Question 1

If the exchange rate were 5 Egyptian pounds per U.S.dollar,a watch that costs $25 US dollars would cost

Accepted Answer

A)   125 Egyptian pounds
B)   50 Egyptian pounds
C)   5 Egyptian pounds
D)   None of the above is correct.E) A) and B)
F) B) and C)

Question 2

If the American company Stryker builds and operates a new factory in France,

Accepted Answer

A)   it engages in foreign direct investment.By itself this action lowers U.S.net capital outflow.
B)   it engages in foreign direct investment.By itself this action raises U.S.net capital outflow.
C)   it engages in foreign portfolio investment.By itself this action lowers U.S.net capital outflow.
D)   it engages in foreign portfolio investment.By itself this action raises U.S.net capital outflow.E) C) and D)
F) B) and D)

Question 3

Other things the same,according to purchasing power parity,if over the next few years Mexico has a higher money supply growth rate than the U.S. ,then

Accepted Answer

A)   prices in Mexico will rise by a larger percentage than in the U.S.So,the dollar will appreciate against the Mexican peso.
B)   prices in Mexico will rise by larger percentage than in the U.S.So,the dollar will depreciate against the Mexican peso.
C)   prices in Mexico will rise by a smaller percentage than in the U.S.So,the dollar will appreciate against the Mexican peso.
D)   prices in Mexico will rise by a smaller percentage than in the U.S.So,the dollar will depreciate against the Mexican peso.E) B) and C)
F) C) and D)

Question 4

If the exchange rate is 12.5 pesos per U.S.dollar,it is also 1/12.5 U.S.dollars per peso.

Accepted Answer

A) True 
 B)False

Question 5

Both foreign direct investment and foreign portfolio investment by U.S.residents increase U.S.net capital outflow.

Accepted Answer

A) True 
 B)False

Question 6

The nominal exchange rate is 90 Pakistani rupees per dollar.The price of a shirt in Pakistan is 1800 rupees.The same shirt sells for $25 in the U.S.
A.What is the real exchange rate? Show your work.
B.Can arbitragers make a profit?
C.If your answer to C is yes,where would they buy and where would they sell?

Accepted Answer

A.The real exchange rate = $25...

Question 7

Sonya,a citizen of Denmark,produces boots and shoes that she sells to department stores in the United States.Other things the same,these sales

Accepted Answer

A)   increase U.S.net exports and have no effect on Danish net exports.
B)   decrease U.S.net exports and have no effect on Danish net exports.
C)   increase U.S.net exports and decrease Danish net exports.
D)   decrease U.S.net exports and increase Danish net exports.E) None of the above
F) A) and B)

Question 8

According to purchasing-power parity,what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Accepted Answer

Purchasing-power parity asserts that the...

Question 9

Other things the same,if the dollar depreciates relative to the Japanese yen,then

Accepted Answer

A)   the exchange rate falls.It will cost fewer yen to travel in the U.S.
B)   the exchange rate falls.It will cost more yen to travel in the U.S.
C)   the exchange rate rises.It will cost fewer yen to travel in the U.S.
D)   the exchange rate rises.It will cost more yen to travel in the U.S.E) B) and C)
F) B) and D)

Question 10

List the factors that might influence a country's exports,imports,and trade balance.

Accepted Answer

a.the tastes of consumers for domestic a...

Question 11

Which of the following is an example of U.S.foreign direct investment?

Accepted Answer

A)   A Polish company opens a shipbuilding plant in the United States.
B)   A Bolivian bank buys U.S.corporate bonds.
C)   A U.S.bank buys Bolivian corporate bonds.
D)   A U.S.furniture maker opens a plant in Mexico.E) A) and D)
F) C) and D)

Question 12

Tom and Anthony are both U.S.citizens.Tom buys construction machinery from a company in Canada to use for his U.S construction company.Anthony opens a cafe in Portugal.Whose action is an example of U.S.foreign direct investment

Accepted Answer

A)   Tom's but not Anthony's.
B)   Anthony's but not Tom's.
C)   Anthony's and Tom's.
D)   Neither Anthony's nor Tom's.E) None of the above
F) A) and B)

Question 13

If saving is greater than domestic investment,then

Accepted Answer

A)   there is a trade deficit and Y > C + I + G.
B)   there is a trade deficit and Y 
C)   there is a trade surplus and Y > C + I + G.
D)   there is a trade surplus and Y < C + I + G.E) B) and C)
F) A) and D)

Question 14

Other things the same,if the exchange rate changes from .30 Kuwaiti dinar per dollar to .35 Kuwaiti dinar per dollar,then the dollar has

Accepted Answer

A)   appreciated and so buys more Kuwaiti goods.
B)   appreciated and so buys fewer Kuwaiti goods.
C)   depreciated and so buys more Kuwaiti goods.
D)   depreciated and so buys fewer Kuwaiti goods.E) A) and B)
F) A) and C)

Question 15

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 assets 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 BE) None of the above
F) B) and C)

Question 16

Other things the same,a country could move from having a trade surplus to having a trade deficit if either

Accepted Answer

A)   saving rose or domestic investment rose.
B)   saving rose or domestic investment fell.
C)   saving fell or domestic investment rose.
D)   saving fell or domestic investment fell.E) B) and C)
F) A) and C)

Question 17

Net exports of a country are the value of

Accepted Answer

A)   goods and services imported minus the value of goods and services exported.
B)   goods and services exported minus the value of goods and services imported.
C)   goods exported minus the value of goods imported.
D)   goods imported minus the value of goods exported.E) A) and D)
F) A) and C)

Question 18

If a U.S.dollar purchases 4 Argentinean pesos,and a gallon of milk costs $2 in the U.S.and 6 pesos in Argentina what is the real exchange rate?

Accepted Answer

A)   3
B)   4/3
C)   3/4
D)   1/3E) B) and C)
F) None of the above

Question 19

When U.S.national saving rises,domestic investment also necessarily rises.

Accepted Answer

A) True 
 B)False

Question 20

If a Starbucks tall latte cost $3.20 in the United States and 3 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Accepted Answer

A)   .938 If the exchange rate is less than this,it costs more dollars to buy a tall latte in the U.S.than in the Euro area.
B)   .938 If the exchange rate is less than this,it costs fewer dollars to buy a tall latte in the U.S.then in the Euro area.
C)   1.067 If the exchange rate is less than this,it costs more dollars to buy a tall latte in the U.S.than in the Euro area.
D)   1.067 If the exchange rate is less than this,it costs fewer dollars to buy a tall latte in the U.S.than in the Euro area.E) A) and C)
F) A) and B)

Exam 31: Open-Economy Macroeconomic Models

If a U.S.dollar purchases 4 Argentinean pesos,and a gallon of milk costs $2 in the U.S.and 6 pesos in Argentina what is the real exchange rate?

Correct Answer
verified

If the exchange rate is 12.5 pesos per U.S.dollar,it is also 1/12.5 U.S.dollars per peso.

Correct Answer
verified

Correct Answer
verified
A.The real exchange rate = $25...
View Answer

According to purchasing-power parity,what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Correct Answer
verified
Purchasing-power parity asserts that the...
View Answer

Other things the same,according to purchasing power parity,if over the next few years Mexico has a higher money supply growth rate than the U.S. ,then

Correct Answer
verified

If the exchange rate were 5 Egyptian pounds per U.S.dollar,a watch that costs $25 US dollars would cost

Correct Answer
verified

Other things the same,if the exchange rate changes from .30 Kuwaiti dinar per dollar to .35 Kuwaiti dinar per dollar,then the dollar has

Correct Answer
verified

If saving is greater than domestic investment,then

Correct Answer
verified

Tom and Anthony are both U.S.citizens.Tom buys construction machinery from a company in Canada to use for his U.S construction company.Anthony opens a cafe in Portugal.Whose action is an example of U.S.foreign direct investment

Correct Answer
verified

When U.S.national saving rises,domestic investment also necessarily rises.

Correct Answer
verified

Both foreign direct investment and foreign portfolio investment by U.S.residents increase U.S.net capital outflow.

Correct Answer
verified

List the factors that might influence a country's exports,imports,and trade balance.

Correct Answer
verified
a.the tastes of consumers for domestic a...
View Answer

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 assets from country A.What would the net capital outflows of both countries be?

Correct Answer
verified

Net exports of a country are the value of

Correct Answer
verified

Sonya,a citizen of Denmark,produces boots and shoes that she sells to department stores in the United States.Other things the same,these sales

Correct Answer
verified

Which of the following is an example of U.S.foreign direct investment?

Correct Answer
verified

If a Starbucks tall latte cost $3.20 in the United States and 3 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Correct Answer
verified

Other things the same,if the dollar depreciates relative to the Japanese yen,then

Correct Answer
verified

Other things the same,a country could move from having a trade surplus to having a trade deficit if either

Correct Answer
verified

If the American company Stryker builds and operates a new factory in France,

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

If a U.S.dollar purchases 4 Argentinean pesos,and a gallon of milk costs $2 in the U.S.and 6 pesos in Argentina what is the real exchange rate?

Correct AnswerverifiedShow Answer

If the exchange rate is 12.5 pesos per U.S.dollar,it is also 1/12.5 U.S.dollars per peso.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA.The real exchange rate = $25...View AnswerShow Answer

According to purchasing-power parity,what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Correct AnswerverifiedPurchasing-power parity asserts that the...View AnswerShow Answer

Other things the same,according to purchasing power parity,if over the next few years Mexico has a higher money supply growth rate than the U.S. ,then

Correct AnswerverifiedShow Answer

If the exchange rate were 5 Egyptian pounds per U.S.dollar,a watch that costs $25 US dollars would cost

Correct AnswerverifiedShow Answer

Other things the same,if the exchange rate changes from .30 Kuwaiti dinar per dollar to .35 Kuwaiti dinar per dollar,then the dollar has

Correct AnswerverifiedShow Answer

If saving is greater than domestic investment,then

Correct AnswerverifiedShow Answer

Tom and Anthony are both U.S.citizens.Tom buys construction machinery from a company in Canada to use for his U.S construction company.Anthony opens a cafe in Portugal.Whose action is an example of U.S.foreign direct investment

Correct AnswerverifiedShow Answer

When U.S.national saving rises,domestic investment also necessarily rises.

Correct AnswerverifiedShow Answer

Both foreign direct investment and foreign portfolio investment by U.S.residents increase U.S.net capital outflow.

Correct AnswerverifiedShow Answer

List the factors that might influence a country's exports,imports,and trade balance.

Correct Answerverifieda.the tastes of consumers for domestic a...View AnswerShow Answer

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 assets from country A.What would the net capital outflows of both countries be?

Correct AnswerverifiedShow Answer

Net exports of a country are the value of

Correct AnswerverifiedShow Answer

Sonya,a citizen of Denmark,produces boots and shoes that she sells to department stores in the United States.Other things the same,these sales

Correct AnswerverifiedShow Answer

Which of the following is an example of U.S.foreign direct investment?

Correct AnswerverifiedShow Answer

If a Starbucks tall latte cost $3.20 in the United States and 3 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Correct AnswerverifiedShow Answer

Other things the same,if the dollar depreciates relative to the Japanese yen,then

Correct AnswerverifiedShow Answer

Other things the same,a country could move from having a trade surplus to having a trade deficit if either

Correct AnswerverifiedShow Answer

If the American company Stryker builds and operates a new factory in France,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A.The real exchange rate = $25...
View Answer

Correct Answer
verified
Purchasing-power parity asserts that the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
a.the tastes of consumers for domestic a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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