Question 1

Net exports equal

Accepted Answer

A)  imports − exports. 
B)  domestic consumption − foreign consumption. 
C)  exports − imports. 
D)  foreign consumption − domestic consumption. 
A)  imports − exports. 
B)  domestic consumption − foreign consumption. 
C)  exports − imports. 
D)  foreign consumption − domestic consumption.

Question 2

How has rising productivity in the United States affected the balance on capital account?

Accepted Answer

A)  It has attracted foreign investors, thereby increasing the surplus on capital account. 
B)  It has attracted foreign investors, thereby decreasing the surplus on capital account. 
C)  It has raised real wages and discouraged foreigners from investing in the U.S., thereby increasing the surplus on capital account. 
D)  It has raised real wages and discouraged foreigners from investing in the U.S., thereby decreasing the surplus on capital account. 
A)  It has attracted foreign investors, thereby increasing the surplus on capital account. 
B)  It has attracted foreign investors, thereby decreasing the surplus on capital account. 
C)  It has raised real wages and discouraged foreigners from investing in the U.S., thereby increasing the surplus on capital account. 
D)  It has raised real wages and discouraged foreigners from investing in the U.S., thereby decreasing the surplus on capital account.

Question 3

In the long run, international trade

Accepted Answer

A)  affects the economy's natural level of employment. 
B)  affects the economy's real wage. 
C)  does not affect the natural level of employment or the real wage. 
D)  increases real wages because it increases a country's standard of living. 
A)  affects the economy's natural level of employment. 
B)  affects the economy's real wage. 
C)  does not affect the natural level of employment or the real wage. 
D)  increases real wages because it increases a country's standard of living.

Question 4

A lower price level in the United States.

Accepted Answer

A)  discourages U.S. exports and increases U.S. imports. 
B)  encourages U.S. exports and reduces U.S. imports. 
C)  discourages U.S. exports and reduces U.S. imports. 
D)  encourages U.S. exports and increases U.S. imports. 
A)  discourages U.S. exports and increases U.S. imports. 
B)  encourages U.S. exports and reduces U.S. imports. 
C)  discourages U.S. exports and reduces U.S. imports. 
D)  encourages U.S. exports and increases U.S. imports.

Question 5

In a currency board arrangement, participating countries make an explicit legislative
Commitment to
I. use the currency of the largest (based on real GDP) participating country.
II. exchange domestic currency for a specified foreign currency at a fixed rate and agreed to
Submit to the board's disciplines to fulfill its obligations.
III. adopt common monetary and fiscal policies prescribed by the board.

Accepted Answer

A)  I only 
B)  II only 
C)  II and III only 
D)  I, II, and III 
A)  I only 
B)  II only 
C)  II and III only 
D)  I, II, and III

Question 6

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado
Springs, Colorado. 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 positive item. 
D)  It is recorded in the capital 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 positive item. 
D)  It is recorded in the capital account as a negative item.

Question 7

The U.S. and Canada are major trading partners. Suppose the Canadian dollar rises sharply in
Value against the U.S. dollar. At the same time, strong income growth in the U.S. increases the demand for Canadian exports. What happens to Canada's net exports as a result of these two
Events?

Accepted Answer

A)  Net exports must necessarily rise. 
B)  Net exports must necessarily fall. 
C)  Net exports will remain constant. 
D)  The effect on net exports is indeterminate. 
A)  Net exports must necessarily rise. 
B)  Net exports must necessarily fall. 
C)  Net exports will remain constant. 
D)  The effect on net exports is indeterminate.

Question 8

Which of the following is an example of a tariff?

Accepted Answer

A)  A limit on the total number of Hondas that can be imported from Japan. 
B)  A regulation specifying that each imported Honda must meet certain emission exhaust guidelines 
C)  A tax of $500 on each Honda imported from Japan 
D)  A tax of 10% of the value of each Honda purchased in Japan 
A)  A limit on the total number of Hondas that can be imported from Japan. 
B)  A regulation specifying that each imported Honda must meet certain emission exhaust guidelines 
C)  A tax of $500 on each Honda imported from Japan 
D)  A tax of 10% of the value of each Honda purchased in Japan

Question 9

Suppose Grovner's exports equal $950 billion, its imports equal $1,000 billion, and
Purchases of foreign assets by its citizens equals $900 billion. What is Grovner's balance on its current account?

Accepted Answer

A)  $50 billion 
B)  -$50 billion 
C)  $850 billion 
D)  -$850 billion 
A)  $50 billion 
B)  -$50 billion 
C)  $850 billion 
D)  -$850 billion

Question 10

Suppose that a change in consumer preferences leads to a $50 billion decrease in net exports.
If the value of the multiplier is 3, what is the size of the shift in the aggregate demand after
The multiplier process works through the economy?

Accepted Answer

A)  $150 billion 
B)  $100 billion 
C)  Less than $50 billion 
D)  Cannot be determined without information on exports 
A)  $150 billion 
B)  $100 billion 
C)  Less than $50 billion 
D)  Cannot be determined without information on exports

Question 11

The international trade effect results in

Accepted Answer

A)  a shift to the right in the aggregate demand curve. 
B)  a shift to the left in the aggregate demand curve. 
C)  a movement along the aggregate demand curve. 
D)  a shift in the aggregate demand curve equal to the change in net exports times the multiplier. 
A)  a shift to the right in the aggregate demand curve. 
B)  a shift to the left in the aggregate demand curve. 
C)  a movement along the aggregate demand curve. 
D)  a shift in the aggregate demand curve equal to the change in net exports times the multiplier.

Question 12

In a simple currency board arrangement, a country can issue

Accepted Answer

A)  domestic currency at its discretion. 
B)  at its discretion, the foreign currency to which the domestic currency is pegged. 
C)  domestic currency when the board has an equivalent amount of foreign currency to which the domestic currency is pegged. 
D)  foreign currency to which the domestic currency is pegged when the board has an equivalent amount of domestic currency. 
A)  domestic currency at its discretion. 
B)  at its discretion, the foreign currency to which the domestic currency is pegged. 
C)  domestic currency when the board has an equivalent amount of foreign currency to which the domestic currency is pegged. 
D)  foreign currency to which the domestic currency is pegged when the board has an equivalent amount of domestic currency.

Question 13

Of the systems listed below, the exchange rate system in which a country's ability to
Conduct 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.

Question 14

The exchange rate system adopted by the European Union countries that are part of the eurozone can be described among the participating countries as

Accepted Answer

A)  a free-floating exchange rate system. 
B)  a managed float. 
C)  a fixed exchange rate system. 
D)  a variable exchange rate system. 
A)  a free-floating exchange rate system. 
B)  a managed float. 
C)  a fixed exchange rate system. 
D)  a variable exchange rate system.

Question 15

One reason to demand a nation's currency is to facilitate foreigners' purchases of that nation's goods.

Accepted Answer

A) True 
 B)False

Question 16

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion.
Foreigners purchased $200 billion worth of assets in Cavland. What is Cavland's
Balance on its current account?

Accepted Answer

A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion 
A)  $100 billion 
B)  -$100 billion 
C)  $300 billion 
D)  -$300 billion

Question 17

An increase in exports would shift the U.S. aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 18

Consider the market for U.S. dollars. Which of the following is true in equilibrium?
I. The quantity demanded of U.S. dollars equals the U.S. money supply.
II. U.S. exports + foreign purchases of U.S. assets equal U.S. imports + purchases of foreign
Assets by U.S. citizens.
III. The quantity demanded of U.S. dollars equals the quantity supplied of U.S. dollars.
IV. The quantity supplied of U.S. dollars by U.S. nationals equals the quantity demanded of U.S. dollars by foreign nationals.

Accepted Answer

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

Question 19

The purchase of U.S. goods and services by foreigners

Accepted Answer

A)  requires the purchase of dollar-denominated bonds. 
B)  increases the demand for U.S. dollars. 
C)  increases the demand for foreign currencies. 
D)  requires the purchase of U.S. financial assets as collateral. 
A)  requires the purchase of dollar-denominated bonds. 
B)  increases the demand for U.S. dollars. 
C)  increases the demand for foreign currencies. 
D)  requires the purchase of U.S. financial assets as collateral.

Question 20

In the short run, a decrease in net exports causes

Accepted Answer

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

Net exports equal

How has rising productivity in the United States affected the balance on capital account?

In the long run, international trade

A lower price level in the United States.

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado Springs, Colorado. How will this transaction be recorded in U.S. international transactions?

The U.S. and Canada are major trading partners. Suppose the Canadian dollar rises sharply in Value against the U.S. dollar. At the same time, strong income growth in the U.S. increases the demand for Canadian exports. What happens to Canada's net exports as a result of these two Events?

Which of the following is an example of a tariff?

Suppose Grovner's exports equal $950 billion, its imports equal $1,000 billion, and Purchases of foreign assets by its citizens equals $900 billion. What is Grovner's balance on its current account?

Suppose that a change in consumer preferences leads to a $50 billion decrease in net exports. If the value of the multiplier is 3, what is the size of the shift in the aggregate demand after The multiplier process works through the economy?

The international trade effect results in

In a simple currency board arrangement, a country can issue

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

The exchange rate system adopted by the European Union countries that are part of the eurozone can be described among the participating countries as

One reason to demand a nation's currency is to facilitate foreigners' purchases of that nation's goods.

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. Foreigners purchased $200 billion worth of assets in Cavland. What is Cavland's Balance on its current account?

An increase in exports would shift the U.S. aggregate demand curve to the left.

The purchase of U.S. goods and services by foreigners

In the short run, a decrease in net exports causes

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

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Exam 15: Net Exports and International Finance

Net exports equal

How has rising productivity in the United States affected the balance on capital account?

In the long run, international trade

A lower price level in the United States.

Suppose a Peruvian financial investor purchases a sporting goods store in Colorado Springs, Colorado. How will this transaction be recorded in U.S. international transactions?

The U.S. and Canada are major trading partners. Suppose the Canadian dollar rises sharply in Value against the U.S. dollar. At the same time, strong income growth in the U.S. increases the demand for Canadian exports. What happens to Canada's net exports as a result of these two Events?

Which of the following is an example of a tariff?

Suppose Grovner's exports equal $950 billion, its imports equal $1,000 billion, and Purchases of foreign assets by its citizens equals $900 billion. What is Grovner's balance on its current account?

Suppose that a change in consumer preferences leads to a $50 billion decrease in net exports. If the value of the multiplier is 3, what is the size of the shift in the aggregate demand after The multiplier process works through the economy?

The international trade effect results in

In a simple currency board arrangement, a country can issue

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

The exchange rate system adopted by the European Union countries that are part of the eurozone can be described among the participating countries as

One reason to demand a nation's currency is to facilitate foreigners' purchases of that nation's goods.

Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. Foreigners purchased $200 billion worth of assets in Cavland. What is Cavland's Balance on its current account?

An increase in exports would shift the U.S. aggregate demand curve to the left.

The purchase of U.S. goods and services by foreigners

In the short run, a decrease in net exports causes

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