Question 1

The current account balance equals the value of net exports.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

The current account

Question 3

In the United States,domestic investment is greater than national saving.

Accepted Answer

A) True 
 B)False

Question 4

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

Accepted Answer

A) True 
 B)False

Question 5

An open economy is an economy that has

Accepted Answer

A) interactions in trade or finance with other economies. 
B) its own stock market. 
C) governmental regulations regarding public information that is included in corporate finance reports. 
D) governmental regulations regarding the number of hours retail establishments must remain open on a daily basis. 
A) interactions in trade or finance with other economies. 
B) its own stock market. 
C) governmental regulations regarding public information that is included in corporate finance reports. 
D) governmental regulations regarding the number of hours retail establishments must remain open on a daily basis.

Question 6

If the price level in the United States is 110,the price level is 120 in Mexico,and the nominal exchange rate is 140 pesos per dollar,what is the real exchange rate from the U.S.perspective?

Accepted Answer

A) 94 
B) 115 
C) 128 
D) 153 
A) 94 
B) 115 
C) 128 
D) 153

Question 7

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP.What is Canada's foreign investment as a percentage of GDP?

Accepted Answer

A) 1.15% 
B) 2.3% 
C) 15.3% 
D) 23.7% 
A) 1.15% 
B) 2.3% 
C) 15.3% 
D) 23.7%

Question 8

The balance of trade is defined as

Accepted Answer

A) the difference between the balance of the current account and the balance of the capital account. 
B) the difference between the value of the goods and services a country exports and the value of the goods and services a country imports. 
C) the difference between the value of the goods a country exports and the value of the goods a country imports. 
D) the difference between the balance of the current account and the balance of the financial account. 
A) the difference between the balance of the current account and the balance of the capital account. 
B) the difference between the value of the goods and services a country exports and the value of the goods and services a country imports. 
C) the difference between the value of the goods a country exports and the value of the goods a country imports. 
D) the difference between the balance of the current account and the balance of the financial account.

Question 9

What's the difference between the nominal exchange rate and the real exchange rate?

Accepted Answer

The nominal exchange rate measures the v

Question 10

The federal budget deficit and the trade balance are often referred to as the

Accepted Answer

A) balance of payments. 
B) dueling depreciators. 
C) twin deficits. 
D) national debt. 
A) balance of payments. 
B) dueling depreciators. 
C) twin deficits. 
D) national debt.

Question 11

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

Accepted Answer

A) True 
 B)False

Question 12

The decline in the value of the yen in 2014 and 2015 occurred as a result of the Japanese central bank,the Bank of Japan,following an expansionary monetary policy.Investors expected that the result would be lower nominal Japanese interest rates and a higher inflation rate.In response,investors ________,causing the value of the yen to decline against the dollar.

Accepted Answer

A) sold Japanese yen and bought U.S.dollars 
B) sold Japanese yen and sold U.S.dollars 
C) bought Japanese yen and sold U.S.dollars 
D) bought Japanese yen and bought U.S.dollars 
A) sold Japanese yen and bought U.S.dollars 
B) sold Japanese yen and sold U.S.dollars 
C) bought Japanese yen and sold U.S.dollars 
D) bought Japanese yen and bought U.S.dollars

Question 13

The United States usually exports ________ goods than it imports and exports ________ services than it imports.

Accepted Answer

A) more;more 
B) more;fewer 
C) fewer;more 
D) fewer;fewer 
A) more;more 
B) more;fewer 
C) fewer;more 
D) fewer;fewer

Question 14

Suppose that Federal Reserve policy leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is a closed economy,and how will it affect real GDP in the short run if the United States is an open economy?

Accepted Answer

For a closed economy,higher interest rat

Question 15

Explain why economies with financial account surpluses usually have current account deficits.

Accepted Answer

An economy will have a current account d

Question 16

How will contractionary monetary policy in Japan affect the demand for the yen and the supply of the yen in the foreign exchange market?

Accepted Answer

A) The demand for the yen will fall,and the supply of the yen will increase. 
B) The demand for the yen will increase,and the supply of the yen will fall. 
C) The demand for the yen will fall,and the supply of the yen will fall. 
D) The demand for the yen will increase,and the supply of the yen will increase. 
A) The demand for the yen will fall,and the supply of the yen will increase. 
B) The demand for the yen will increase,and the supply of the yen will fall. 
C) The demand for the yen will fall,and the supply of the yen will fall. 
D) The demand for the yen will increase,and the supply of the yen will increase.

Question 17

If net exports are positive,

Accepted Answer

A) net foreign investment is also positive. 
B) capital inflows must be greater than capital outflows. 
C) net foreign investment is negative. 
D) Both A and B are correct. 
A) net foreign investment is also positive. 
B) capital inflows must be greater than capital outflows. 
C) net foreign investment is negative. 
D) Both A and B are correct.

Question 18

If national saving decreases,

Accepted Answer

A) the sum of domestic investment and net exports must increase. 
B) the sum of domestic investment and foreign investment must increase. 
C) the sum of domestic investment and foreign investment must decrease. 
D) foreign investment must increase to cover the loss. 
A) the sum of domestic investment and net exports must increase. 
B) the sum of domestic investment and foreign investment must increase. 
C) the sum of domestic investment and foreign investment must decrease. 
D) foreign investment must increase to cover the loss.

Question 19

If net foreign investment is positive,which of the following must be true? (Assume that the capital account is zero and net transfers are zero. )

Accepted Answer

A) Capital outflows are less than capital inflows. 
B) Domestic investment must be less than national saving. 
C) Net exports are negative. 
D) None of the above are true when net foreign investment is positive. 
A) Capital outflows are less than capital inflows. 
B) Domestic investment must be less than national saving. 
C) Net exports are negative. 
D) None of the above are true when net foreign investment is positive.

Question 20

What is the relationship among the current account,the financial account,and the balance of payments?

Accepted Answer

Leaving aside the statistical

The current account balance equals the value of net exports.

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

In the United States,domestic investment is greater than national saving.

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

An open economy is an economy that has

If the price level in the United States is 110,the price level is 120 in Mexico,and the nominal exchange rate is 140 pesos per dollar,what is the real exchange rate from the U.S.perspective?

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP.What is Canada's foreign investment as a percentage of GDP?

The balance of trade is defined as

What's the difference between the nominal exchange rate and the real exchange rate?

The federal budget deficit and the trade balance are often referred to as the

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

The United States usually exports goods than it imports and exports services than it imports.

Suppose that Federal Reserve policy leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is a closed economy,and how will it affect real GDP in the short run if the United States is an open economy?

Explain why economies with financial account surpluses usually have current account deficits.

How will contractionary monetary policy in Japan affect the demand for the yen and the supply of the yen in the foreign exchange market?

If net exports are positive,

If national saving decreases,

If net foreign investment is positive,which of the following must be true? (Assume that the capital account is zero and net transfers are zero. )

What is the relationship among the current account,the financial account,and the 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

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 current account balance equals the value of net exports.

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

In the United States,domestic investment is greater than national saving.

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

An open economy is an economy that has

If the price level in the United States is 110,the price level is 120 in Mexico,and the nominal exchange rate is 140 pesos per dollar,what is the real exchange rate from the U.S.perspective?

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP.What is Canada's foreign investment as a percentage of GDP?

The balance of trade is defined as

What's the difference between the nominal exchange rate and the real exchange rate?

The federal budget deficit and the trade balance are often referred to as the

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

The United States usually exports ________ goods than it imports and exports ________ services than it imports.

Suppose that Federal Reserve policy leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is a closed economy,and how will it affect real GDP in the short run if the United States is an open economy?

Explain why economies with financial account surpluses usually have current account deficits.

How will contractionary monetary policy in Japan affect the demand for the yen and the supply of the yen in the foreign exchange market?

If net exports are positive,

If national saving decreases,

If net foreign investment is positive,which of the following must be true? (Assume that the capital account is zero and net transfers are zero. )

What is the relationship among the current account,the financial account,and the 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

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

The United States usually exports goods than it imports and exports services than it imports.