Question 1

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Accepted Answer

A) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras. 
B) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala. 
C) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala. 
D) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras. 
A) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras. 
B) buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala. 
C) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala. 
D) buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.

Question 2

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

Accepted Answer

A) True 
 B)False

Question 3

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Accepted Answer

A) $65 million. 
B) -$65 million. 
C) $35 million. 
D) -$35 million. 
A) $65 million. 
B) -$65 million. 
C) $35 million. 
D) -$35 million.

Question 4

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Accepted Answer

A) are an export of the U.S. and increase U.S. net exports. 
B) are an export of the U.S. and decrease U.S. net exports. 
C) are an import of the U.S. and increase U.S. net exports. 
D) are an import of the U.S. and decrease U.S. net exports. 
A) are an export of the U.S. and increase U.S. net exports. 
B) are an export of the U.S. and decrease U.S. net exports. 
C) are an import of the U.S. and increase U.S. net exports. 
D) are an import of the U.S. and decrease U.S. net exports.

Question 5

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Accepted Answer

A) decrease by 5 percent 
B) decrease by 1 percent 
C) increase by 5 percent 
D) increase by 1 percent 
A) decrease by 5 percent 
B) decrease by 1 percent 
C) increase by 5 percent 
D) increase by 1 percent

Question 6

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

Accepted Answer

A) more willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
B) more willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
C) less willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
D) less willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
A) more willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
B) more willing to purchase U.S. bonds, so U.S. net capital outflow would rise. 
C) less willing to purchase U.S. bonds, so U.S. net capital outflow would fall. 
D) less willing to purchase U.S. bonds, so U.S. net capital outflow would rise.

Question 7

The U.S. has a trade surplus. Which of the following is correct?

Accepted Answer

A) capital is flowing into the U.S. and S > I B) capital is flowing into the U.S. and S I D) capital is flowing out of the U.S. and S < I A) capital is flowing into the U.S. and S > I B) capital is flowing into the U.S. and S I D) capital is flowing out of the U.S. and S < I

Question 8

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Accepted Answer

A) U.S. interest rates rise, the default risk of U.S. assets rise 
B) U.S. interest rates rise, the default risk of U.S. assets fall 
C) U.S. interest rates fall, the default risk of U.S. assets rise 
D) U.S. interest rates fall, the default risk of U.S. assets fall 
A) U.S. interest rates rise, the default risk of U.S. assets rise 
B) U.S. interest rates rise, the default risk of U.S. assets fall 
C) U.S. interest rates fall, the default risk of U.S. assets rise 
D) U.S. interest rates fall, the default risk of U.S. assets fall

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

The U.S. has a trade surplus. Which of the following is correct?

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 18: Open-Economy Macroeconomic Models

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

The U.S. has a trade surplus. Which of the following is correct?

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters