Question 1

A reduction in net exports will, all other things unchanged, shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the U.S. dollar exchange rate means foreigners must pay

Accepted Answer

A)  more for dollars and more for U.S. exports. 
B)  less for dollars and more for U.S. imports. 
C)  more for dollars and less for U.S. exports. 
D)  less for dollars and less for U.S. exports. 
A)  more for dollars and more for U.S. exports. 
B)  less for dollars and more for U.S. imports. 
C)  more for dollars and less for U.S. exports. 
D)  less for dollars and less for U.S. exports.

Question 3

Under the Bretton Woods agreement,

Accepted Answer

A)  each currency's value moved freely relative to other currencies. 
B)  government intervention to maintain the exchange rate tended to disrupt the domestic economy. 
C)  it was not possible to change the exchange rate, once it was fixed. 
D)  the exchange rate system functioned essentially as a free-floating exchange rate system. 
A)  each currency's value moved freely relative to other currencies. 
B)  government intervention to maintain the exchange rate tended to disrupt the domestic economy. 
C)  it was not possible to change the exchange rate, once it was fixed. 
D)  the exchange rate system functioned essentially as a free-floating exchange rate system.

Question 4

Which of the following statements is true?

Accepted Answer

A)  A positive balance on capital account necessarily implies a positive balance on current account. 
B)  A negative balance on capital account necessarily implies a negative balance on current account. 
C)  A positive balance on capital account necessarily implies growing U.S. foreign investments. 
D)  A negative balance on capital account necessarily implies a positive balance on current account. 
A)  A positive balance on capital account necessarily implies a positive balance on current account. 
B)  A negative balance on capital account necessarily implies a negative balance on current account. 
C)  A positive balance on capital account necessarily implies growing U.S. foreign investments. 
D)  A negative balance on capital account necessarily implies a positive balance on current account.

Question 5

Within the United States, a(n)

Accepted Answer

A)  decrease in the price level will make U.S. exports more expensive to foreign consumers. 
B)  increase in the price level will make U.S. exports more expensive to foreign consumers. 
C)  increase in the price level will make U.S. exports less expensive to foreign consumers. 
D)  decrease in the price level will make U.S. exports neither more nor less expensive to foreign consumers. 
A)  decrease in the price level will make U.S. exports more expensive to foreign consumers. 
B)  increase in the price level will make U.S. exports more expensive to foreign consumers. 
C)  increase in the price level will make U.S. exports less expensive to foreign consumers. 
D)  decrease in the price level will make U.S. exports neither more nor less expensive to foreign consumers.

Question 6

International finance is the study of economics that deals with

Accepted Answer

A)  the balance of trade 
B)  the macroeconomic consequences of financial flows associated with international trade. 
C)  international investment opportunities for American multinational corporations. 
D)  the relationships among world currency dealers. 
A)  the balance of trade 
B)  the macroeconomic consequences of financial flows associated with international trade. 
C)  international investment opportunities for American multinational corporations. 
D)  the relationships among world currency dealers.

Question 7

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

Accepted Answer

A) True 
 B)False

Question 8

In the long run, international trade will result in the loss of jobs for a nation.

Accepted Answer

A) True 
 B)False

Question 9

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 10

All other things unchanged, a recession in Japan

Accepted Answer

A)  increases U.S. net exports and shifts the U.S. aggregate demand curve to the right. 
B)  decreases U.S. net exports and shifts the U.S. aggregate demand curve to the right. 
C)  increases U.S. net exports and shifts the U.S. aggregate demand curve to the left. 
D)  decreases U.S. net exports and shifts the U.S. aggregate demand curve to the left. 
A)  increases U.S. net exports and shifts the U.S. aggregate demand curve to the right. 
B)  decreases U.S. net exports and shifts the U.S. aggregate demand curve to the right. 
C)  increases U.S. net exports and shifts the U.S. aggregate demand curve to the left. 
D)  decreases U.S. net exports and shifts the U.S. aggregate demand curve to the left.

Question 11

Suppose an American family from New York City eats in a restaurant in Mexico City. How
Will this transaction be recorded in U.S. international transactions?

Accepted Answer

A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a plus item. 
D)  It is recorded in the current account as a negative item. 
A)  It is recorded in the current account as a positive (plus) item. 
B)  It is recorded in the current account as a negative (minus) item. 
C)  It is recorded in the capital account as a plus item. 
D)  It is recorded in the current account as a negative item.

Question 12

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100
Billion, and foreign purchase of Boulinas' assets equal $200 billion. What is the value of
Boulinas' imports?

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 13

A recession in the United States will

Accepted Answer

A)  increase imports and decrease exports of the United States. 
B)  decrease imports and decrease exports of the United States. 
C)  decrease imports of the United States but not affect exports of the United States. 
D)  decrease exports of the United States but not affect imports of the United States. 
A)  increase imports and decrease exports of the United States. 
B)  decrease imports and decrease exports of the United States. 
C)  decrease imports of the United States but not affect exports of the United States. 
D)  decrease exports of the United States but not affect imports of the United States.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The current account deficit and capital account surplus of the United States

Accepted Answer

A)  means that U.S. consumers are worse off. 
B)  means that in the long run, many U.S. jobs are lost. 
C)  implies that foreign nations exert unmatched control over U.S. economic activity. 
D)  has no relevance to a country's long run economic growth. 
A)  means that U.S. consumers are worse off. 
B)  means that in the long run, many U.S. jobs are lost. 
C)  implies that foreign nations exert unmatched control over U.S. economic activity. 
D)  has no relevance to a country's long run economic growth.

Question 16

Consider only the flow of funds spent on acquiring assets. Which of the following is true if the U.S. has a net capital inflow of funds?
I. Foreign purchases of U.S. assets are greater than U.S. residents' purchases of foreign assets.
II. Foreign purchases of U.S. assets are less than U.S. residents' purchases of foreign assets.
III. There is a capital account surplus.
IV. There is a capital account deficit.

Accepted Answer

A)  I and III 
B)  I and IV 
C)  II and III 
D)  II and IV 
A)  I and III 
B)  I and IV 
C)  II and III 
D)  II and IV

Question 17

What is a quota?

Accepted Answer

A)  A restriction on exports 
B)  A unit tax imposed on a product 
C)  A ceiling on the amount of a good or service that can be exported 
D)  A ceiling on the amount of a good or service that can be imported 
A)  A restriction on exports 
B)  A unit tax imposed on a product 
C)  A ceiling on the amount of a good or service that can be exported 
D)  A ceiling on the amount of a good or service that can be imported

Question 18

A free-floating exchange rate is only flexible if there is a deficit in the foreign exchange market.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Suppose Jaffe's exports equal $50 billion, its purchases of foreign assets equal $200
Billion, and foreign purchase of Jaffe's assets equal $100 billion. What is the value of Jaffe's
Exports?

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

A reduction in net exports will, all other things unchanged, shift the aggregate demand curve to the left.

An increase in the U.S. dollar exchange rate means foreigners must pay

Under the Bretton Woods agreement,

Which of the following statements is true?

Within the United States, a(n)

International finance is the study of economics that deals with

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

In the long run, international trade will result in the loss of jobs for a nation.

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?

All other things unchanged, a recession in Japan

Suppose an American family from New York City eats in a restaurant in Mexico City. How Will this transaction be recorded in U.S. international transactions?

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Billion, and foreign purchase of Boulinas' assets equal $200 billion. What is the value of Boulinas' imports?

A recession in the United States will

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

The current account deficit and capital account surplus of the United States

What is a quota?

A free-floating exchange rate is only flexible if there is a deficit in the foreign exchange market.

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

Suppose Jaffe's exports equal $50 billion, its purchases of foreign assets equal $200 Billion, and foreign purchase of Jaffe's assets equal $100 billion. What is the value of Jaffe's Exports?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

Exam 15: Net Exports and International Finance

A reduction in net exports will, all other things unchanged, shift the aggregate demand curve to the left.

An increase in the U.S. dollar exchange rate means foreigners must pay

Under the Bretton Woods agreement,

Which of the following statements is true?

Within the United States, a(n)

International finance is the study of economics that deals with

The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

In the long run, international trade will result in the loss of jobs for a nation.

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?

All other things unchanged, a recession in Japan

Suppose an American family from New York City eats in a restaurant in Mexico City. How Will this transaction be recorded in U.S. international transactions?

Suppose Boulinas' exports equal $50 billion, its purchases of foreign assets equal $100 Billion, and foreign purchase of Boulinas' assets equal $200 billion. What is the value of Boulinas' imports?

A recession in the United States will

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

The current account deficit and capital account surplus of the United States

What is a quota?

A free-floating exchange rate is only flexible if there is a deficit in the foreign exchange market.

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

Suppose Jaffe's exports equal $50 billion, its purchases of foreign assets equal $200 Billion, and foreign purchase of Jaffe's assets equal $100 billion. What is the value of Jaffe's Exports?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters