Question 1

When a country's central bank decreases the money supply,its

Accepted Answer

A)  price level rises and its currency appreciates relative to other currencies in the world. 
B)  price level falls and its currency appreciates relative to other currencies in the world. 
C)  price level rises and its currency depreciates relative to other currencies in the world. 
D)  price level falls and its currency depreciates relative to other currencies in the world. 
A)  price level rises and its currency appreciates relative to other currencies in the world. 
B)  price level falls and its currency appreciates relative to other currencies in the world. 
C)  price level rises and its currency depreciates relative to other currencies in the world. 
D)  price level falls and its currency depreciates relative to other currencies in the world. B

Question 2

Colonial America had little industry and so had mostly raw materials to export.At the same time,there were many opportunities to purchase capital goods and earn a high rate of return because there was little existing capital so that the marginal product of capital was relatively high.What does this suggest about net exports and net capital outflow in colonial America?

Accepted Answer

Net exports were negative because the value of exports was low,and the colonies imported capital goods.If net exports were negative,net capital outflow must also have been negative.Net capital outflow would have been negative because the colonies sold stocks,bonds,and other domestic assets to buy capital goods from abroad.

Question 3

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

Accepted Answer

A)  buying lobsters in Maine and selling them in Massachusetts.This action would increase the price of lobster in Massachusetts. 
B)  buying lobsters in Maine and selling them in Massachusetts.This action would decrease the price of lobster in Massachusetts. 
C)  buying lobsters in Massachusetts and selling them in Maine.This action would increase the price of lobster in Massachusetts. 
D)  buying lobsters in Massachusetts and selling them in Maine.This action would decrease the price of lobster in Massachusetts. 
A)  buying lobsters in Maine and selling them in Massachusetts.This action would increase the price of lobster in Massachusetts. 
B)  buying lobsters in Maine and selling them in Massachusetts.This action would decrease the price of lobster in Massachusetts. 
C)  buying lobsters in Massachusetts and selling them in Maine.This action would increase the price of lobster in Massachusetts. 
D)  buying lobsters in Massachusetts and selling them in Maine.This action would decrease the price of lobster in Massachusetts. B

Question 4

Movies are a major export of the U.S.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of from country A.What would the net capital outflows of both countries be?

Accepted Answer

A)  $50 billion for country A and $30 billion for country B 
B)  $30 billion for country A and $50 billion for country B 
C)  $20 billion for country A and -$20 billion for country B 
D)  -$20 billion for country A and $20 billion for country B 
A)  $50 billion for country A and $30 billion for country B 
B)  $30 billion for country A and $50 billion for country B 
C)  $20 billion for country A and -$20 billion for country B 
D)  -$20 billion for country A and $20 billion for country B

Question 6

Other things the same,if the exchange rate changes from 41 Thai bhat per dollar to 35 Thai bhat per dollar,then the dollar has

Accepted Answer

A)  appreciated and so buys more Thai goods. 
B)  appreciated and so buys fewer Thai goods. 
C)  depreciated and so buys more Thai goods. 
D)  depreciated and so buys fewer Thai goods. 
A)  appreciated and so buys more Thai goods. 
B)  appreciated and so buys fewer Thai goods. 
C)  depreciated and so buys more Thai goods. 
D)  depreciated and so buys fewer Thai goods.

Question 7

Which of the following is correct?

Accepted Answer

A)  NCO + C = NX 
B)  NCO = NX 
C)  NX - NCO = C 
D)  NX + NCO = C 
A)  NCO + C = NX 
B)  NCO = NX 
C)  NX - NCO = C 
D)  NX + NCO = C

Question 8

For an economy as a whole,net exports must equal minus one times net capital outflow.

Accepted Answer

A) True 
 B)False

Question 9

Under what circumstances does purchasing-power parity explain how exchange rates are determined,and why is it not completely accurate?

Accepted Answer

Purchasing-power parity works well in he

Question 10

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania.Supposing this is the only trade that these countries do.What are the net exports of Oceania and Escudia in that order?

Accepted Answer

A)  $140 and $140 
B)  $100 and $40 
C)  $60 and -$60 
D)  None of the above is correct. 
A)  $140 and $140 
B)  $100 and $40 
C)  $60 and -$60 
D)  None of the above is correct.

Question 11

Suppose that the real return from operating factories in Ghana rises relative to the real rate of return in the United States.Other things the same,

Accepted Answer

A)  this will increases U.S.net capital outflow and decrease Ghanan net capital outflow. 
B)  this will decreases U.S.net capital outflow and increase Ghanan net capital outflow. 
C)  this will only increase U.S.net capital outflow. 
D)  this will only increase Ghanan net capital outflow. 
A)  this will increases U.S.net capital outflow and decrease Ghanan net capital outflow. 
B)  this will decreases U.S.net capital outflow and increase Ghanan net capital outflow. 
C)  this will only increase U.S.net capital outflow. 
D)  this will only increase Ghanan net capital outflow.

Question 12

From 1991-2000,U.S.net capital outflow as a percent of GDP became a

Accepted Answer

A)  larger positive number. 
B)  smaller positive number. 
C)  larger negative number. 
D)  smaller negative number. 
A)  larger positive number. 
B)  smaller positive number. 
C)  larger negative number. 
D)  smaller negative number.

Question 13

Domestic saving must equal domestic investment in

Accepted Answer

A)  both closed and open economies. 
B)  closed,but not open economies. 
C)  open,but not closed economies. 
D)  neither closed nor open economies. 
A)  both closed and open economies. 
B)  closed,but not open economies. 
C)  open,but not closed economies. 
D)  neither closed nor open economies.

Question 14

A country's saving is greater than its domestic investment.This difference means that its

Accepted Answer

A)  net capital outflow and net exports are positive. 
B)  net capital outflow and net exports are negative. 
C)  net capital outflow is positive and net exports are negative. 
D)  net capital outflow is negative and net exports are positive. 
A)  net capital outflow and net exports are positive. 
B)  net capital outflow and net exports are negative. 
C)  net capital outflow is positive and net exports are negative. 
D)  net capital outflow is negative and net exports are positive.

Question 15

In every economy,national saving equals domestic investment plus net capital outflow.

Accepted Answer

A) True 
 B)False

Question 16

In 2006 the U.S.had a large trade

Accepted Answer

A)  surplus and a large net capital inflow. 
B)  surplus and a large net capital outflow. 
C)  deficit and a large net capital inflow. 
D)  deficit and a large net capital outflow. 
A)  surplus and a large net capital inflow. 
B)  surplus and a large net capital outflow. 
C)  deficit and a large net capital inflow. 
D)  deficit and a large net capital outflow.

Question 17

In an open economy,gross domestic product equals $2,450 billion,consumption expenditure equals $1,390 billion,government expenditure equals $325 billion,investment equals $510 and net capital outflow equals $225 billion.What is national saving?

Accepted Answer

A)  $225 billion 
B)  $510 billion 
C)  $735 billion 
D)  $1,390 billion 
A)  $225 billion 
B)  $510 billion 
C)  $735 billion 
D)  $1,390 billion

Question 18

Which of the following statements is correct for an open economy with a trade surplus?

Accepted Answer

A)  The trade surplus cannot last for very many years. 
B)  The trade surplus must be offset by negative net capital outflow. 
C)  The trade surplus implies that the country's national saving is greater than domestic investment. 
D)  None of the above is correct. 
A)  The trade surplus cannot last for very many years. 
B)  The trade surplus must be offset by negative net capital outflow. 
C)  The trade surplus implies that the country's national saving is greater than domestic investment. 
D)  None of the above is correct.

Question 19

You buy a new car built in Sweden.Other things the same,your purchase by itself

Accepted Answer

A)  raises both U.S.exports and U.S.net exports. 
B)  raises U.S.exports and lowers U.S.net exports. 
C)  raises both U.S.imports and U.S.net exports. 
D)  raises U.S.imports and lowers U.S.net exports. 
A)  raises both U.S.exports and U.S.net exports. 
B)  raises U.S.exports and lowers U.S.net exports. 
C)  raises both U.S.imports and U.S.net exports. 
D)  raises U.S.imports and lowers U.S.net exports.

Question 20

Other things the same,if a country saves more,then

Accepted Answer

A)  net capital outflow rises,so net exports rise. 
B)  net capital outflow rises,so net exports fall. 
C)  net capital outflow falls,so net exports rise. 
D)  net capital outflow falls,so net exports fall. 
A)  net capital outflow rises,so net exports rise. 
B)  net capital outflow rises,so net exports fall. 
C)  net capital outflow falls,so net exports rise. 
D)  net capital outflow falls,so net exports fall.

Exam 31: Open-Economy Macroeconomics: Basic Concepts

When a country's central bank decreases the money supply,its

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

Movies are a major export of the U.S.

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of from country A.What would the net capital outflows of both countries be?

Other things the same,if the exchange rate changes from 41 Thai bhat per dollar to 35 Thai bhat per dollar,then the dollar has

Which of the following is correct?

For an economy as a whole,net exports must equal minus one times net capital outflow.

Under what circumstances does purchasing-power parity explain how exchange rates are determined,and why is it not completely accurate?

Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania.Supposing this is the only trade that these countries do.What are the net exports of Oceania and Escudia in that order?

Suppose that the real return from operating factories in Ghana rises relative to the real rate of return in the United States.Other things the same,

From 1991-2000,U.S.net capital outflow as a percent of GDP became a

Domestic saving must equal domestic investment in

A country's saving is greater than its domestic investment.This difference means that its

In every economy,national saving equals domestic investment plus net capital outflow.

In 2006 the U.S.had a large trade

In an open economy,gross domestic product equals $2,450 billion,consumption expenditure equals $1,390 billion,government expenditure equals $325 billion,investment equals $510 and net capital outflow equals $225 billion.What is national saving?

Which of the following statements is correct for an open economy with a trade surplus?

You buy a new car built in Sweden.Other things the same,your purchase by itself

Other things the same,if a country saves more,then

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

Five Debates Over Macroeconomic Policy

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