Question 1

If the real exchange rate between the U.S.and Argentina is 1,then

Accepted Answer

A)   purchasing-power parity holds,and 1 U.S.dollar buys 1 Argentinean bolivar.
B)   purchasing power parity holds,and the amount of dollars needed to buy goods in the U.S.is the same as the amount needed to buy enough Argentinean bolivars to buy the same goods in Argentina.
C)   purchasing power parity does not hold,but 1 U.S.dollar buys 1 Argentinean bolivar.
D)   purchasing power parity does not hold,but the amount of dollars needed to buy goods in the U.S.is the same as the amount needed to buy enough Argentinean bolivars to buy the same goods in Argentina.E) A) and C)
F) None of the above

Question 2

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.E) A) and B)
F) None of the above

Question 3

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.E) A) and B)
F) None of the above

Question 4

When Claudia,a U.S.citizen,purchases a handbag made in France,the purchase is

Accepted Answer

A)   both a U.S.and French import.
B)   a U.S.export and a French import.
C)   a U.S.import and a French export.
D)   neither an export nor an import for either country.E) A) and C)
F) B) and C)

Question 5

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Accepted Answer

The real exchange rate = nomin...

Question 6

A country has $30 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Accepted Answer

A)   -$50 billion
B)   -$10 billion
C)   $10 billion
D)   $50 billionE) A) and D)
F) A) and C)

Question 7

While vacationing in Agra,India,the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees.If the exchange rate was previously 55 rupees per dollar,what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

Accepted Answer

At an exchange rate of 6600 rupees the r...

Question 8

If the Kenyan nominal exchange rate declines,and prices are unchanged in Kenya and abroad,then the Kenyan real exchange rate

Accepted Answer

A)   does not change.
B)   rises.
C)   declines
D)   None of the above is necessarily correct.E) B) and C)
F) A) and B)

Question 9

If the exchange rate is 8 Moroccan dirhams per U.S.dollars,a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat,and a similar crate of oranges in Miami sells for $45 dollars,then

Accepted Answer

A)   the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in the United States and selling them in Morocco.
B)   the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the United States.
C)   the real exchange rate is less than one and arbitrageurs could profit by buying oranges in the United States and selling them in Morocco.
D)   the real exchange rate is less than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the United States.E) B) and C)
F) A) and D)

Question 10

A U.S.firm buys apples from New Zealand with New Zealand dollars it got in exchange for U.S.dollars.New Zealand residents then use these dollars to purchase oranges from the U.S.Which of the following increases?

Accepted Answer

A)   New Zeland's net capital outflow and New Zeland's net exports
B)   only New Zeland's net exports
C)   only New Zeland's net capital outflow
D)   neither New Zeland's net exports nor New Zeland's capital outflowE) B) and D)
F) C) and D)

Question 11

A country's saving is greater than its domestic investment.This difference means that its

Accepted Answer

A)   net capital outflow and net exports are positive.
B)   net capital outflow and net exports are negative.
C)   net capital outflow is positive and net exports are negative.
D)   net capital outflow is negative and net exports are positive.E) A) and B)
F) B) and D)

Question 12

A haircut costs 200 pesos in Mexico and $20 in the U.S.The exchange rate is 12.5 pesos per dollar.The real exchange rate is

Accepted Answer

A)   less than one.Haircuts in Mexico are cheaper than in the U.S.
B)   less than one.Haircuts in Mexico are more expensive than in the U.S.
C)   greater than one.Haircuts in Mexico are cheaper than in the U.S.
D)   greater than one.Haircuts in Mexico are more expensive than in the U.S.E) All of the above
F) A) and B)

Question 13

Which of the following equations is correct?

Accepted Answer

A)   Y = C + I + G + NCO
B)   NX = NCO
C)   NCO = S - I
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 14

A Japanese flour mill buys wheat from the United States and pays for it with pesos.Other things the same,Japanese

Accepted Answer

A)   net exports increase,and U.S.net capital outflow increases.
B)   net exports increase,and U.S.net capital outflow decreases.
C)   net exports decrease,and U.S.net capital outflow increases.
D)   net exports decrease,and U.S.net capital outflow decreases.E) B) and C)
F) None of the above

Question 15

Mike,a U.S.citizen,buys $1,000 worth of olives from Greece.By itself this purchase

Accepted Answer

A)   increases U.S.imports by $1,000 and increases U.S.net exports by $1,000.
B)   increases U.S.imports by $1,000 and decreases U.S.net exports by $1,000.
C)   increases U.S.exports by $1,000 and increases U.S.net exports by $1,000.
D)   increases U.S.exports by $1,000 and decreases U.S.net exports by $1,000.E) B) and D)
F) B) and C)

Question 16

When Microsoft establishes a distribution center in France,U.S.net capital outflow

Accepted Answer

A)   increases because Microsoft makes a portfolio investment in France.
B)   decreases because Microsoft makes a portfolio investment in France.
C)   increases because Microsoft makes a direct investment in capital in France.
D)   decreases because Microsoft makes a direct investment in capital France.E) A) and D)
F) A) and C)

Question 17

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

Accepted Answer

A) True 
 B)False

Question 18

According to purchasing-power parity,if prices in the United States increase by a smaller percentage than prices in Poland,then

Accepted Answer

A)   the real exchange defined as Polish goods per unit of U.S.goods rises.
B)   the real exchange defined as Polish goods per unit of U.S.goods falls.
C)   the nominal exchange rate defined as Polish currency per dollar rises.
D)   the nominal exchange rate defined as Polish currency per dollar falls.E) None of the above
F) B) and C)

Question 19

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

Accepted Answer

A)   increases U.S.imports and decreases U.S.net exports.
B)   increases U.S.imports and increases U.S.net exports.
C)   increases U.S.exports and decreases U.S.net exports.
D)   increases U.S.exports and increases U.S.net exports.E) A) and D)
F) A) and C)

Question 20

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 has 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.E) None of the above
F) C) and D)

Exam 31: Open-Economy Macroeconomic Models

When Claudia,a U.S.citizen,purchases a handbag made in France,the purchase is

Correct Answer
verified

According to purchasing-power parity,if prices in the United States increase by a smaller percentage than prices in Poland,then

Correct Answer
verified

A Japanese flour mill buys wheat from the United States and pays for it with pesos.Other things the same,Japanese

Correct Answer
verified

Mike,a U.S.citizen,buys $1,000 worth of olives from Greece.By itself this purchase

Correct Answer
verified

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

Correct Answer
verified

If the real exchange rate between the U.S.and Argentina is 1,then

Correct Answer
verified

A country has a trade deficit.Its

Correct Answer
verified

If the exchange rate is 8 Moroccan dirhams per U.S.dollars,a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat,and a similar crate of oranges in Miami sells for $45 dollars,then

Correct Answer
verified

If the Kenyan nominal exchange rate declines,and prices are unchanged in Kenya and abroad,then the Kenyan real exchange rate

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
verified

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

Correct Answer
verified

A country's saving is greater than its domestic investment.This difference means that its

Correct Answer
verified

When Microsoft establishes a distribution center in France,U.S.net capital outflow

Correct Answer
verified

A country has $30 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Correct Answer
verified

A U.S.firm buys apples from New Zealand with New Zealand dollars it got in exchange for U.S.dollars.New Zealand residents then use these dollars to purchase oranges from the U.S.Which of the following increases?

Correct Answer
verified

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

Correct Answer
verified

A haircut costs 200 pesos in Mexico and $20 in the U.S.The exchange rate is 12.5 pesos per dollar.The real exchange rate is

Correct Answer
verified

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Correct Answer
verified
The real exchange rate = nomin...
View Answer

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

Correct Answer
verified

Correct Answer
verified
At an exchange rate of 6600 rupees the r...
View Answer

Exam 31: Open-Economy Macroeconomic Models

When Claudia,a U.S.citizen,purchases a handbag made in France,the purchase is

Correct AnswerverifiedShow Answer

According to purchasing-power parity,if prices in the United States increase by a smaller percentage than prices in Poland,then

Correct AnswerverifiedShow Answer

A Japanese flour mill buys wheat from the United States and pays for it with pesos.Other things the same,Japanese

Correct AnswerverifiedShow Answer

Mike,a U.S.citizen,buys $1,000 worth of olives from Greece.By itself this purchase

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the real exchange rate between the U.S.and Argentina is 1,then

Correct AnswerverifiedShow Answer

A country has a trade deficit.Its

Correct AnswerverifiedShow Answer

If the exchange rate is 8 Moroccan dirhams per U.S.dollars,a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat,and a similar crate of oranges in Miami sells for $45 dollars,then

Correct AnswerverifiedShow Answer

If the Kenyan nominal exchange rate declines,and prices are unchanged in Kenya and abroad,then the Kenyan real exchange rate

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

Correct AnswerverifiedShow Answer

A country's saving is greater than its domestic investment.This difference means that its

Correct AnswerverifiedShow Answer

When Microsoft establishes a distribution center in France,U.S.net capital outflow

Correct AnswerverifiedShow Answer

A country has $30 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Correct AnswerverifiedShow Answer

A U.S.firm buys apples from New Zealand with New Zealand dollars it got in exchange for U.S.dollars.New Zealand residents then use these dollars to purchase oranges from the U.S.Which of the following increases?

Correct AnswerverifiedShow Answer

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

Correct AnswerverifiedShow Answer

A haircut costs 200 pesos in Mexico and $20 in the U.S.The exchange rate is 12.5 pesos per dollar.The real exchange rate is

Correct AnswerverifiedShow Answer

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Correct AnswerverifiedThe real exchange rate = nomin...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAt an exchange rate of 6600 rupees the r...View AnswerShow Answer

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The real exchange rate = nomin...
View Answer

Correct Answer
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Correct Answer
verified
At an exchange rate of 6600 rupees the r...
View Answer