Question 1

A country sells more to foreign countries than it buys from them. It has

Accepted Answer

A)  a trade surplus and positive net exports. 
B)  a trade surplus and negative net exports. 
C)  a trade deficit and positive net exports. 
D)  a trade deficit and negative net exports. 
A)  a trade surplus and positive net exports. 
B)  a trade surplus and negative net exports. 
C)  a trade deficit and positive net exports. 
D)  a trade deficit and negative net exports.

Question 2

Foreign-produced goods and services that are purchased domestically are called

Accepted Answer

A)  imports. 
B)  exports. 
C)  net imports. 
D)  net exports. 
A)  imports. 
B)  exports. 
C)  net imports. 
D)  net exports.

Question 3

A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports

Accepted Answer

A)  increase, and U.S. net capital outflow increases. 
B)  increase, and U.S. net capital outflow decreases. 
C)  decrease, and U.S. net capital outflow increases. 
D)  decrease, and U.S. net capital outflow decreases. 
A)  increase, and U.S. net capital outflow increases. 
B)  increase, and U.S. net capital outflow decreases. 
C)  decrease, and U.S. net capital outflow increases. 
D)  decrease, and U.S. net capital outflow decreases.

Question 4

If a country has positive net capital outflows, then its net exports are

Accepted Answer

A)  positive, and its saving is larger than its domestic investment. 
B)  positive, and its saving is smaller than its domestic investment. 
C)  negative, and its saving is larger than its domestic investment. 
D)  negative, and its saving is smaller than its domestic investment. 
A)  positive, and its saving is larger than its domestic investment. 
B)  positive, and its saving is smaller than its domestic investment. 
C)  negative, and its saving is larger than its domestic investment. 
D)  negative, and its saving is smaller than its domestic investment.

Question 5

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

Accepted Answer

A)  buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States. 
B)  buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in Egypt. 
C)  buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in Egypt. 
D)  buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in the United States. 
A)  buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States. 
B)  buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in Egypt. 
C)  buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in Egypt. 
D)  buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in the United States.

Question 6

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Accepted Answer

The answer of A country had a net capital outflow...

Question 7

A U.S. firm opens a factory that produces power tools in Korea.

Accepted Answer

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

Question 8

Table 31-2  
-Refer to Table 31-2. Which currency(ies) is(are) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)  the euro and the riyal 
B)  the pound and the yen 
C)  the bolivar 
D)  the yen 
A)  the euro and the riyal 
B)  the pound and the yen 
C)  the bolivar 
D)  the yen

Question 9

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 10

An open economy's GDP is always given by

Accepted Answer

A)  Y = C + I + G. 
B)  Y = C + I + G + T. 
C)  Y = C + I + G + S. 
D)  Y = C + I + G + NX. 
A)  Y = C + I + G. 
B)  Y = C + I + G + T. 
C)  Y = C + I + G + S. 
D)  Y = C + I + G + NX.

Question 11

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund, U.S. net capital outflow

Accepted Answer

A)  increases because an American company makes a portfolio investment in Germany. 
B)  declines because an American company makes a portfolio investment in Germany. 
C)  increases because an American company makes a direct investment in Germany. 
D)  declines because an American company makes a direct investment in Germany. 
A)  increases because an American company makes a portfolio investment in Germany. 
B)  declines because an American company makes a portfolio investment in Germany. 
C)  increases because an American company makes a direct investment in Germany. 
D)  declines because an American company makes a direct investment in Germany.

Question 12

Nominal exchange rates

Accepted Answer

A)  vary little over time. 
B)  vary substantially over time. 
C)  appreciate over time for most countries. 
D)  depreciate over time for most countries. 
A)  vary little over time. 
B)  vary substantially over time. 
C)  appreciate over time for most countries. 
D)  depreciate over time for most countries.

Question 13

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 14

Jen and Alica are both U.S. citizens. Jen opens a cafe in France. Alicia buys equipment from a company in Canada to use in her factory. Whose action is an example of U.S. foreign direct investment?

Accepted Answer

A)  Jen's and Alica's 
B)  Jen's but not Alicia's 
C)  Alicia's but not Jen's 
D)  Neither Anthony's nor Tom's. 
A)  Jen's and Alica's 
B)  Jen's but not Alicia's 
C)  Alicia's but not Jen's 
D)  Neither Anthony's nor Tom's.

Question 15

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Accepted Answer

A)  7/4 cans of Belgian coffee per can of U.S. coffee 
B)  5.6/5 cans of Belgian coffee per can of U.S. coffee 
C)  5/5.6 cans of Belgian coffee per can of U.S. coffee 
D)  4/7 cans of Belgian coffee per can of U.S. coffee 
A)  7/4 cans of Belgian coffee per can of U.S. coffee 
B)  5.6/5 cans of Belgian coffee per can of U.S. coffee 
C)  5/5.6 cans of Belgian coffee per can of U.S. coffee 
D)  4/7 cans of Belgian coffee per can of U.S. coffee

Question 16

The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is

Accepted Answer

A)  3/8 
B)  2/3 
C)  3/2 
D)  8/3 
A)  3/8 
B)  2/3 
C)  3/2 
D)  8/3

Question 17

Which of the following statements is incorrect for an open economy?

Accepted Answer

A)  A country can have a trade deficit, trade surplus, or balanced trade. 
B)  A country that has a trade deficit has positive net capital outflow. 
C)  Net exports must equal net capital outflow. 
D)  National saving equals domestic investment plus net capital outflow. 
A)  A country can have a trade deficit, trade surplus, or balanced trade. 
B)  A country that has a trade deficit has positive net capital outflow. 
C)  Net exports must equal net capital outflow. 
D)  National saving equals domestic investment plus net capital outflow.

Question 18

Last month a country sold more goods and services to residents of foreign countries than it purchased from them. What does this imply about this country's trade balance?

Accepted Answer

This count

Question 19

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Accepted Answer

A)  $7.2 billion of exports and $4.8 billion of imports. 
B)  $7.2 billion of imports and $4.8 billion of exports. 
C)  $4.8 billion of exports and $2.4 billion of imports. 
D)  $4.8 billion of imports and $2.4 billion of exports. 
A)  $7.2 billion of exports and $4.8 billion of imports. 
B)  $7.2 billion of imports and $4.8 billion of exports. 
C)  $4.8 billion of exports and $2.4 billion of imports. 
D)  $4.8 billion of imports and $2.4 billion of exports.

Question 20

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.

Exam 31: Open-Economy Macroeconomics: Basic Concepts

A country sells more to foreign countries than it buys from them. It has

Foreign-produced goods and services that are purchased domestically are called

A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports

If a country has positive net capital outflows, then its net exports are

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

A U.S. firm opens a factory that produces power tools in Korea.

Table 31-2 -Refer to Table 31-2. Which currency(ies) is(are) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

An open economy's GDP is always given by

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund, U.S. net capital outflow

Nominal exchange rates

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

Jen and Alica are both U.S. citizens. Jen opens a cafe in France. Alicia buys equipment from a company in Canada to use in her factory. Whose action is an example of U.S. foreign direct investment?

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is

Which of the following statements is incorrect for an open economy?

Last month a country sold more goods and services to residents of foreign countries than it purchased from them. What does this imply about this country's trade balance?

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

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

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

Six Debates Over Macroeconomic Policy

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