Question 1

A system in which exchange rates are set by government policy is called a

Accepted Answer

A)  managed float system. 
B)  free-floating exchange rate system. 
C)  commodity standard system. 
D)  fixed exchange rate system. 
A)  managed float system. 
B)  free-floating exchange rate system. 
C)  commodity standard system. 
D)  fixed exchange rate system.

Question 2

How will a recession in Japan affect the Singapore's economy, given that Singapore is an Jimportant trading partner?

Accepted Answer

A)  Singapore's net exports are likely to fall because Japan's recession will reduce Singapore's imports. 
B)  Singapore's net exports are likely to fall because Japan's recession will reduce Japan's imports. 
C)  Singapore's net exports are likely to rise because Japan's recession will discourage its other trading partners from buying Japanese purchase products. 
D)  Singapore's net exports are likely to rise because shortages in Japan due to its recession will discourage Singapore's exports to Japan. 
A)  Singapore's net exports are likely to fall because Japan's recession will reduce Singapore's imports. 
B)  Singapore's net exports are likely to fall because Japan's recession will reduce Japan's imports. 
C)  Singapore's net exports are likely to rise because Japan's recession will discourage its other trading partners from buying Japanese purchase products. 
D)  Singapore's net exports are likely to rise because shortages in Japan due to its recession will discourage Singapore's exports to Japan.

Question 3

When exchange rates are fixed but fiscal and monetary policies are not coordinated, equilibrium exchange rates can move away from their fixed levels.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas'
Jbalance on its current account?

Accepted Answer

A)  $100 billion 
B)  -$100 billion 
C)  $150 billion 
D)  -$150 billion 
A)  $100 billion 
B)  -$100 billion 
C)  $150 billion 
D)  -$150 billion

Question 5

Suppose there is an increased demand from foreign countries for Iowa pork. What happens to the U.S. dollar exchange rate in a flexible foreign currency market?

Accepted Answer

A)  The demand and supply of U.S. dollars increase, leading to an increase in the quantity of dollars traded and an indeterminate effect on the exchange rate. 
B)  The supply of U.S. dollars increases, causing the U.S. dollar exchange rate to fall. 
C)  The demand for U.S. dollars increases and the supply decreases, leading to an increase in the U.S. dollar exchange rate. 
D)  The demand for U.S. dollars increases, causing the U.S. dollar exchange rate to rise. 
A)  The demand and supply of U.S. dollars increase, leading to an increase in the quantity of dollars traded and an indeterminate effect on the exchange rate. 
B)  The supply of U.S. dollars increases, causing the U.S. dollar exchange rate to fall. 
C)  The demand for U.S. dollars increases and the supply decreases, leading to an increase in the U.S. dollar exchange rate. 
D)  The demand for U.S. dollars increases, causing the U.S. dollar exchange rate to rise.

Question 6

Suppose there is an increased demand from foreign countries for Iowa pork.
Ja. What happens to the U.S. dollar exchange rate in a flexible foreign currency market? Illustrate your answer with a graph of the U.S. dollar market.
Jb. Explain how a free-floating exchange rate acts as a buffer to insulate an economy, say,
JCanada's economy, from the impact of this event.

Accepted Answer

Ja. In a flexible foreign currency marke

Question 7

If the price level in the United States increases relative to prices in foreign countries, then

Accepted Answer

A)  imports and exports of the United States will increase. 
B)  imports and exports of the United States will decrease. 
C)  imports of the United States will decrease and exports of the United States will increase. 
D)  imports of the United States will increase and exports of the United States will decrease. 
A)  imports and exports of the United States will increase. 
B)  imports and exports of the United States will decrease. 
C)  imports of the United States will decrease and exports of the United States will increase. 
D)  imports of the United States will increase and exports of the United States will decrease.

Question 8

Which of the following statements is false?

Accepted Answer

A)  Owners of factors of production used in industries in which a nation lacks a comparative advantage may be hurt by free trade. 
B)  Trade based on comparative advantage enables a country to produce outside its production possibilities curve. 
C)  Trade based on comparative advantage enables a country to consume outside its production possibilities curve. 
D)  Generally, trade between two countries tends to be mutually beneficial. 
A)  Owners of factors of production used in industries in which a nation lacks a comparative advantage may be hurt by free trade. 
B)  Trade based on comparative advantage enables a country to produce outside its production possibilities curve. 
C)  Trade based on comparative advantage enables a country to consume outside its production possibilities curve. 
D)  Generally, trade between two countries tends to be mutually beneficial.

Question 9

Trade between two nations is mutually beneficial if each specializes in the good in which it
Jhas a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 10

A country has a comparative advantage if it can produce a good or service

Accepted Answer

A)  at a higher opportunity cost than can other nations. 
B)  at a lower opportunity cost than can other nations. 
C)  by using less resources than other nations. 
D)  that lies outside its production possibilities curve. 
A)  at a higher opportunity cost than can other nations. 
B)  at a lower opportunity cost than can other nations. 
C)  by using less resources than other nations. 
D)  that lies outside its production possibilities curve.

Question 11

Which of the following statements is true of a country that has a gold standard exchange Jrate system?

Accepted Answer

A)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold. 
B)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold. 
C)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply. 
D)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply. 
A)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold. 
B)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold. 
C)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply. 
D)  A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply.

Question 12

In the short run, an increase in net exports causes

Accepted Answer

A)  an increase in real GDP and the price level. 
B)  an increase in real GDP and a decrease in the price level. 
C)  a decrease in real GDP and an increase in the price level. 
D)  a decrease in real GDP and the price level. 
A)  an increase in real GDP and the price level. 
B)  an increase in real GDP and a decrease in the price level. 
C)  a decrease in real GDP and an increase in the price level. 
D)  a decrease in real GDP and the price level.

Question 13

Under the simplifying assumptions made in the text, a current account surplus

Accepted Answer

A)  arises when a country's exchange rate rises. 
B)  arises when the purchase of foreign assets by a nation's citizens exceed the purchase of domestic assets by a nation's citizens. 
C)  is necessary for a long run economic growth. 
D)  arises when exports exceed imports. 
A)  arises when a country's exchange rate rises. 
B)  arises when the purchase of foreign assets by a nation's citizens exceed the purchase of domestic assets by a nation's citizens. 
C)  is necessary for a long run economic growth. 
D)  arises when exports exceed imports.

Question 14

International trade affects the economy's real wage in the long run.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that at the fixed exchange rate implied by the gold standard, the quantity demanded of Chahidi's currency exceeded the quantity supplied. This implies that

Accepted Answer

A)  Chahidi has a surplus in its balance of payments. 
B)  Chahidi has a deficit in its balance of payments. 
C)  Chahidi has a deficit in its capital account. 
D)  The exchange rate will fall to restore equilibrium. 
A)  Chahidi has a surplus in its balance of payments. 
B)  Chahidi has a deficit in its balance of payments. 
C)  Chahidi has a deficit in its capital account. 
D)  The exchange rate will fall to restore equilibrium.

Question 16

Which of the following is not a trade barrier?

Accepted Answer

A)  Tariffs 
B)  Quota 
C)  An embargo 
D)  A growing sentiment in favor of "buying local" 
A)  Tariffs 
B)  Quota 
C)  An embargo 
D)  A growing sentiment in favor of "buying local"

Question 17

Which of the following affects the quantity of U.S. dollars supplied in the currency market?

Accepted Answer

A)  Foreign purchases of U.S. goods and services 
B)  Payments to U.S. owners of foreign assets 
C)  Domestic purchases of U.S. goods and services 
D)  U.S. purchases of foreign assets 
A)  Foreign purchases of U.S. goods and services 
B)  Payments to U.S. owners of foreign assets 
C)  Domestic purchases of U.S. goods and services 
D)  U.S. purchases of foreign assets

Question 18

An increase in the U.S. GDP will result in

Accepted Answer

A)  an increase in exports of the United States. 
B)  an increase in imports of the United States. 
C)  an increase in the dollar exchange rate and a decrease in imports of the United States. 
D)  an increase in the dollar exchange rate and a rise in imports of the United States. 
A)  an increase in exports of the United States. 
B)  an increase in imports of the United States. 
C)  an increase in the dollar exchange rate and a decrease in imports of the United States. 
D)  an increase in the dollar exchange rate and a rise in imports of the United States.

Question 19

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas'
Jbalance on its capital account?

Accepted Answer

A)  $100 billion 
B)  -$100 billion 
C)  $150 billion 
D)  -$150 billion 
A)  $100 billion 
B)  -$100 billion 
C)  $150 billion 
D)  -$150 billion

Question 20

Of the systems listed below, the exchange rate system in which a country's ability to Jconduct independent monetary policy is most limited is the

Accepted Answer

A)  free-floating exchange rate system. 
B)  floating exchange rate system. 
C)  managed float exchange rate system. 
D)  currency board exchange rate system. 
A)  free-floating exchange rate system. 
B)  floating exchange rate system. 
C)  managed float exchange rate system. 
D)  currency board exchange rate system.

A system in which exchange rates are set by government policy is called a

How will a recession in Japan affect the Singapore's economy, given that Singapore is an Jimportant trading partner?

When exchange rates are fixed but fiscal and monetary policies are not coordinated, equilibrium exchange rates can move away from their fixed levels.

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas' Jbalance on its current account?

Suppose there is an increased demand from foreign countries for Iowa pork. What happens to the U.S. dollar exchange rate in a flexible foreign currency market?

If the price level in the United States increases relative to prices in foreign countries, then

Which of the following statements is false?

Trade between two nations is mutually beneficial if each specializes in the good in which it Jhas a comparative advantage.

A country has a comparative advantage if it can produce a good or service

Which of the following statements is true of a country that has a gold standard exchange Jrate system?

In the short run, an increase in net exports causes

Under the simplifying assumptions made in the text, a current account surplus

International trade affects the economy's real wage in the long run.

Suppose that at the fixed exchange rate implied by the gold standard, the quantity demanded of Chahidi's currency exceeded the quantity supplied. This implies that

Which of the following is not a trade barrier?

Which of the following affects the quantity of U.S. dollars supplied in the currency market?

An increase in the U.S. GDP will result in

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas' Jbalance on its capital account?

Of the systems listed below, the exchange rate system in which a country's ability to Jconduct independent monetary policy is most limited is the

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 15: Net Exports and International Finance

A system in which exchange rates are set by government policy is called a

How will a recession in Japan affect the Singapore's economy, given that Singapore is an Jimportant trading partner?

When exchange rates are fixed but fiscal and monetary policies are not coordinated, equilibrium exchange rates can move away from their fixed levels.

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas' Jbalance on its current account?

Suppose there is an increased demand from foreign countries for Iowa pork. What happens to the U.S. dollar exchange rate in a flexible foreign currency market?

If the price level in the United States increases relative to prices in foreign countries, then

Which of the following statements is false?

Trade between two nations is mutually beneficial if each specializes in the good in which it Jhas a comparative advantage.

A country has a comparative advantage if it can produce a good or service

Which of the following statements is true of a country that has a gold standard exchange Jrate system?

In the short run, an increase in net exports causes

Under the simplifying assumptions made in the text, a current account surplus

International trade affects the economy's real wage in the long run.

Suppose that at the fixed exchange rate implied by the gold standard, the quantity demanded of Chahidi's currency exceeded the quantity supplied. This implies that

Which of the following is not a trade barrier?

Which of the following affects the quantity of U.S. dollars supplied in the currency market?

An increase in the U.S. GDP will result in

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Jbillion, and foreign purchase of Boulinas' assets equal $200 billion. What is Boulinas' Jbalance on its capital account?

Of the systems listed below, the exchange rate system in which a country's ability to Jconduct independent monetary policy is most limited is the

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters