO + C = NX 
B)  NCO = NX 
C)  NX - NCO = S 
D)  NX + NCO = C

Question 10

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 11

A country's trade balance will fall if

Accepted Answer

A)  either investment or saving rise. 
B)  either investment falls or saving rises. 
C)  either saving falls or investment rises. 
D)  either investment or saving fall. 
A)  either investment or saving rise. 
B)  either investment falls or saving rises. 
C)  either saving falls or investment rises. 
D)  either investment or saving fall.

Question 12

Other things the same, if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar, the dollar has

Accepted Answer

A)  appreciated and so buys more Algerian goods. 
B)  appreciated and so buys fewer Algerian goods. 
C)  depreciated and so buys more Algerian goods. 
D)  depreciated and so buys fewer Algerian goods. 
A)  appreciated and so buys more Algerian goods. 
B)  appreciated and so buys fewer Algerian goods. 
C)  depreciated and so buys more Algerian goods. 
D)  depreciated and so buys fewer Algerian goods.

Question 13

A nation has a positive net capital outflow. Which of the following is correct?

Accepted Answer

A)  Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreigners 
B)  It has positive net exports. 
C)  Its savings exceeds its domestic investment. 
D)  All of the above are correct. 
A)  Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreigners 
B)  It has positive net exports. 
C)  Its savings exceeds its domestic investment. 
D)  All of the above are correct.

Question 14

If a McDonald's Big Mac cost $4.50 in the United States and 3.60 euros in the Euro area, then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Accepted Answer

A)  1.25 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. 
B)  1.25 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. then in the Euro area. 
C)  .80 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. 
D)  .80 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. than in the Euro area. 
A)  1.25 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. 
B)  1.25 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. then in the Euro area. 
C)  .80 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area. 
D)  .80 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. than in the Euro area.

Question 15

Which of the following equations is correct?

Accepted Answer

A)  S = I + C 
B)  S = I - NX 
C)  S = I + NCO 
D)  S = NX - NCO. 
A)  S = I + C 
B)  S = I - NX 
C)  S = I + NCO 
D)  S = NX - NCO.

Question 16

If Saudi Arabia had negative net exports last year, then it

Accepted Answer

A)  sold more abroad than it purchased abroad and had a trade surplus. 
B)  sold more abroad than it purchased abroad and had a trade deficit. 
C)  bought more abroad than it sold abroad and had a trade surplus. 
D)  bought more abroad than it sold abroad and had a trade deficit. 
A)  sold more abroad than it purchased abroad and had a trade surplus. 
B)  sold more abroad than it purchased abroad and had a trade deficit. 
C)  bought more abroad than it sold abroad and had a trade surplus. 
D)  bought more abroad than it sold abroad and had a trade deficit.

Question 17

An appreciation of the U.S. real exchange rate induces U.S. consumers to buy

Accepted Answer

A)  fewer domestic goods and fewer foreign goods. 
B)  more domestic goods and fewer foreign goods. 
C)  fewer domestic goods and more foreign goods. 
D)  more domestic goods and more foreign goods. 
A)  fewer domestic goods and fewer foreign goods. 
B)  more domestic goods and fewer foreign goods. 
C)  fewer domestic goods and more foreign goods. 
D)  more domestic goods and more foreign goods.

Question 18

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 19

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

Accepted Answer

A)  1/2 cup of that country's hot chocolate per cup of U.S. hot chocolate 
B)  1 cup of that country's hot chocolate per cup of U.S. hot chocolate 
C)  2 cups of that country's hot chocolate per cup of U.S. hot chocolate 
D)  None of the above is correct. 
A)  1/2 cup of that country's hot chocolate per cup of U.S. hot chocolate 
B)  1 cup of that country's hot chocolate per cup of U.S. hot chocolate 
C)  2 cups of that country's hot chocolate per cup of U.S. hot chocolate 
D)  None of the above is correct.

Question 20

Which of the following is always correct?

Accepted Answer

A)  Y - I = NCO 
B)  NCO = NX 
C)  NX = I 
D)  All of the above are correct. 
A)  Y - I = NCO 
B)  NCO = NX 
C)  NX = I 
D)  All of the above are correct.

Exam 18: Open-Economy Macroeconomics: Basic Concepts

A country sells more to foreign countries than it buys from them. It has

The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has

Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to an)

Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would be computed as how many French goods per U.S. goods?

A Finnish corporation builds a factory the produces ceiling fans in the United States. This is an example of Finish

Other things the same, an increase in the real exchange rate raises U.S. net exports.

If a country has a trade surplus

Which of the following is correct?

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

A country's trade balance will fall if

Other things the same, if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar, the dollar has

A nation has a positive net capital outflow. Which of the following is correct?

If a McDonald's Big Mac cost $4.50 in the United States and 3.60 euros in the Euro area, then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Which of the following equations is correct?

If Saudi Arabia had negative net exports last year, then it

An appreciation of the U.S. real exchange rate induces U.S. consumers to buy

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

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

Which of the following is always correct?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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