Question 1

A U.S.citizen buys bonds issued by an automobile manufacturer in Japan.Her expenditures are U.S.

Accepted Answer

A)  foreign direct investment that increase U.S.net capital outflow. 
B)  foreign direct investment that decrease U.S.net capital outflow. 
C)  foreign portfolio investment that increase U.S.net capital outflow. 
D)  foreign portfolio investment that decrease U.S.net capital outflow. 
A)  foreign direct investment that increase U.S.net capital outflow. 
B)  foreign direct investment that decrease U.S.net capital outflow. 
C)  foreign portfolio investment that increase U.S.net capital outflow. 
D)  foreign portfolio investment that decrease U.S.net capital outflow.

Question 2

You are staying in London over the summer and you have a number of dollars with you.If the dollar depreciates relative to the British pound,then other things the same,

Accepted Answer

A)  the dollar would buy more pounds.The depreciation would discourage you from buying as many British goods and services. 
B)  the dollar would buy more pounds.The depreciation would encourage you to buy more British goods and services. 
C)  the dollar would buy fewer pounds.The depreciation would discourage you from buying as many British goods and services. 
D)  the dollar would buy fewer pounds.The depreciation would encourage you to buy more British goods and services. 
A)  the dollar would buy more pounds.The depreciation would discourage you from buying as many British goods and services. 
B)  the dollar would buy more pounds.The depreciation would encourage you to buy more British goods and services. 
C)  the dollar would buy fewer pounds.The depreciation would discourage you from buying as many British goods and services. 
D)  the dollar would buy fewer pounds.The depreciation would encourage you to buy more British goods and services.

Question 3

If a country has business opportunities that are relatively attractive to other countries,we would expect it to have

Accepted Answer

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

Question 4

Other things the same,if a country has a trade deficit and saving rises,

Accepted Answer

A)  net capital outflow rises,so the trade deficit increases. 
B)  net capital outflow rises,so the trade deficit decreases. 
C)  net capital outflow falls,so the trade deficit increases. 
D)  net capital outflow falls,so the trade deficit decreases. 
A)  net capital outflow rises,so the trade deficit increases. 
B)  net capital outflow rises,so the trade deficit decreases. 
C)  net capital outflow falls,so the trade deficit increases. 
D)  net capital outflow falls,so the trade deficit decreases.

Question 5

Most of the change from 2000 to 2006 in U.S.net capital outflow as a percent of GDP was due to a(n)

Accepted Answer

A)  decrease in U.S.investment. 
B)  decrease in U.S.national saving. 
C)  increase in U.S.investment. 
D)  increase in U.S.national saving. 
A)  decrease in U.S.investment. 
B)  decrease in U.S.national saving. 
C)  increase in U.S.investment. 
D)  increase in U.S.national saving.

Question 6

If a country's net exports fall,then its net capital outflow rises.

Accepted Answer

A) True 
 B)False

Question 7

Table 31-2
  
-Refer to Table 31-2.Which currency(ies)is(are)more valuable than predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)  boloviano and dinar 
B)  yen,kroner,and baht 
C)  yen and kroner 
D)  baht 
A)  boloviano and dinar 
B)  yen,kroner,and baht 
C)  yen and kroner 
D)  baht

Question 8

If purchasing-power parity holds,then the value of the

Accepted Answer

A)  real exchange rate is equal to one. 
B)  nominal exchange rate is equal to one. 
C)  real exchange rate is equal to the nominal exchange rate. 
D)  real exchange rate is equal to the difference in inflation rates between the two countries. 
A)  real exchange rate is equal to one. 
B)  nominal exchange rate is equal to one. 
C)  real exchange rate is equal to the nominal exchange rate. 
D)  real exchange rate is equal to the difference in inflation rates between the two countries.

Question 9

If a country sells more goods and services abroad than it purchases abroad,it has positive net exports and a trade surplus.

Accepted Answer

A) True 
 B)False

Question 10

A U.S.firm opens a factory that produces camping equipment in Estonia

Accepted Answer

A)  This increases U.S.net capital outflow and decreases Estonian net capital outflow. 
B)  This decreases U.S.net capital outflow and increases Estonian net capital outflow. 
C)  This increases only U.S.net capital outflow. 
D)  This increases only Estonian net capital outflow. 
A)  This increases U.S.net capital outflow and decreases Estonian net capital outflow. 
B)  This decreases U.S.net capital outflow and increases Estonian net capital outflow. 
C)  This increases only U.S.net capital outflow. 
D)  This increases only Estonian net capital outflow.

Question 11

If a country has a trade surplus

Accepted Answer

A)  it has positive net exports and positive net capital outflow. 
B)  it has positive net exports and negative net capital outflow. 
C)  it has negative net exports and positive net capital outflow. 
D)  it has negative net exports and negative net capital outflow. 
A)  it has positive net exports and positive net capital outflow. 
B)  it has positive net exports and negative net capital outflow. 
C)  it has negative net exports and positive net capital outflow. 
D)  it has negative net exports and negative net capital outflow.

Question 12

Net capital outflow

Accepted Answer

A)  is always greater than net exports. 
B)  is always less than net exports. 
C)  is always equal to net exports. 
D)  could be any of the above. 
A)  is always greater than net exports. 
B)  is always less than net exports. 
C)  is always equal to net exports. 
D)  could be any of the above.

Question 13

If the exchange rate is 5 units of Peruvian currency per dollar and a hotel room in Lima costs 300 units of Peruvian currency,then how many dollars do you need to get a room?

Accepted Answer

A)  1,500,and your purchase will increase Peru's net exports. 
B)  60 and your purchase will increase Peru's net exports. 
C)  1,500 and your purchase will have no effect on Peru's net exports. 
D)  60 and your purchase will have no effect on Peru's net exports. 
A)  1,500,and your purchase will increase Peru's net exports. 
B)  60 and your purchase will increase Peru's net exports. 
C)  1,500 and your purchase will have no effect on Peru's net exports. 
D)  60 and your purchase will have no effect on Peru's net exports.

Question 14

Most of the change from 1991 to 2000 in U.S.net capital outflow as a percent of GDP was due to a(n)

Accepted Answer

A)  decrease in U.S.investment. 
B)  decrease in U.S.national saving. 
C)  increase in U.S.investment. 
D)  increase in U.S.national saving. 
A)  decrease in U.S.investment. 
B)  decrease in U.S.national saving. 
C)  increase in U.S.investment. 
D)  increase in U.S.national saving.

Question 15

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Accepted Answer

A)  The U.S.has a trade surplus of $350 billion. 
B)  The U.S.has a trade surplus of $50 billion. 
C)  The U.S.has a trade deficit of $350 billion. 
D)  The U.S.has a trade deficit of $50 billion. 
A)  The U.S.has a trade surplus of $350 billion. 
B)  The U.S.has a trade surplus of $50 billion. 
C)  The U.S.has a trade deficit of $350 billion. 
D)  The U.S.has a trade deficit of $50 billion.

Question 16

Other things the same,which of the following would both increase the U.S.real exchange rate?

Accepted Answer

A)  prices in the U.S.were higher,or prices in Israel were higher. 
B)  prices in the U.S were higher,or prices in Israel were lower. 
C)  prices in the U.S.were lower,or prices in Israel were higher. 
D)  prices in the U.S.were lower,or prices in Israel were lower. 
A)  prices in the U.S.were higher,or prices in Israel were higher. 
B)  prices in the U.S were higher,or prices in Israel were lower. 
C)  prices in the U.S.were lower,or prices in Israel were higher. 
D)  prices in the U.S.were lower,or prices in Israel were lower.

Question 17

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S.goods buys)?

Accepted Answer

A)  an increase in the number of Kenyan shillings that can be purchased with a dollar 
B)  an increase in the price of U.S.baskets of goods 
C)  a decrease in the price in Kenyan shillings of Kenyan goods 
D)  All of the above are correct. 
A)  an increase in the number of Kenyan shillings that can be purchased with a dollar 
B)  an increase in the price of U.S.baskets of goods 
C)  a decrease in the price in Kenyan shillings of Kenyan goods 
D)  All of the above are correct.

Question 18

A Venezuelan firm purchases earth-moving equipment from a U.S.company and pays for it with Venezuelan currency.This transaction

Accepted Answer

A)  increases U.S.net exports,and increases Venezuelan net capital outflow. 
B)  increases U.S.net exports,and decreases Venezuelan net capital outflow. 
C)  decreases U.S.net exports,and increases Venezuelan net capital outflow. 
D)  decreases U.S.net exports,and decreases Venezuelan net capital outflow. 
A)  increases U.S.net exports,and increases Venezuelan net capital outflow. 
B)  increases U.S.net exports,and decreases Venezuelan net capital outflow. 
C)  decreases U.S.net exports,and increases Venezuelan net capital outflow. 
D)  decreases U.S.net exports,and decreases Venezuelan net capital outflow.

Question 19

The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does domestically.

Accepted Answer

A) True 
 B)False

Question 20

Other things the same,if the exchange rate changes from 125 yen per dollar to 115 yen per dollar,the dollar has

Accepted Answer

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

Exam 31: Open-Economy Macroeconomics: Basic Concepts

A U.S.citizen buys bonds issued by an automobile manufacturer in Japan.Her expenditures are U.S.

You are staying in London over the summer and you have a number of dollars with you.If the dollar depreciates relative to the British pound,then other things the same,

If a country has business opportunities that are relatively attractive to other countries,we would expect it to have

Other things the same,if a country has a trade deficit and saving rises,

Most of the change from 2000 to 2006 in U.S.net capital outflow as a percent of GDP was due to a(n)

If a country's net exports fall,then its net capital outflow rises.

Table 31-2 -Refer to Table 31-2.Which currency(ies)is(are)more valuable than predicted by the doctrine of purchasing-power parity?

If purchasing-power parity holds,then the value of the

If a country sells more goods and services abroad than it purchases abroad,it has positive net exports and a trade surplus.

A U.S.firm opens a factory that produces camping equipment in Estonia

If a country has a trade surplus

Net capital outflow

If the exchange rate is 5 units of Peruvian currency per dollar and a hotel room in Lima costs 300 units of Peruvian currency,then how many dollars do you need to get a room?

Most of the change from 1991 to 2000 in U.S.net capital outflow as a percent of GDP was due to a(n)

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Other things the same,which of the following would both increase the U.S.real exchange rate?

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S.goods buys)?

A Venezuelan firm purchases earth-moving equipment from a U.S.company and pays for it with Venezuelan currency.This transaction

The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does domestically.

Other things the same,if the exchange rate changes from 125 yen per dollar to 115 yen per dollar,the dollar has

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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