Question 1

The purchase of foreign shares and bonds by an Australian brokerage firm is an example of capital inflows to Australia.

Accepted Answer

A) True 
 B)False

Question 2

Australia usually operates with a large current account deficit.

Accepted Answer

A) True 
 B)False

Question 3

Refer to Figure 20.5 for the following questions.
Figure 20.5  
-If the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as illustrated in Figure 20.5,then it must

Accepted Answer

A)  purchase 100 million baht per day with US dollars. 
B)  purchase 50 million baht per day with US dollars. 
C)  sell 100 million baht per day in exchange for US dollars. 
D)  sell 50 million baht per day in exchange for US dollars. 
A)  purchase 100 million baht per day with US dollars. 
B)  purchase 50 million baht per day with US dollars. 
C)  sell 100 million baht per day in exchange for US dollars. 
D)  sell 50 million baht per day in exchange for US dollars.

Question 4

A decrease in capital outflows from Australia will

Accepted Answer

A)  decrease the balance on the financial account. 
B)  increase the balance on the financial account. 
C)  increase the balance on the capital account. 
D)  decrease the balance on the current account. 
A)  decrease the balance on the financial account. 
B)  increase the balance on the financial account. 
C)  increase the balance on the capital account. 
D)  decrease the balance on the current account.

Question 5

Assume the exchange rate between the dollar and yen is ¥80= $1.Suppose that the exchange rate changes to ¥75 = $1.As a result of the change,there will be

Accepted Answer

A)  more Japanese goods sold in Australia and less Australian goods sold in Japan. 
B)  less Japanese goods sold in Australia and more Australian goods sold in Japan. 
C)  more Japanese goods sold in Australia and the same amount of Australian goods sold in Japan. 
D)  the same number of Japanese goods sold in Australia and less Australian goods sold in Japan. 
A)  more Japanese goods sold in Australia and less Australian goods sold in Japan. 
B)  less Japanese goods sold in Australia and more Australian goods sold in Japan. 
C)  more Japanese goods sold in Australia and the same amount of Australian goods sold in Japan. 
D)  the same number of Japanese goods sold in Australia and less Australian goods sold in Japan.

Question 6

By 2017,there were ________ member countries in the European Union (still including the UK).

Accepted Answer

A)  12 
B)  16 
C)  28 
D)  57 
A)  12 
B)  16 
C)  28 
D)  57

Question 7

Under a 'floating exchange rate',the exchange rate

Accepted Answer

A)  will change whenever the price of gold changes. 
B)  is controlled by central bank intervention. 
C)  is determined by the interaction of supply of the currency and demand for the currency. 
D)  is pegged against the euro. 
A)  will change whenever the price of gold changes. 
B)  is controlled by central bank intervention. 
C)  is determined by the interaction of supply of the currency and demand for the currency. 
D)  is pegged against the euro.

Question 8

Since the 1970s,Australia's imports and exports have both grown from less than ________ of GDP,to approximately ________ of GDP by 2016.

Accepted Answer

A)  10 per cent; 15 per cent 
B)  15 per cent; 20 per cent 
C)  20 per cent; 30 per cent 
D)  40 per cent; 50 per cent 
A)  10 per cent; 15 per cent 
B)  15 per cent; 20 per cent 
C)  20 per cent; 30 per cent 
D)  40 per cent; 50 per cent

Question 9

According to the saving and investment equation,if net foreign investment rises by $35 million,

Accepted Answer

A)  national saving in excess of domestic investment will increase by $35 million. 
B)  national savings will increase by $35 million. 
C)  domestic investment will fall by $35 million. 
D)  national saving in excess of domestic investment will decrease by $35 million. 
A)  national saving in excess of domestic investment will increase by $35 million. 
B)  national savings will increase by $35 million. 
C)  domestic investment will fall by $35 million. 
D)  national saving in excess of domestic investment will decrease by $35 million.

Question 10

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The three main sets of factors are:
(i)c

Question 11

The 'theory of purchasing power parity' implies that:

Accepted Answer

A)  in the long run, the prices of goods in different countries will be the same when measured in a common currency. 
B)  the prices of goods in different countries are always the same. 
C)  the nominal exchange rates will equate over time. 
D)  demand and supply have no influence over the exchange rate. 
A)  in the long run, the prices of goods in different countries will be the same when measured in a common currency. 
B)  the prices of goods in different countries are always the same. 
C)  the nominal exchange rates will equate over time. 
D)  demand and supply have no influence over the exchange rate.

Question 12

Suppose that interest rates decrease in Japan and at the same time the Japanese economy is experiencing a recession.What will happen to the value of the dollar relative to the yen?

Accepted Answer

A)  The dollar will appreciate relative to the yen. 
B)  The dollar will depreciate relative to the yen. 
C)  One would have to know the size of the demand shift relative to the supply shift to answer correctly. 
D)  There will be no change in the relative exchange rate. 
A)  The dollar will appreciate relative to the yen. 
B)  The dollar will depreciate relative to the yen. 
C)  One would have to know the size of the demand shift relative to the supply shift to answer correctly. 
D)  There will be no change in the relative exchange rate.

Question 13

During the Great Depression,many countries left the gold standard because

Accepted Answer

A)  central banks could not pursue active monetary policy under the gold standard. 
B)  active fiscal policy could not be pursued under the gold standard. 
C)  people began to lose faith in gold as a medium of exchange and would no longer accept it as a means of payment. 
D)  gold supplies could be increased rapidly to expand the money supply. 
A)  central banks could not pursue active monetary policy under the gold standard. 
B)  active fiscal policy could not be pursued under the gold standard. 
C)  people began to lose faith in gold as a medium of exchange and would no longer accept it as a means of payment. 
D)  gold supplies could be increased rapidly to expand the money supply.

Question 14

If S = national saving,I = private investment and NFI = net foreign investments,then _________.

Accepted Answer

A)  S + I = NFI 
B)  S = I + NFI 
C)  S = I − NFI 
D)  S + NFI = I 
A)  S + I = NFI 
B)  S = I + NFI 
C)  S = I − NFI 
D)  S + NFI = I

Question 15

If the Thai baht is pegged above the equilibrium exchange rate as expressed in US dollars per baht,

Accepted Answer

A)  the currency is undervalued. 
B)  the currency is overvalued. 
C)  there will be a shortage of the baht. 
D)  the exchange rate between the baht and the US dollar is flexible. 
A)  the currency is undervalued. 
B)  the currency is overvalued. 
C)  there will be a shortage of the baht. 
D)  the exchange rate between the baht and the US dollar is flexible.

Question 16

The dollar will appreciate relative to the yen if,ceteris paribus,

Accepted Answer

A)  Australian interest rates decrease relative to interest rates in other countries. 
B)  income in Japan falls. 
C)  speculators think the value of the dollar relative to the yen will rise. 
D)  there is a recession in Japan. 
A)  Australian interest rates decrease relative to interest rates in other countries. 
B)  income in Japan falls. 
C)  speculators think the value of the dollar relative to the yen will rise. 
D)  there is a recession in Japan.

Question 17

Assume that the exchange rate between the dollar and the euro is €0.6 = $1.Suppose the exchange rate changes to €0.50 = $1.Because of the change

Accepted Answer

A)  Australian exports should increase and Australian imports should increase. 
B)  Australian exports should decrease and Australian imports should increase. 
C)  Australian exports should increase and Australian imports should decrease. 
D)  Australian exports should decrease and Australian imports should decrease. 
A)  Australian exports should increase and Australian imports should increase. 
B)  Australian exports should decrease and Australian imports should increase. 
C)  Australian exports should increase and Australian imports should decrease. 
D)  Australian exports should decrease and Australian imports should decrease.

Question 18

Which of the following is a source of supply for the Australian dollar?

Accepted Answer

A)  A German firm that wants to purchase agricultural products from Australia. 
B)  An Indian financier who wants to buy an Australian bond. 
C)  A currency trader who thinks the value of the dollar will be greater in the future relative to the value today. 
D)  An Australian bank that wants to buy a Japanese bond. 
A)  A German firm that wants to purchase agricultural products from Australia. 
B)  An Indian financier who wants to buy an Australian bond. 
C)  A currency trader who thinks the value of the dollar will be greater in the future relative to the value today. 
D)  An Australian bank that wants to buy a Japanese bond.

Question 19

Refer to Figure 20.1 for the following questions.
Figure 20.1  
-Consider the market for dollars against the British pound shown in Figure 20.1.From this graph,we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound.

Accepted Answer

A)  decreased; 0.46 
B)  increased; 2.17 
C)  decreased; 2.00 
D)  increased; 0.50 
A)  decreased; 0.46 
B)  increased; 2.17 
C)  decreased; 2.00 
D)  increased; 0.50

Question 20

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Accepted Answer

A) True 
 B)False

The purchase of foreign shares and bonds by an Australian brokerage firm is an example of capital inflows to Australia.

Australia usually operates with a large current account deficit.

Refer to Figure 20.5 for the following questions. Figure 20.5 -If the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as illustrated in Figure 20.5,then it must

A decrease in capital outflows from Australia will

Assume the exchange rate between the dollar and yen is ¥80= $1.Suppose that the exchange rate changes to ¥75 = $1.As a result of the change,there will be

By 2017,there were ________ member countries in the European Union (still including the UK).

Under a 'floating exchange rate',the exchange rate

Since the 1970s,Australia's imports and exports have both grown from less than of GDP,to approximately of GDP by 2016.

According to the saving and investment equation,if net foreign investment rises by $35 million,

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift? _ _

The 'theory of purchasing power parity' implies that:

Suppose that interest rates decrease in Japan and at the same time the Japanese economy is experiencing a recession.What will happen to the value of the dollar relative to the yen?

During the Great Depression,many countries left the gold standard because

If S = national saving,I = private investment and NFI = net foreign investments,then _________.

If the Thai baht is pegged above the equilibrium exchange rate as expressed in US dollars per baht,

The dollar will appreciate relative to the yen if,ceteris paribus,

Assume that the exchange rate between the dollar and the euro is €0.6 = $1.Suppose the exchange rate changes to €0.50 = $1.Because of the change

Which of the following is a source of supply for the Australian dollar?

Refer to Figure 20.1 for the following questions. Figure 20.1 -Consider the market for dollars against the British pound shown in Figure 20.1.From this graph,we can conclude that the dollar price of a British pound has to dollars per pound.

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

Exam 20: Macroeconomics in an Open Economy

The purchase of foreign shares and bonds by an Australian brokerage firm is an example of capital inflows to Australia.

Australia usually operates with a large current account deficit.

Refer to Figure 20.5 for the following questions. Figure 20.5 -If the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as illustrated in Figure 20.5,then it must

A decrease in capital outflows from Australia will

Assume the exchange rate between the dollar and yen is ¥80= $1.Suppose that the exchange rate changes to ¥75 = $1.As a result of the change,there will be

By 2017,there were ________ member countries in the European Union (still including the UK).

Under a 'floating exchange rate',the exchange rate

Since the 1970s,Australia's imports and exports have both grown from less than ________ of GDP,to approximately ________ of GDP by 2016.

According to the saving and investment equation,if net foreign investment rises by $35 million,

The 'theory of purchasing power parity' implies that:

Suppose that interest rates decrease in Japan and at the same time the Japanese economy is experiencing a recession.What will happen to the value of the dollar relative to the yen?

During the Great Depression,many countries left the gold standard because

If S = national saving,I = private investment and NFI = net foreign investments,then _________.

If the Thai baht is pegged above the equilibrium exchange rate as expressed in US dollars per baht,

The dollar will appreciate relative to the yen if,ceteris paribus,

Assume that the exchange rate between the dollar and the euro is €0.6 = $1.Suppose the exchange rate changes to €0.50 = $1.Because of the change

Which of the following is a source of supply for the Australian dollar?

Refer to Figure 20.1 for the following questions. Figure 20.1 -Consider the market for dollars against the British pound shown in Figure 20.1.From this graph,we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound.

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

Since the 1970s,Australia's imports and exports have both grown from less than of GDP,to approximately of GDP by 2016.

Refer to Figure 20.1 for the following questions. Figure 20.1 -Consider the market for dollars against the British pound shown in Figure 20.1.From this graph,we can conclude that the dollar price of a British pound has to dollars per pound.