Question 1

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Accepted Answer

A)  financial account balance. 
B)  current account balance. 
C)  balance of trade. 
D)  capital account balance. 
A)  financial account balance. 
B)  current account balance. 
C)  balance of trade. 
D)  capital account balance.

Question 2

Which of the following would decrease the balance on the current account?

Accepted Answer

A)  a decrease in foreign direct investment 
B)  a decrease in the amount of aid money the government sends abroad 
C)  a decrease in imports 
D)  None of the above will decrease the balance on the current account. 
A)  a decrease in foreign direct investment 
B)  a decrease in the amount of aid money the government sends abroad 
C)  a decrease in imports 
D)  None of the above will decrease the balance on the current account.

Question 3

When Americans decrease their demand for Japanese goods

Accepted Answer

A)  the demand for dollars will rise, and the demand for yen will rise. 
B)  the demand for dollars will fall, and the demand for yen will rise. 
C)  the supply of dollars will rise, and the demand for yen will rise. 
D)  the supply of dollars will fall, and the demand for yen will fall. 
A)  the demand for dollars will rise, and the demand for yen will rise. 
B)  the demand for dollars will fall, and the demand for yen will rise. 
C)  the supply of dollars will rise, and the demand for yen will rise. 
D)  the supply of dollars will fall, and the demand for yen will fall.

Question 4

Expansionary fiscal policy crowds out both domestic investment and net exports.

Accepted Answer

A) True 
 B)False

Question 5

If the United States has a net export surplus, which of the following must be true?

Accepted Answer

A)  The balance on the financial account must equal the balance on the current account. 
B)  Net foreign investment must be positive as well. 
C)  Domestic private saving must be greater than net foreign investment. 
D)  Domestic public saving must be greater than net foreign investment. 
A)  The balance on the financial account must equal the balance on the current account. 
B)  Net foreign investment must be positive as well. 
C)  Domestic private saving must be greater than net foreign investment. 
D)  Domestic public saving must be greater than net foreign investment.

Question 6

Figure 29-1  
-Refer to Figure 29-1. Europe suffers a recession. Assuming all else remains constant, this would be represented as a movement from

Accepted Answer

A)  D to A. 
B)  C to D. 
C)  B to C. 
D)  A to D. 
E)  A to B. 
A)  D to A. 
B)  C to D. 
C)  B to C. 
D)  A to D. 
E)  A to B.

Question 7

Suppose that domestic investment in Japan is 20.2% of GDP, and Japanese national savings is 24% of GDP. What is Japan's foreign investment as a percentage of GDP?

Accepted Answer

A)  1.19% 
B)  3.8% 
C)  27.8% 
D)  44.2% 
A)  1.19% 
B)  3.8% 
C)  27.8% 
D)  44.2%

Question 8

Table 29-1
  
-Refer to Table 29-1. Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy. Assume that the balance on the capital account is zero.

Accepted Answer

The answer of Table 29-1
  
-Refer to Table 29-1....

Question 9

Ceteris paribus, a real depreciation of the dollar will decrease net exports in the United States.

Accepted Answer

A) True 
 B)False

Question 10

Figure 29-1  
-Refer to Figure 29-1. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented?

Accepted Answer

A)  Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B)  Supply would increase, demand would decrease and the economy moves from C to B to A. 
C)  Supply would decrease, demand would increase and the economy moves from A to D to C. 
D)  Supply would increase, demand would increase and the economy moves from D to A to B. 
A)  Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B)  Supply would increase, demand would decrease and the economy moves from C to B to A. 
C)  Supply would decrease, demand would increase and the economy moves from A to D to C. 
D)  Supply would increase, demand would increase and the economy moves from D to A to B.

Question 11

Figure 29-1  
-Refer to Figure 29-1. The appreciation of the dollar is represented as a movement from

Accepted Answer

A)  B to A. 
B)  D to C. 
C)  C to B. 
D)  C to A. 
A)  B to A. 
B)  D to C. 
C)  C to B. 
D)  C to A.

Question 12

Which of the following would result in a trade surplus for the United States?

Accepted Answer

A)  Exports of goods = $725 billion Imports of goods = $790 billion
Exports of services = $350 billion
Imports of services = $260 billion 
B)  Exports of goods = $625 billion Imports of goods = $625 billion
Exports of services = $300 billion
Imports of services = $375 billion 
C)  Exports of goods = $550 billion Imports of goods = $575 billion
Exports of services = $275 billion
Imports of services = $300 billion 
D)  None of the above will result in a trade surplus. 
A)  Exports of goods = $725 billion Imports of goods = $790 billion
Exports of services = $350 billion
Imports of services = $260 billion 
B)  Exports of goods = $625 billion Imports of goods = $625 billion
Exports of services = $300 billion
Imports of services = $375 billion 
C)  Exports of goods = $550 billion Imports of goods = $575 billion
Exports of services = $275 billion
Imports of services = $300 billion 
D)  None of the above will result in a trade surplus.

Question 13

If national saving increases, ________. (Assume that the capital account is zero and net transfers are zero.)

Accepted Answer

A)  the sum of domestic investment and net exports must decrease 
B)  the sum of domestic investment and net foreign investment must increase 
C)  the sum of domestic investment and net foreign investment must decrease 
D)  net foreign investment must decrease to cover the gain 
A)  the sum of domestic investment and net exports must decrease 
B)  the sum of domestic investment and net foreign investment must increase 
C)  the sum of domestic investment and net foreign investment must decrease 
D)  net foreign investment must decrease to cover the gain

Question 14

An appreciating yen makes Japanese products

Accepted Answer

A)  more expensive in foreign markets. 
B)  less expensive in foreign markets. 
C)  more expensive in the Japanese market. 
D)  more expensive in both foreign markets and the Japanese market. 
A)  more expensive in foreign markets. 
B)  less expensive in foreign markets. 
C)  more expensive in the Japanese market. 
D)  more expensive in both foreign markets and the Japanese market.

Question 15

Which of the following would increase net exports in the United States?

Accepted Answer

A)  The United States purchases 500 silver necklaces from Mexico. 
B)  The government of Mexico purchases 500 Ford F-150 pickup trucks from the United States. 
C)  A Mexican citizen purchases 25 shares of stock in Ford Motor Company. 
D)  The U.S. government donates $5 million to Mexico to help victims of drought in Mexico. 
A)  The United States purchases 500 silver necklaces from Mexico. 
B)  The government of Mexico purchases 500 Ford F-150 pickup trucks from the United States. 
C)  A Mexican citizen purchases 25 shares of stock in Ford Motor Company. 
D)  The U.S. government donates $5 million to Mexico to help victims of drought in Mexico.

Question 16

Suppose the Fed purchases Treasury securities. Interest rates in the United States will ________ and the U.S. dollar will ________ against foreign currencies.

Accepted Answer

A)  decrease; appreciate 
B)  decrease; depreciate 
C)  increase; depreciate 
D)  increase; appreciate 
A)  decrease; appreciate 
B)  decrease; depreciate 
C)  increase; depreciate 
D)  increase; appreciate

Question 17

Based on the following information, calculate public saving, net foreign investment, and national income.
Private saving = $83 billion
Exports = $125 billion
Imports = $130 billion
Consumption = $200 billion
Private investment = $56 billion
Government purchases = $38 billion

Accepted Answer

Based on the macroeconomic equation for

Question 18

If Californians increase their purchases of Italian wine, assuming all else remains constant, this will ________ of the United States.

Accepted Answer

A)  decrease the balance of trade 
B)  increase net exports 
C)  increase the current account balance 
D)  decrease the trade deficit 
E)  decrease the balance of payments 
A)  decrease the balance of trade 
B)  increase net exports 
C)  increase the current account balance 
D)  decrease the trade deficit 
E)  decrease the balance of payments

Question 19

Which of the following will not shift the demand for the euro to the right?

Accepted Answer

A)  an increase in interest rates in the European Union 
B)  an increase in incomes in countries that buy goods from the European Union 
C)  expectations among speculators that the price of the euro will rise in the future 
D)  a decrease in the demand for European goods 
A)  an increase in interest rates in the European Union 
B)  an increase in incomes in countries that buy goods from the European Union 
C)  expectations among speculators that the price of the euro will rise in the future 
D)  a decrease in the demand for European goods

Question 20

The federal budget deficit and the trade balance are often referred to as the

Accepted Answer

A)  balance of payments. 
B)  dueling depreciators. 
C)  twin deficits. 
D)  national debt. 
A)  balance of payments. 
B)  dueling depreciators. 
C)  twin deficits. 
D)  national debt.

Exam 29: Macroeconomics in an Open Economy

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Which of the following would decrease the balance on the current account?

When Americans decrease their demand for Japanese goods

Expansionary fiscal policy crowds out both domestic investment and net exports.

If the United States has a net export surplus, which of the following must be true?

Figure 29-1 -Refer to Figure 29-1. Europe suffers a recession. Assuming all else remains constant, this would be represented as a movement from

Suppose that domestic investment in Japan is 20.2% of GDP, and Japanese national savings is 24% of GDP. What is Japan's foreign investment as a percentage of GDP?

Table 29-1 -Refer to Table 29-1. Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy. Assume that the balance on the capital account is zero.

Ceteris paribus, a real depreciation of the dollar will decrease net exports in the United States.

Figure 29-1 -Refer to Figure 29-1. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented?

Figure 29-1 -Refer to Figure 29-1. The appreciation of the dollar is represented as a movement from

Which of the following would result in a trade surplus for the United States?

If national saving increases, ________. (Assume that the capital account is zero and net transfers are zero.)

An appreciating yen makes Japanese products

Which of the following would increase net exports in the United States?

Suppose the Fed purchases Treasury securities. Interest rates in the United States will ________ and the U.S. dollar will ________ against foreign currencies.

Based on the following information, calculate public saving, net foreign investment, and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

If Californians increase their purchases of Italian wine, assuming all else remains constant, this will ________ of the United States.

Which of the following will not shift the demand for the euro to the right?

The federal budget deficit and the trade balance are often referred to as the

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

The International Financial System

Filters

Suppose the Fed purchases Treasury securities. Interest rates in the United States will and the U.S. dollar will against foreign currencies.