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In the 1970s and 1980s the U.S.dollar depreciated against the German mark and appreciated against the Italian lira because U.S.inflation was lower than in Germany but higher than in Italy.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in domestic prices raises the real exchange rate.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in foreign prices raises the real exchange rate.

A) True
B) False

Correct Answer

verifed

verified

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

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in the nominal exchange rate raises the real exchange rate.

A) True
B) False

Correct Answer

verifed

verified

A rational investor will always purchase the bond that pays the highest real interest rate.

A) True
B) False

Correct Answer

verifed

verified

False

If the price of a good in the U.S.is $10,the exchange rate is 2 units of foreign currency per dollar,and the foreign price of the same good is 30 units of foreign currency,then the real exchange rate is 2/3.

A) True
B) False

Correct Answer

verifed

verified

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in the real exchange rate raises U.S.net exports.

A) True
B) False

Correct Answer

verifed

verified

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

A) True
B) False

Correct Answer

verifed

verified

In an open economy,national saving can be less than investment.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in the U.S.real exchange rate makes U.S.goods more expensive relative to foreign goods.

A) True
B) False

Correct Answer

verifed

verified

Reductions in transportation costs help explain the increase in U.S.trade flows.

A) True
B) False

Correct Answer

verifed

verified

True

If prices in Mexico rise at a higher rate than prices in the U.S. ,then according to purchasing-power parity the U.S.nominal exchange rate with Mexico should rise.

A) True
B) False

Correct Answer

verifed

verified

If the purchasing power of the dollar is always the same at home and abroad,then the nominal exchange rate defined as units of foreign currency per dollar decreases if the U.S.price level rises more than the price level in foreign countries.

A) True
B) False

Correct Answer

verifed

verified

If the exchange rate is 12.5 pesos per U.S.dollar,it is also 1/12.5 U.S.dollars per peso.

A) True
B) False

Correct Answer

verifed

verified

If a country's trade surplus falls,its net capital outflow rises.

A) True
B) False

Correct Answer

verifed

verified

If foreign residents purchase 30 billion pesos of Mexican assets and Mexican residents purchase 25 billion pesos of foreign assets,then Mexico has a net capital outflow of 5 billion pesos.

A) True
B) False

Correct Answer

verifed

verified

If prices in the U.S.rise faster than prices in the United Kingdom,then according to the doctrine of purchasing-power parity the U.S.nominal exchange rate should rise

A) True
B) False

Correct Answer

verifed

verified

A country must have a positive net outflow of capital if it has a trade deficit.

A) True
B) False

Correct Answer

verifed

verified

False

Showing 1 - 20 of 63

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