Question 1

U.S. international trade has

Accepted Answer

A)  decreased because of a decrease in the trade of goods with a high value per pound. 
B)  decreased because of an increase in the trade of goods with a high value per pound. 
C)  increased because of a decrease in trade of goods with a high value per pound. 
D)  increased because of an increase in trade of goods with a high value per pound. 
A)  decreased because of a decrease in the trade of goods with a high value per pound. 
B)  decreased because of an increase in the trade of goods with a high value per pound. 
C)  increased because of a decrease in trade of goods with a high value per pound. 
D)  increased because of an increase in trade of goods with a high value per pound.

Question 2

A country has a trade deficit. Its

Accepted Answer

A)  net capital outflow must be positive, and saving is larger than investment. 
B)  net capital outflow must be positive and saving is smaller than investment. 
C)  net capital outflow must be negative and saving is larger than investment. 
D)  net capital outflow must be negative and saving is smaller than investment. 
A)  net capital outflow must be positive, and saving is larger than investment. 
B)  net capital outflow must be positive and saving is smaller than investment. 
C)  net capital outflow must be negative and saving is larger than investment. 
D)  net capital outflow must be negative and saving is smaller than investment.

Question 3

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

Accepted Answer

A)  depreciates which causes U.S. net exports to increase. 
B)  depreciates which causes U.S. net exports to decrease. 
C)  appreciates which causes U.S. net exports to increase. 
D)  appreciates, which causes U.S. net exports to decrease. 
A)  depreciates which causes U.S. net exports to increase. 
B)  depreciates which causes U.S. net exports to decrease. 
C)  appreciates which causes U.S. net exports to increase. 
D)  appreciates, which causes U.S. net exports to decrease.

Question 4

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

Accepted Answer

A)  increase U.S. net exports and have no effect on Mexican net exports. 
B)  increase U.S. net exports and decrease Mexican net exports. 
C)  decrease U.S. net exports and have no effect on Mexican net exports. 
D)  decrease U.S. net exports and increase Mexican net exports. 
A)  increase U.S. net exports and have no effect on Mexican net exports. 
B)  increase U.S. net exports and decrease Mexican net exports. 
C)  decrease U.S. net exports and have no effect on Mexican net exports. 
D)  decrease U.S. net exports and increase Mexican net exports.

Question 5

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale

Accepted Answer

A)  increases U.S. net exports and decreases German net exports. 
B)  decreases U.S. net exports and increases German net exports. 
C)  increases U.S. and German net exports. 
D)  decreases U.S. and German net exports. 
A)  increases U.S. net exports and decreases German net exports. 
B)  decreases U.S. net exports and increases German net exports. 
C)  increases U.S. and German net exports. 
D)  decreases U.S. and German net exports.

Question 6

A country has $60 million of saving and domestic investment of $40 million. Net exports are

Accepted Answer

A)  $20 million. 
B)  -$20 million. 
C)  $100 million. 
D)  -$100 million. 
A)  $20 million. 
B)  -$20 million. 
C)  $100 million. 
D)  -$100 million.

Question 7

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

Accepted Answer

A)  -$1 billion 
B)  -$2 billion 
C)  $1 billion 
D)  $2 billion 
A)  -$1 billion 
B)  -$2 billion 
C)  $1 billion 
D)  $2 billion

Question 8

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Accepted Answer

A) True 
 B)False

Question 9

A department store chain in Japan uses yen to purchase 500,000 U.S. dollars from a U.S. bank. It then uses these dollars to buy DVDs from a U.S. filmmaker. As a result of these transactions:
A. By how much and in what direction did U.S. net exports change?
B. By how much and in which direction did U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports

Question 10

Other things the same, a country could move from having a trade deficit to having a trade surplus if either

Accepted Answer

A)  saving rose or domestic investment rose. 
B)  saving rose or domestic investment fell. 
C)  saving fell or domestic investment rose. 
D)  saving fell or domestic investment fell. 
A)  saving rose or domestic investment rose. 
B)  saving rose or domestic investment fell. 
C)  saving fell or domestic investment rose. 
D)  saving fell or domestic investment fell.

Question 11

A country recently had saving of 250 billion euro and domestic investment of 400 billion euro. What was the value of this country's net exports? Show your work.

Accepted Answer

saving = investment + net capital outflo

Question 12

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Accepted Answer

The real exchange rate = 8/5 =

Question 13

Other things the same, an increase in domestic prices raises the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 14

From 1960 to about 1980 the net capital outflow of the U.S. was typically

Accepted Answer

A)  small but always positive. 
B)  small and sometimes negative and sometimes positive. 
C)  large and positive. 
D)  large but sometimes negative and sometimes positive. 
A)  small but always positive. 
B)  small and sometimes negative and sometimes positive. 
C)  large and positive. 
D)  large but sometimes negative and sometimes positive.

Question 15

An Italian company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in its stores in Rome. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations. At this point

Accepted Answer

A)  both U.S. net exports and U.S. net capital outflows have risen. 
B)  both U.S. net exports and U.S. net capital outflow have fallen. 
C)  U.S. net exports have risen and U.S. net capital outflow have fallen. 
D)  U.S. net exports have fallen and U.S. net capital outflow have risen. 
A)  both U.S. net exports and U.S. net capital outflows have risen. 
B)  both U.S. net exports and U.S. net capital outflow have fallen. 
C)  U.S. net exports have risen and U.S. net capital outflow have fallen. 
D)  U.S. net exports have fallen and U.S. net capital outflow have risen.

Question 16

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

Accepted Answer

A)  sells more overseas then it buys from overseas; it has a trade deficit. 
B)  sells more overseas then it buys from overseas; it has a trade surplus. 
C)  buys more from overseas then it sells overseas; it has a trade deficit. 
D)  buys more from overseas then it sells overseas; it has a trade surplus. 
A)  sells more overseas then it buys from overseas; it has a trade deficit. 
B)  sells more overseas then it buys from overseas; it has a trade surplus. 
C)  buys more from overseas then it sells overseas; it has a trade deficit. 
D)  buys more from overseas then it sells overseas; it has a trade surplus.

Question 17

A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

Accepted Answer

Foreigners purchased

Question 18

If business opportunities in a country become relatively less attractive relative to those of other countries, then

Accepted Answer

A)  both its net exports and net capital outflows fall. 
B)  both its net exports and net capital outflows rise. 
C)  its net exports fall and its net capital outflows fall. 
D)  its net exports rise and its net capital outflows fall 
A)  both its net exports and net capital outflows fall. 
B)  both its net exports and net capital outflows rise. 
C)  its net exports fall and its net capital outflows fall. 
D)  its net exports rise and its net capital outflows fall

Question 19

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company.
As a result of these transactions, by how much and in which direction did:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports

Question 20

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Accepted Answer

A)  $65 million 
B)  -$65 million 
C)  $35 million 
D)  -$35 million 
A)  $65 million 
B)  -$65 million 
C)  $35 million 
D)  -$35 million

Exam 18: Open-Economy Macroeconomics: Basic Concepts

U.S. international trade has

A country has a trade deficit. Its

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale

A country has $60 million of saving and domestic investment of $40 million. Net exports are

A country has $3 billion of domestic investment and net exports of -$2 billion. What is its saving?

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

Other things the same, a country could move from having a trade deficit to having a trade surplus if either

A country recently had saving of 250 billion euro and domestic investment of 400 billion euro. What was the value of this country's net exports? Show your work.

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Other things the same, an increase in domestic prices raises the real exchange rate.

From 1960 to about 1980 the net capital outflow of the U.S. was typically

An Italian company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in its stores in Rome. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations. At this point

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

If business opportunities in a country become relatively less attractive relative to those of other countries, then

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

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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