Question 1

A nation with a trade surplus will necessarily have domestic investment that is greater than domestic saving.

Accepted Answer

A) True 
 B)False

Question 2

A U.S.firm exchanges dollars for yen and then uses them to buy Japanese goods.Overall as a result of these transactions

Accepted Answer

A)   both U.S.net capital outflow and U.S.net exports rise.
B)   both U.S.net capital outflow and U.S.net exports fall.
C)   U.S.net capital outflow rises and U.S.net exports fall.
D)   U.S.net capital outflow falls and U.S.net exports rise.E) A) and B)
F) B) and C)

Question 3

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Accepted Answer

The real exchange rate 2/3 = $...

Question 4

A U.S.citizen buys bonds issued by a construction equipment manufacturer in Poland.Her expenditures are U.S.

Accepted Answer

A)   foreign portfolio investment that increase U.S.net capital outflow.
B)   foreign portfolio investment that decrease U.S.net capital outflow.
C)   foreign direct investment that increase U.S.net capital outflow.
D)   foreign direct investment that decrease U.S.net capital outflow.E) B) and C)
F) None of the above

Question 5

Ann,a U.S.citizen,uses some previously obtained euros to purchase a bond issued by a Spanish company.This transaction

Accepted Answer

A)   increases U.S.net capital outflow by more than the value of the bond.
B)   increases U.S.net capital outflow by the value of the bond.
C)   does not change U.S.net capital outflow.
D)   decreases U.S.net capital outflow.E) B) and D)
F) A) and D)

Question 6

If over the next year the price level in Turkey increases and the price level in Japan falls,then the Turkish lira should depreciate relative to the Japanese Yen.

Accepted Answer

A) True 
 B)False

Question 7

If the U.S.real exchange rate is greater than 1,then there is the possiblity of arbitraging by buying foreign goods to sell in the U.S.

Accepted Answer

A) True 
 B)False

Question 8

If a country's net exports fall,then its net capital outflow falls by the same amount.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct?

Accepted Answer

A)   NCO + C = NX
B)   NCO = NX
C)   NX - NCO = C
D)   NX + NCO = CE) C) and D)
F) All of the above

Question 10

During 2011,the price level in the U.S.rose at a faster rate than the price level in Japan.Other things the same,according to purchasing power parity,this difference in inflation rates should have caused

Accepted Answer

A)   the nominal exchange rate of the dollar to appreciate relative to the yen.
B)   the real exchange rate of the dollar to appreciate relative to the yen.
C)   the nominal exchange rate of the dollar to depreciate relative to the yen.
D)   the real exchange rate of the dollar to depreciate relative to the yen.E) A) and B)
F) B) and C)

Question 11

If the U.S.real exchange rate appreciates,U.S.exports

Accepted Answer

A)   increase and U.S.imports decrease.
B)   decrease and U.S.imports increase.
C)   and U.S.imports both increase.
D)   and U.S.imports both decrease.E) B) and C)
F) None of the above

Question 12

If a nation is selling more goods and services to foreigners than it is buying from them,then on net it must be selling assets abroad.

Accepted Answer

A) True 
 B)False

Question 13

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.E) All of the above
F) B) and D)

Question 14

When the yen gets "stronger" relative to the dollar,

Accepted Answer

A)   the U.S.trade deficit with Japan will rise.
B)   the U.S.trade deficit with Japan will fall.
C)   the U.S.trade deficit with Japan will be unchanged.
D)   None of the above necessarily happens.E) A) and B)
F) B) and C)

Question 15

The country of Sylvania has a GDP of $900,investment of $200,government purchases of $200,and net capital outflow of -$100.What is consumption?

Accepted Answer

A)   $700
B)   $600
C)   $500
D)   $300E) All of the above
F) A) and C)

Question 16

You buy a new car built in Sweden.Other things the same,your purchase by itself

Accepted Answer

A)   raises both U.S.exports and U.S.net exports.
B)   raises U.S.exports and lowers U.S.net exports.
C)   raises both U.S.imports and U.S.net exports.
D)   raises U.S.imports and lowers U.S.net exports.E) None of the above
F) C) and D)

Question 17

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S.currency must rise if the price levels in

Accepted Answer

A)   foreign countries rise.
B)   the United States rises.
C)   both countries rise.
D)   both countries fall.E) B) and D)
F) B) and C)

Question 18

A U.S.company uses U.K.pounds it already owned to purchase bonds issued by a company in the U.K.Which of these countries has an increase in net capital outflow?

Accepted Answer

A)   The U.S.and the U.K.
B)   The U.S.but not the U.K.
C)   The U.K.but not the U.S.
D)   Neither the U.S.nor the U.K.E) None of the above
F) B) and C)

Question 19

A depreciation 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.E) B) and D)
F) B) and C)

Question 20

Last summer when you went to Stockholm Sweden you exchanged $20 to get 16 kronas to buy a meal.This summer you exchanged $25 to get 18 kronas to buy the same meal.The nominal exchange rate

Accepted Answer

A)   rose.If purchasing-power parity holds,than prices in the Sweden rose faster than prices in the U.S.
B)   rose.If purchasing-power parity holds,than prices in the U.S.rose faster than prices in the Sweden.
C)   fell.If purchasing-power parity holds,than prices in the Sweden rose faster than prices in the U.S.
D)   fell.If purchasing-power parity holds,than prices in the U.S.rose faster than prices in the Sweden.E) B) and D)
F) B) and C)

Exam 31: Open-Economy Macroeconomic Models

Last summer when you went to Stockholm Sweden you exchanged $20 to get 16 kronas to buy a meal.This summer you exchanged $25 to get 18 kronas to buy the same meal.The nominal exchange rate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a country's net exports fall,then its net capital outflow falls by the same amount.

Correct AnswerverifiedShow Answer

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S.currency must rise if the price levels in

Correct AnswerverifiedShow Answer

A nation with a trade surplus will necessarily have domestic investment that is greater than domestic saving.

Correct AnswerverifiedShow Answer

You buy a new car built in Sweden.Other things the same,your purchase by itself

Correct AnswerverifiedShow Answer

If the U.S.real exchange rate is greater than 1,then there is the possiblity of arbitraging by buying foreign goods to sell in the U.S.

Correct AnswerverifiedShow Answer

If the U.S.real exchange rate appreciates,U.S.exports

Correct AnswerverifiedShow Answer

When the yen gets "stronger" relative to the dollar,

Correct AnswerverifiedShow Answer

A U.S.firm exchanges dollars for yen and then uses them to buy Japanese goods.Overall as a result of these transactions

Correct AnswerverifiedShow Answer

The country of Sylvania has a GDP of $900,investment of $200,government purchases of $200,and net capital outflow of -$100.What is consumption?

Correct AnswerverifiedShow Answer

If over the next year the price level in Turkey increases and the price level in Japan falls,then the Turkish lira should depreciate relative to the Japanese Yen.

Correct AnswerverifiedShow Answer

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Correct AnswerverifiedThe real exchange rate 2/3 = $...View AnswerShow Answer

During 2011,the price level in the U.S.rose at a faster rate than the price level in Japan.Other things the same,according to purchasing power parity,this difference in inflation rates should have caused

Correct AnswerverifiedShow Answer

Ann,a U.S.citizen,uses some previously obtained euros to purchase a bond issued by a Spanish company.This transaction

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

A U.S.company uses U.K.pounds it already owned to purchase bonds issued by a company in the U.K.Which of these countries has an increase in net capital outflow?

Correct AnswerverifiedShow Answer

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

Correct AnswerverifiedShow Answer

A U.S.citizen buys bonds issued by a construction equipment manufacturer in Poland.Her expenditures are U.S.

Correct AnswerverifiedShow Answer

If a nation is selling more goods and services to foreigners than it is buying from them,then on net it must be selling assets abroad.

Correct AnswerverifiedShow Answer

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The real exchange rate 2/3 = $...
View Answer

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