Question 1

In 2006 the U.S. had a large trade

Accepted Answer

A)  surplus and a large net capital inflow.
B)  surplus and a large net capital outflow.
C)  deficit and a large net capital inflow.
D)  deficit and a large net capital outflow.E) A) and D)
F) B) and C)

Question 2

When the central bank of some country prints large quantities of money, that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Accepted Answer

A) True 
 B)False

Question 3

A country has net capital outflow of $20 billion. Which of the following is consistent with this net capital outflow?

Accepted Answer

A)  It has $20 billion of net exports.
B)  Purchases of domestic assets by foreigners exceed purchases of foreign assets by domestic residents by $20 billion.
C)  It's saving is $15 billion and its domestic investment is $5 billion.
D)  All of the above are consistent with a net capital outflow of $20 billion.E) A) and D)
F) C) and D)

Question 4

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Accepted Answer

A) True 
 B)False

Question 5

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order?

Accepted Answer

A)  $140 and $140
B)  $100 and $40
C)  $60 and -$60
D)  None of the above is correct.E) None of the above
F) B) and D)

Question 6

Which of the following is an example of U.S. foreign direct investment?

Accepted Answer

A)  A Polish company opens a shipbuilding plant in the United States.
B)  A Bolivian bank buys U.S. corporate bonds.
C)  A U.S. bank buys Bolivian corporate bonds.
D)  A U.S. furniture maker opens a plant in Mexico.E) A) and D)
F) None of the above

Question 7

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Accepted Answer

A)  larger positive number.
B)  smaller positive number.
C)  larger negative number.
D)  smaller negative number.E) None of the above
F) All of the above

Question 8

Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a(n)

Accepted Answer

A)  decrease in U.S. investment.
B)  decrease in U.S. national saving.
C)  increase in U.S. investment.
D)  increase in U.S. national saving.E) A) and D)
F) B) and C)

Question 9

A U.S. firm buys wool from Australia with U.S. currency. The Australian firm then uses this money to buy electric shears from a U.S. firm. Which of the following increases?

Accepted Answer

A)  Australian net capital outflow and Australian net exports
B)  only Australian net exports
C)  only Australian net capital outflow
D)  neither Australian net exports nor Australian capital outflowE) A) and B)
F) A) and C)

Question 10

According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Accepted Answer

A)  the real exchange rate, but not the nominal exchange rate
B)  the nominal exchange rate, but not the real exchange rate
C)  the real exchange rate and the nominal exchange rate
D)  neither the real exchange rate nor the nominal exchange rateE) A) and B)
F) None of the above

Question 11

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Accepted Answer

A) True 
 B)False

Question 12

Exchange rates are 82 yen per dollar, 0.8 euro per dollar, and 10 pesos per dollar. A bottle of beer in New York costs 6 dollars, 820 yen in Tokyo, 7.2 euro in Munich, and 50 pesos in Cancun. Where is the most expensive and the cheapest beer in that order?

Accepted Answer

A)  Cancun, New York
B)  New York, Tokyo
C)  Tokyo, Cancun
D)  Munich, New YorkE) C) and D)
F) None of the above

Question 13

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) All of the above
F) A) and B)

Question 14

Assuming all other things equal, what would happen to the U.S. dollar real exchange rate under each of the following circumstances?
a.The U.S. nominal exchange rate depreciates.

Accepted Answer

a.The U.S. dollar real exchang...

Question 15

Use the (hypothetical)  information in the following table to answer the following questions.Table 18-2
   Country  Currency  Currency per  U.S. Dollar  U.S. Price  Index  Country Price  Index  Bolivia  boloviano 8.002001600 Japan  yen 80.0020020,000 Morocco  dinar 10.002002,000 Norwegian  kroner 6.52001,500 Thailand  baht 40.002007,000\begin{array}{|l|l|c|l|c}\hline 	ext { Country } & 	ext { Currency } & \begin{array}{l}	ext { Currency per } \	ext { U.S. Dollar }\end{array} & \begin{array}{l}	ext { U.S. Price } \	ext { Index }\end{array} & \begin{array}{l}	ext { Country Price } \	ext { Index }\end{array} \\hline 	ext { Bolivia } & 	ext { boloviano } & 8.00 & 200 & 1600 \\hline 	ext { Japan } & 	ext { yen } & 80.00 & 200 & 20,000 \\hline 	ext { Morocco } & 	ext { dinar } & 10.00 & 200 & 2,000 \\hline 	ext { Norwegian } & 	ext { kroner } & 6.5 & 200 & 1,500 \\hline 	ext { Thailand } & 	ext { baht } & 40.00 & 200 & 7,000 \\hline\end{array} Country  Bolivia  Japan  Morocco  Norwegian  Thailand ​ Currency  boloviano  yen  dinar  kroner  baht ​ Currency per  U.S. Dollar ​8.0080.0010.006.540.00​ U.S. Price  Index ​200200200200200​ Country Price  Index ​160020,0002,0001,5007,000​​

-Refer to Table 18-2. For which country(ies)  in the table does purchasing-power parity hold?

Accepted Answer

A)  Bolivia and Japan
B)  Bolivia and Morocco
C)  Japan and Morocco
D)  Norway and Thailand E) A) and B)
F) All of the above

Question 16

Which of the following statements is correct for an open economy with a trade surplus?

Accepted Answer

A)  The trade surplus cannot last for very many years.
B)  The trade surplus must be offset by negative net capital outflow.
C)  The trade surplus implies that the country's national saving is greater than domestic investment.
D)  None of the above is correct.E) A) and C)
F) A) and B)

Question 17

Bolivia buys railroad engines from a U.S. firm and pays for them with Bolivianos (Bolivian currency) . By itself, this exchange

Accepted Answer

A)  increases both U.S. net exports and U.S. net capital outflow.
B)  decreases both U.S. net exports and U.S. net capital outflow.
C)  increases U.S. net exports and does not affect U.S. net capital outflow.
D)  None of the above is correct.E) C) and D)
F) A) and B)

Question 18

Clear Brook Farms, a U.S. manufacturer of frozen vegetarian entrees, sells cases of its product to stores overseas. These sales

Accepted Answer

A)  decrease U.S. exports but increase U.S. net exports.
B)  decrease both U.S. exports and U.S. net exports.
C)  increase both U.S. exports and U.S. net exports.
D)  increase U.S. exports but decrease U.S. net exports.E) A) and C)
F) B) and D)

Question 19

Which of the following is correct?

Accepted Answer

A)  NCO = NX
B)  NCO + I = NX
C)  NX + NCO = Y
D)  Y = NCO - IE) A) and D)
F) B) and C)

Question 20

A country has a trade deficit. Which of the following must also be true?

Accepted Answer

A)  net capital outflow is positive and domestic investment is larger than saving
B)  net capital outflow is positive and saving is larger than domestic investment
C)  net capital outflow is negative and domestic investment is larger than saving
D)  net capital outflow is negative and saving is larger than domestic investmentE) B) and C)
F) A) and D)

Exam 18: Open-Economy Macroeconomic Models

A country has a trade deficit. Which of the following must also be true?

Correct Answer
verified

Correct Answer
verified

Bolivia buys railroad engines from a U.S. firm and pays for them with Bolivianos (Bolivian currency) . By itself, this exchange

Correct Answer
verified

Which of the following statements is correct for an open economy with a trade surplus?

Correct Answer
verified

A country has net capital outflow of $20 billion. Which of the following is consistent with this net capital outflow?

Correct Answer
verified

A U.S. firm buys wool from Australia with U.S. currency. The Australian firm then uses this money to buy electric shears from a U.S. firm. Which of the following increases?

Correct Answer
verified

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

Correct Answer
verified

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Correct Answer
verified

According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Correct Answer
verified

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct Answer
verified

In 2006 the U.S. had a large trade

Correct Answer
verified

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order?

Correct Answer
verified

Clear Brook Farms, a U.S. manufacturer of frozen vegetarian entrees, sells cases of its product to stores overseas. These sales

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

Exchange rates are 82 yen per dollar, 0.8 euro per dollar, and 10 pesos per dollar. A bottle of beer in New York costs 6 dollars, 820 yen in Tokyo, 7.2 euro in Munich, and 50 pesos in Cancun. Where is the most expensive and the cheapest beer in that order?

Correct Answer
verified

Which of the following is an example of U.S. foreign direct investment?

Correct Answer
verified

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Correct Answer
verified

When the central bank of some country prints large quantities of money, that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Correct Answer
verified

Assuming all other things equal, what would happen to the U.S. dollar real exchange rate under each of the following circumstances? a.The U.S. nominal exchange rate depreciates.

Correct Answer
verified
a.The U.S. dollar real exchang...
View Answer

Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a(n)

Correct Answer
verified

Exam 18: Open-Economy Macroeconomic Models

A country has a trade deficit. Which of the following must also be true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bolivia buys railroad engines from a U.S. firm and pays for them with Bolivianos (Bolivian currency) . By itself, this exchange

Correct AnswerverifiedShow Answer

Which of the following statements is correct for an open economy with a trade surplus?

Correct AnswerverifiedShow Answer

A country has net capital outflow of $20 billion. Which of the following is consistent with this net capital outflow?

Correct AnswerverifiedShow Answer

A U.S. firm buys wool from Australia with U.S. currency. The Australian firm then uses this money to buy electric shears from a U.S. firm. Which of the following increases?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a country sells more goods and services abroad than it purchases abroad, it has positive net exports and a trade surplus.

Correct AnswerverifiedShow Answer

According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Correct AnswerverifiedShow Answer

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

In 2006 the U.S. had a large trade

Correct AnswerverifiedShow Answer

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order?

Correct AnswerverifiedShow Answer

Clear Brook Farms, a U.S. manufacturer of frozen vegetarian entrees, sells cases of its product to stores overseas. These sales

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Exchange rates are 82 yen per dollar, 0.8 euro per dollar, and 10 pesos per dollar. A bottle of beer in New York costs 6 dollars, 820 yen in Tokyo, 7.2 euro in Munich, and 50 pesos in Cancun. Where is the most expensive and the cheapest beer in that order?

Correct AnswerverifiedShow Answer

Which of the following is an example of U.S. foreign direct investment?

Correct AnswerverifiedShow Answer

Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950.

Correct AnswerverifiedShow Answer

When the central bank of some country prints large quantities of money, that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Correct AnswerverifiedShow Answer

Assuming all other things equal, what would happen to the U.S. dollar real exchange rate under each of the following circumstances? a.The U.S. nominal exchange rate depreciates.

Correct Answerverifieda.The U.S. dollar real exchang...View AnswerShow Answer

Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a(n)

Correct AnswerverifiedShow Answer

Correct Answer
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a.The U.S. dollar real exchang...
View Answer

Correct Answer
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