Question 1

If the current account balance is negative

Accepted Answer

A)  net foreign investment is also negative. 
B)  capital inflows must be less than capital outflows. 
C)  net foreign investment is positive. 
D)  Both A and B are correct. 
A)  net foreign investment is also negative. 
B)  capital inflows must be less than capital outflows. 
C)  net foreign investment is positive. 
D)  Both A and B are correct.

Question 2

If Australian demand for purchases of British goods has decreased,how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

Accepted Answer

@#IMG-DLM& If Australians are demanding fewer Brit

Question 3

Explain how the Economist's Big Mac Index is related to purchasing power parity.Does the Big Mac Index suggest that purchasing power parity exists? Explain why or why not.

Accepted Answer

The Big Mac Index shows that purchasing

Question 4

In an open economy,expansionary monetary policy will have the added effect of causing the

Accepted Answer

A)  exchange rate to depreciate and net exports to increase. 
B)  exchange rate to depreciate and net exports to decrease. 
C)  exchange rate to appreciate and net exports to increase. 
D)  exchange rate to appreciate and net exports to decrease. 
A)  exchange rate to depreciate and net exports to increase. 
B)  exchange rate to depreciate and net exports to decrease. 
C)  exchange rate to appreciate and net exports to increase. 
D)  exchange rate to appreciate and net exports to decrease.

Question 5

Which of the following transactions would be included in Germany's current account?

Accepted Answer

A)  A German citizen purchases 100 shares in Qantas. 
B)  An Australian citizen purchases 100 shares in Germany's BMW company. 
C)  A German citizen purchases a new Volkswagen made in Germany. 
D)  An Australian citizen purchases a new Mercedes-Benz car made in Germany. 
A)  A German citizen purchases 100 shares in Qantas. 
B)  An Australian citizen purchases 100 shares in Germany's BMW company. 
C)  A German citizen purchases a new Volkswagen made in Germany. 
D)  An Australian citizen purchases a new Mercedes-Benz car made in Germany.

Question 6

Limits on the flow of foreign exchange and financial investment across countries are called

Accepted Answer

A)  capital controls. 
B)  fixed exchange rates. 
C)  credit constraints. 
D)  currency restrictions. 
A)  capital controls. 
B)  fixed exchange rates. 
C)  credit constraints. 
D)  currency restrictions.

Question 7

What is the difference between net exports and the current account balance?

Accepted Answer

'Net exports' refers to the balance betw

Question 8

If the average productivity of Indian firms is rising more quickly than the average productivity of Australian firms,which of the following would you expect to see? (India's currency is the rupee.)

Accepted Answer

A)  A decrease in the value of the rupee relative to the Australian dollar. 
B)  An increase in the prices of Indian products. 
C)  An increase in the quantity demanded of Indian products relative to Australian products. 
D)  All of these options are correct. 
A)  A decrease in the value of the rupee relative to the Australian dollar. 
B)  An increase in the prices of Indian products. 
C)  An increase in the quantity demanded of Indian products relative to Australian products. 
D)  All of these options are correct.

Question 9

In recent decades,Australia has incurred overall balance of payments deficits.

Accepted Answer

A) True 
 B)False

Question 10

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

Accepted Answer

A) True 
 B)False

Question 11

The European Union countries that have adopted the euro still conduct independent monetary policies within their countries.

Accepted Answer

A) True 
 B)False

Question 12

The following are hypothetical data for a country's balance of payments.You can assume the balance on the capital account is zero.Use the data to calculate the following:
a. the balance on the current account
b. the balance of trade on goods and services
c. the balance on the financial account
d. net errors and omissions

Accepted Answer

a. The current account balance is found

Question 13

Has the adoption of the euro by many countries in the European Union enhanced economic growth in those countries?

Accepted Answer

There is no definitive answer to this qu

Question 14

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 15

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 16

If a current account deficit increases,and investment levels remain the same,national saving must increase.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are considered among the four most important determinants in explaining exchange rate fluctuations in the long run except

Accepted Answer

A)  tariffs and quotas. 
B)  preferences for domestic and foreign goods. 
C)  interest rates. 
D)  relative rates of productivity growth across countries. 
A)  tariffs and quotas. 
B)  preferences for domestic and foreign goods. 
C)  interest rates. 
D)  relative rates of productivity growth across countries.

Question 18

In 2012/13,Australia

Accepted Answer

A)  had a trade surplus due to the booming mining sector. 
B)  had less income flowing overseas than was coming into Australia. 
C)  had a trade deficit. 
D)  exported more services than it imported. 
A)  had a trade surplus due to the booming mining sector. 
B)  had less income flowing overseas than was coming into Australia. 
C)  had a trade deficit. 
D)  exported more services than it imported.

Question 19

What factors are most important for determining exchange rate fluctuations in the long run?

Accepted Answer

A)  Relative price levels across countries. 
B)  Relative rates of productivity growth across countries. 
C)  Preferences for domestic and foreign goods across countries. 
D)  All of these options are correct. 
A)  Relative price levels across countries. 
B)  Relative rates of productivity growth across countries. 
C)  Preferences for domestic and foreign goods across countries. 
D)  All of these options are correct.

Question 20

Describe the four determinants of exchange rates in the long run.

Accepted Answer

One determinant of exchange rates in the

If the current account balance is negative

If Australian demand for purchases of British goods has decreased,how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

Explain how the Economist's Big Mac Index is related to purchasing power parity.Does the Big Mac Index suggest that purchasing power parity exists? Explain why or why not.

In an open economy,expansionary monetary policy will have the added effect of causing the

Which of the following transactions would be included in Germany's current account?

Limits on the flow of foreign exchange and financial investment across countries are called

What is the difference between net exports and the current account balance?

If the average productivity of Indian firms is rising more quickly than the average productivity of Australian firms,which of the following would you expect to see? (India's currency is the rupee.)

In recent decades,Australia has incurred overall balance of payments deficits.

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

The European Union countries that have adopted the euro still conduct independent monetary policies within their countries.

Has the adoption of the euro by many countries in the European Union enhanced economic growth in those countries?

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

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

If a current account deficit increases,and investment levels remain the same,national saving must increase.

All of the following are considered among the four most important determinants in explaining exchange rate fluctuations in the long run except

In 2012/13,Australia

What factors are most important for determining exchange rate fluctuations in the long run?

Describe the four determinants of exchange rates in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

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Exam 19: Comparative Advantage, international Trade, and Exchange Rates

If the current account balance is negative

If Australian demand for purchases of British goods has decreased,how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

Explain how the Economist's Big Mac Index is related to purchasing power parity.Does the Big Mac Index suggest that purchasing power parity exists? Explain why or why not.

In an open economy,expansionary monetary policy will have the added effect of causing the

Which of the following transactions would be included in Germany's current account?

Limits on the flow of foreign exchange and financial investment across countries are called

What is the difference between net exports and the current account balance?

If the average productivity of Indian firms is rising more quickly than the average productivity of Australian firms,which of the following would you expect to see? (India's currency is the rupee.)

In recent decades,Australia has incurred overall balance of payments deficits.

The Australian dollar is partially backed by the gold held at the Reserve Bank of Australia.

The European Union countries that have adopted the euro still conduct independent monetary policies within their countries.

Has the adoption of the euro by many countries in the European Union enhanced economic growth in those countries?

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

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

If a current account deficit increases,and investment levels remain the same,national saving must increase.

All of the following are considered among the four most important determinants in explaining exchange rate fluctuations in the long run except

In 2012/13,Australia

What factors are most important for determining exchange rate fluctuations in the long run?

Describe the four determinants of exchange rates in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters