Question 1

The ________ rate is the price of one country's currency in units of another country's currency.

Accepted Answer

A)  nominal exchange 
B)  real exchange 
C)  reverse repo 
D)  discount rate 
A)  nominal exchange 
B)  real exchange 
C)  reverse repo 
D)  discount rate

Question 2

The following figure shows the net exports curve for a country:
  
-Refer to the figure above.There is a ________ relationship between ________.

Accepted Answer

A)  negative; the real exchange rate and net exports 
B)  positive; the real exchange rate and net exports 
C)  negative; the real exchange rate and imports 
D)  positive; the real exchange rate and exports 
A)  negative; the real exchange rate and net exports 
B)  positive; the real exchange rate and net exports 
C)  negative; the real exchange rate and imports 
D)  positive; the real exchange rate and exports

Question 3

An increase in the interest rates in a country ________.

Accepted Answer

A)  reduces net exports 
B)  increases net exports 
C)  does not affect net exports 
D)  results in a an outflow of capital from the country 
A)  reduces net exports 
B)  increases net exports 
C)  does not affect net exports 
D)  results in a an outflow of capital from the country

Question 4

Announcing a target exchange rate is sufficient to fix the exchange rate at its pegged value.

Accepted Answer

A) True 
 B)False

Question 5

It is possible for an economy to keep its currency overvalued against the dollar if it ________.

Accepted Answer

A)  has substantial domestic currency reserves 
B)  has substantial dollar reserves 
C)  sells the domestic currency in the foreign exchange market 
D)  buys dollars in the foreign exchange market 
A)  has substantial domestic currency reserves 
B)  has substantial dollar reserves 
C)  sells the domestic currency in the foreign exchange market 
D)  buys dollars in the foreign exchange market

Question 6

If the ratio of the dollar price of a U.S.toy to the dollar price of the same toy sold in China is greater than 1,U.S.toys are ________ than Chinese toys and retailers in the United States should ________.

Accepted Answer

A)  cheaper; buy the toys from American suppliers 
B)  cheaper; buy the toys from Chinese suppliers 
C)  more expensive; buy the toys from American suppliers 
D)  more expensive; buy the toys from Chinese suppliers 
A)  cheaper; buy the toys from American suppliers 
B)  cheaper; buy the toys from Chinese suppliers 
C)  more expensive; buy the toys from American suppliers 
D)  more expensive; buy the toys from Chinese suppliers

Question 7

Consequences of supporting an overvalued yuan-per-dollar exchange rate are ________,and diplomatic issues between China and its trading partners.

Accepted Answer

A)  a large trade deficit of the United States with China, higher buying power for Chinese workers 
B)  a large trade deficit of the United States with China, lower buying power for Chinese workers 
C)  a large trade surplus of the United States with China, lower buying power for Chinese workers 
D)  a large trade surplus of the United States with China, higher buying power for Chinese workers 
A)  a large trade deficit of the United States with China, higher buying power for Chinese workers 
B)  a large trade deficit of the United States with China, lower buying power for Chinese workers 
C)  a large trade surplus of the United States with China, lower buying power for Chinese workers 
D)  a large trade surplus of the United States with China, higher buying power for Chinese workers

Question 8

Which of the following will restore an economy to full employment if it is operating below full employment because of a decrease in net exports?

Accepted Answer

A)  A reduction in the interest rate 
B)  A reduction in the investment in the economy 
C)  An increase in the real exchange rate 
D)  An reduction in the demand for goods and services in the economy 
A)  A reduction in the interest rate 
B)  A reduction in the investment in the economy 
C)  An increase in the real exchange rate 
D)  An reduction in the demand for goods and services in the economy

Question 9

Everything else being equal,if the dollar appreciates against the Chinese yuan,________.

Accepted Answer

A)  China will stop trading with the United States 
B)  the Chinese government will sell yuan in the foreign exchange market 
C)  China will export more to and import less from the United States 
D)  China will import more from and export less to the United States 
A)  China will stop trading with the United States 
B)  the Chinese government will sell yuan in the foreign exchange market 
C)  China will export more to and import less from the United States 
D)  China will import more from and export less to the United States

Question 10

In the foreign exchange market,the higher the exchange rate is,________ will be.

Accepted Answer

A)  the higher the demand for dollars 
B)  the higher the supply of dollars 
C)  the higher the quantity of dollars demanded 
D)  the higher the quantity of dollars supplied 
A)  the higher the demand for dollars 
B)  the higher the supply of dollars 
C)  the higher the quantity of dollars demanded 
D)  the higher the quantity of dollars supplied

Question 11

A curve showing the relationship between net exports and the real exchange rate is ________.

Accepted Answer

A)  vertical 
B)  horizontal 
C)  upward-sloping 
D)  downward-sloping 
A)  vertical 
B)  horizontal 
C)  upward-sloping 
D)  downward-sloping

Question 12

If a country wants to keep a foreign currency overvalued against its domestic currency,________.

Accepted Answer

A)  it will buy both the foreign and the domestic currency 
B)  it will sell both the foreign and the domestic currency 
C)  it will buy the domestic currency and sell the foreign currency 
D)  it will buy the foreign currency and sell the domestic currency 
A)  it will buy both the foreign and the domestic currency 
B)  it will sell both the foreign and the domestic currency 
C)  it will buy the domestic currency and sell the foreign currency 
D)  it will buy the foreign currency and sell the domestic currency

Question 13

Which of the following policies,if adopted,will most likely restore an economy to full employment,if it is operating below full employment due to a decrease in net exports?

Accepted Answer

A)  An increase in the interest rate 
B)  A decrease in investment in the economy 
C)  Devaluation of the domestic currency 
D)  A decrease in the demand for goods and services in the economy 
A)  An increase in the interest rate 
B)  A decrease in investment in the economy 
C)  Devaluation of the domestic currency 
D)  A decrease in the demand for goods and services in the economy

Question 14

When the yuan-dollar real exchange rate appreciates,________.

Accepted Answer

A)  both U.S. net exports to China and Chinese net exports to the United States increase 
B)  both U.S. net exports to China and Chinese net exports to the United States decrease 
C)  U.S. net exports to China decrease, while Chinese net exports to the United States increase 
D)  U.S. net exports to China increase, while Chinese net exports to the United States decrease 
A)  both U.S. net exports to China and Chinese net exports to the United States increase 
B)  both U.S. net exports to China and Chinese net exports to the United States decrease 
C)  U.S. net exports to China decrease, while Chinese net exports to the United States increase 
D)  U.S. net exports to China increase, while Chinese net exports to the United States decrease

Question 15

Which of the following statements is true?

Accepted Answer

A)  Defending an undervalued currency is easier in the short run than in the long run. 
B)  Defending an overvalued currency is easier than defending an undervalued currency. 
C)  The nominal exchange rate is the ratio of interest rates existing in two countries. 
D)  The real exchange rate is calculated by dividing the nominal exchange rate by the inflation rate. 
A)  Defending an undervalued currency is easier in the short run than in the long run. 
B)  Defending an overvalued currency is easier than defending an undervalued currency. 
C)  The nominal exchange rate is the ratio of interest rates existing in two countries. 
D)  The real exchange rate is calculated by dividing the nominal exchange rate by the inflation rate.

Question 16

If 1,000 British pounds buy more U.S.dollars today than they did yesterday,then the British pound has ________ and the U.S.dollar has ________.

Accepted Answer

A)  appreciated; appreciated 
B)  depreciated; appreciated 
C)  appreciated; depreciated 
D)  depreciated; depreciated 
A)  appreciated; appreciated 
B)  depreciated; appreciated 
C)  appreciated; depreciated 
D)  depreciated; depreciated

Question 17

Which of the following situations illustrates a definite depreciation of the U.S.dollar?

Accepted Answer

A)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 250 yuan. 
B)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 150 yen. 
C)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 250 yen. 
D)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 150 yuan. 
A)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 250 yuan. 
B)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 150 yen. 
C)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 250 yen. 
D)  The dollar exchanged for 200 yuan yesterday, and today it exchanges for 150 yuan.

Question 18

The real exchange rate can change even if the nominal exchange rate is held constant (that is,pegged).

Accepted Answer

A) True 
 B)False

Question 19

Everything else being equal,an increase in the demand for dollars in exchange for pesos will cause the dollar ________ the quantity of dollars being traded in the foreign exchange market.

Accepted Answer

A)  to appreciate against the peso and will decrease 
B)  to depreciate against the peso and will decrease 
C)  to appreciate against the peso and will increase 
D)  to depreciate against the peso and will increase 
A)  to appreciate against the peso and will decrease 
B)  to depreciate against the peso and will decrease 
C)  to appreciate against the peso and will increase 
D)  to depreciate against the peso and will increase

Question 20

Assume that the dollar price of a basket of goods in the United States is $3 and the dollar price of the same basket of goods in China is $5.In addition,the yuan price of the same basket in the United States is 20 yuan.Given this information,the yuan price of the basket in China is ________.

Accepted Answer

A)  26.50 yuan 
B)  30.50 yuan 
C)  33.33 yuan 
D)  105.50 yuan 
A)  26.50 yuan 
B)  30.50 yuan 
C)  33.33 yuan 
D)  105.50 yuan

The ________ rate is the price of one country's currency in units of another country's currency.

The following figure shows the net exports curve for a country: -Refer to the figure above.There is a relationship between .

An increase in the interest rates in a country ________.

Announcing a target exchange rate is sufficient to fix the exchange rate at its pegged value.

It is possible for an economy to keep its currency overvalued against the dollar if it ________.

If the ratio of the dollar price of a U.S.toy to the dollar price of the same toy sold in China is greater than 1,U.S.toys are than Chinese toys and retailers in the United States should .

Consequences of supporting an overvalued yuan-per-dollar exchange rate are ________,and diplomatic issues between China and its trading partners.

Which of the following will restore an economy to full employment if it is operating below full employment because of a decrease in net exports?

Everything else being equal,if the dollar appreciates against the Chinese yuan,________.

In the foreign exchange market,the higher the exchange rate is,________ will be.

A curve showing the relationship between net exports and the real exchange rate is ________.

If a country wants to keep a foreign currency overvalued against its domestic currency,________.

Which of the following policies,if adopted,will most likely restore an economy to full employment,if it is operating below full employment due to a decrease in net exports?

When the yuan-dollar real exchange rate appreciates,________.

Which of the following statements is true?

If 1,000 British pounds buy more U.S.dollars today than they did yesterday,then the British pound has and the U.S.dollar has .

Which of the following situations illustrates a definite depreciation of the U.S.dollar?

The real exchange rate can change even if the nominal exchange rate is held constant (that is,pegged).

Everything else being equal,an increase in the demand for dollars in exchange for pesos will cause the dollar ________ the quantity of dollars being traded in the foreign exchange market.

Assume that the dollar price of a basket of goods in the United States is $3 and the dollar price of the same basket of goods in China is $5.In addition,the yuan price of the same basket in the United States is 20 yuan.Given this information,the yuan price of the basket in China is ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Filters

Exam 15: Open Economy Macroeconomics

The ________ rate is the price of one country's currency in units of another country's currency.

The following figure shows the net exports curve for a country: -Refer to the figure above.There is a ________ relationship between ________.

An increase in the interest rates in a country ________.

Announcing a target exchange rate is sufficient to fix the exchange rate at its pegged value.

It is possible for an economy to keep its currency overvalued against the dollar if it ________.

If the ratio of the dollar price of a U.S.toy to the dollar price of the same toy sold in China is greater than 1,U.S.toys are ________ than Chinese toys and retailers in the United States should ________.

Consequences of supporting an overvalued yuan-per-dollar exchange rate are ________,and diplomatic issues between China and its trading partners.

Which of the following will restore an economy to full employment if it is operating below full employment because of a decrease in net exports?

Everything else being equal,if the dollar appreciates against the Chinese yuan,________.

In the foreign exchange market,the higher the exchange rate is,________ will be.

A curve showing the relationship between net exports and the real exchange rate is ________.

If a country wants to keep a foreign currency overvalued against its domestic currency,________.

Which of the following policies,if adopted,will most likely restore an economy to full employment,if it is operating below full employment due to a decrease in net exports?

When the yuan-dollar real exchange rate appreciates,________.

Which of the following statements is true?

If 1,000 British pounds buy more U.S.dollars today than they did yesterday,then the British pound has ________ and the U.S.dollar has ________.

Which of the following situations illustrates a definite depreciation of the U.S.dollar?

The real exchange rate can change even if the nominal exchange rate is held constant (that is,pegged).

Everything else being equal,an increase in the demand for dollars in exchange for pesos will cause the dollar ________ the quantity of dollars being traded in the foreign exchange market.

Assume that the dollar price of a basket of goods in the United States is $3 and the dollar price of the same basket of goods in China is $5.In addition,the yuan price of the same basket in the United States is 20 yuan.Given this information,the yuan price of the basket in China is ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Filters

The following figure shows the net exports curve for a country: -Refer to the figure above.There is a relationship between .

If the ratio of the dollar price of a U.S.toy to the dollar price of the same toy sold in China is greater than 1,U.S.toys are than Chinese toys and retailers in the United States should .

If 1,000 British pounds buy more U.S.dollars today than they did yesterday,then the British pound has and the U.S.dollar has .