Question 1

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 2

Table 18-1
  
-Refer to Table 18-1.Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy.Assume that the balance on the capital account is zero.

Accepted Answer

The answer of Table 18-1
  
-Refer to Table 18-1.Use...

Question 3

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Accepted Answer

A) True 
 B)False

Question 4

Figure 18-2  
-Refer to Figure 18-2.Consider the market for U.S.Dollars against the British pound shown in the graph above.From this graph we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound

Accepted Answer

A) decreased;0.46 
B) increased;2.17 
C) decreased;2.00 
D) increased;0.50 
A) decreased;0.46 
B) increased;2.17 
C) decreased;2.00 
D) increased;0.50

Question 5

The impact of crowding out

Accepted Answer

A) is larger in a closed economy as compared to an open economy. 
B) is larger in an open economy as compared to a closed economy. 
C) is larger in an open economy as compared to a closed economy when fiscal policy is contractionary. 
D) is larger in a closed economy as compared to an open economy when fiscal policy is contractionary. 
A) is larger in a closed economy as compared to an open economy. 
B) is larger in an open economy as compared to a closed economy. 
C) is larger in an open economy as compared to a closed economy when fiscal policy is contractionary. 
D) is larger in a closed economy as compared to an open economy when fiscal policy is contractionary.

Question 6

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 7

Based on the following information,calculate public saving,net foreign investment,and national income.
Private saving = $83 billion
Exports = $125 billion
Imports = $130 billion
Consumption = $200 billion
Private investment = $56 billion
Government purchases = $38 billion

Accepted Answer

Based on the macroeconomic equation for

Question 8

Ceteris paribus,a real depreciation of the dollar will decrease net exports in the United States.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following equations is true in an open economy?

Accepted Answer

A) Private saving = net foreign investment + domestic investment. 
B) National saving = net capital flows. 
C) Net exports = -Financial account balance. 
D) Net exports = net foreign investment. 
A) Private saving = net foreign investment + domestic investment. 
B) National saving = net capital flows. 
C) Net exports = -Financial account balance. 
D) Net exports = net foreign investment.

Question 10

Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment.Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.

Accepted Answer

In an open economy,the saving and invest

Question 11

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar. )

Accepted Answer

A) A federal budget surplus raises interest rates,which raises exchange rates,and increases the balance of trade. 
B) A federal budget surplus raises interest rates,which raises exchange rates,and reduces the balance of trade. 
C) A federal budget surplus reduces interest rates,which raises exchange rates,and reduces the balance of trade. 
D) A federal budget surplus reduces interest rates,which reduces exchange rates and increases the balance of trade. 
A) A federal budget surplus raises interest rates,which raises exchange rates,and increases the balance of trade. 
B) A federal budget surplus raises interest rates,which raises exchange rates,and reduces the balance of trade. 
C) A federal budget surplus reduces interest rates,which raises exchange rates,and reduces the balance of trade. 
D) A federal budget surplus reduces interest rates,which reduces exchange rates and increases the balance of trade.

Question 12

Figure 18-1  
-Refer to Figure 18-1.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

Accepted Answer

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

Question 13

The saving and investment equation holds only when the federal budget is balanced.

Accepted Answer

A) True 
 B)False

Question 14

If the dollar depreciates against the Indian rupee,

Accepted Answer

A) Indian imports to the U.S.become less expensive. 
B) U.S.exports to India become less expensive. 
C) U.S.exports to India become more expensive. 
D) The value of Indian imports to the United States does not change. 
A) Indian imports to the U.S.become less expensive. 
B) U.S.exports to India become less expensive. 
C) U.S.exports to India become more expensive. 
D) The value of Indian imports to the United States does not change.

Question 15

Suppose that domestic investment in Japan is 20.2% of GDP,and Japanese national savings is 24% of GDP.What is Japan's foreign investment as a percentage of GDP?

Accepted Answer

A) 1.19% 
B) 3.8% 
C) 27.8% 
D) 44.2% 
A) 1.19% 
B) 3.8% 
C) 27.8% 
D) 44.2%

Question 16

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?

Accepted Answer

The three main sets of factors are chang

Question 17

Figure 18-1  
-Refer to Figure 18-1.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

Accepted Answer

A) Supply would decrease,demand would decrease and the economy moves from B to C to D. 
B) Supply would increase,demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease,demand would increase and the economy moves from A to D to C. 
D) Supply would increase,demand would increase and the economy moves from D to A to B. 
A) Supply would decrease,demand would decrease and the economy moves from B to C to D. 
B) Supply would increase,demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease,demand would increase and the economy moves from A to D to C. 
D) Supply would increase,demand would increase and the economy moves from D to A to B.

Question 18

Which of the following will shift the demand for the euro to the right?

Accepted Answer

A) an increase in interest rates in the European Union 
B) an increase in incomes in countries that buy goods from the European Union 
C) expectations among speculators that the price of the euro will rise in the future 
D) All of the above will shift the demand for the euro to the right. 
A) an increase in interest rates in the European Union 
B) an increase in incomes in countries that buy goods from the European Union 
C) expectations among speculators that the price of the euro will rise in the future 
D) All of the above will shift the demand for the euro to the right.

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

Table 18-1 -Refer to Table 18-1.Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy.Assume that the balance on the capital account is zero.

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Figure 18-2 -Refer to Figure 18-2.Consider the market for U.S.Dollars against the British pound shown in the graph above.From this graph we can conclude that the dollar price of a British pound has to dollars per pound

The impact of crowding out

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

Based on the following information,calculate public saving,net foreign investment,and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

Ceteris paribus,a real depreciation of the dollar will decrease net exports in the United States.

Which of the following equations is true in an open economy?

Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment.Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar. )

Figure 18-1 -Refer to Figure 18-1.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

The saving and investment equation holds only when the federal budget is balanced.

If the dollar depreciates against the Indian rupee,

Suppose that domestic investment in Japan is 20.2% of GDP,and Japanese national savings is 24% of GDP.What is Japan's foreign investment as a percentage of GDP?

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?

Figure 18-1 -Refer to Figure 18-1.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

Which of the following will shift the demand for the euro to the right?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 18: Macroeconomics in an Open Economy

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

Table 18-1 -Refer to Table 18-1.Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy.Assume that the balance on the capital account is zero.

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Figure 18-2 -Refer to Figure 18-2.Consider the market for U.S.Dollars against the British pound shown in the graph above.From this graph we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound

The impact of crowding out

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

Based on the following information,calculate public saving,net foreign investment,and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

Ceteris paribus,a real depreciation of the dollar will decrease net exports in the United States.

Which of the following equations is true in an open economy?

Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment.Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar. )

Figure 18-1 -Refer to Figure 18-1.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

The saving and investment equation holds only when the federal budget is balanced.

If the dollar depreciates against the Indian rupee,

Suppose that domestic investment in Japan is 20.2% of GDP,and Japanese national savings is 24% of GDP.What is Japan's foreign investment as a percentage of GDP?

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?

Figure 18-1 -Refer to Figure 18-1.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

Which of the following will shift the demand for the euro to the right?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Figure 18-2 -Refer to Figure 18-2.Consider the market for U.S.Dollars against the British pound shown in the graph above.From this graph we can conclude that the dollar price of a British pound has to dollars per pound