Question 1

Apple is an American company, but its iPhones are assembled in China. The sale of each iPhone is counted in China's GDP as:

Accepted Answer

A)   consumption.
B)   investment.
C)   an import.
D)   an export.E) A) and C)
F) All of the above

Question 2

A country that uses a fixed exchange rate to undervalue its currency will:

Accepted Answer

A)   increase its exports.
B)   encourage capital flow to foreign countries.
C)   increase the price of imports for domestic consumers.
D)   All of these are true.E) A) and B)
F) None of the above

Question 3

If $1 is worth 0.8 Canadian dollars, then 1 Canadian dollar is worth:

Accepted Answer

A)   $1.25.
B)   $1.80.
C)   $0.20.
D)   $0.80.E) A) and B)
F) B) and C)

Question 4

We might observe a rise in U.S. net capital outflow when interest rates are:

Accepted Answer

A)   declining in the rest of the world relative to the United States.
B)   declining in the United States relative to the rest of the world.
C)   declining across the globe.
D)   rising across the globe.E) A) and C)
F) None of the above

Question 5

The Argentine crisis of 2001 was brought about by:

Accepted Answer

A)   debt crisis.
B)   exchange rate crisis.
C)   excessive loss of national resources.
D)   None of these are true.E) None of the above
F) A) and B)

Question 6

Which of the following countries is a major trading partner with the United States?

Accepted Answer

A)   Hungary
B)   Russia
C)   Italy
D)   CanadaE) All of the above
F) A) and B)

Question 7

If $1 is worth 10 yen, then 1 yen is worth:

Accepted Answer

A)   $0.01.
B)   $0.10.
C)   $1.00.
D)   $1.10.E) None of the above
F) A) and B)

Question 8

When the value of a currency experiences exchange-rate appreciation, its value:

Accepted Answer

A)   increases relative to the value of another currency.
B)   increases and it can now buy more goods and services.
C)   decreases relative to the value of another currency.
D)   has experienced inflation relative to other currencies.E) A) and D)
F) B) and C)

Question 9

When the U.S. government runs a deficit, the savings curve in the market for loanable funds shifts to the _______, _______ interest rates and _______ domestic investment and net capital outflow.

Accepted Answer

A)   left; increasing; decreasing
B)   left; decreasing; increasing
C)   right; decreasing; increasing
D)   right; increasing; increasingE) A) and B)
F) All of the above

Question 10

Apple is an American company, but its iPhones are assembled in China. The sale of each iPhone is counted in U.S. GDP as:

Accepted Answer

A)   consumption.
B)   investment.
C)   an import.
D)   an export.E) B) and C)
F) None of the above

Question 11

Suppose the cost of a typical basket of goods is $100 in the United States and 500 yuan in China. If the nominal exchange rate is 10 yuan per dollar, what is the real exchange rate?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and C)
F) A) and C)

Question 12

One of the largest foreign portfolio investments in the United States comes from:

Accepted Answer

A)   U.S. purchases of Chinese consumption goods.
B)   U.S. purchases of Chinese government debt.
C)   Chinese purchases of U.S. government debt.
D)   Chinese purchases of U.S. capital goods.E) A) and C)
F) B) and C)

Question 13

The balance of payments is the accounting of trade:

Accepted Answer

A)   in financial assets.
B)   in goods and capital.
C)   between two countries with similar imports and exports.
D)   in services.E) C) and D)
F) A) and B)

Question 14

The currency of a country with a floating exchange rate:

Accepted Answer

A)   is set by the government.
B)   is tied to the U.S. exchange rate.
C)   can be freely traded, and its value is determined by the foreign-exchange market.
D)   All of these are true.E) C) and D)
F) None of the above

Question 15

Alan buys 20 shares of Unibroue stock because it's his favorite foreign beer company. Alan's purchase is an example of:

Accepted Answer

A)   foreign direct investment.
B)   foreign portfolio investment.
C)   foreign import investment.
D)   foreign export investment.E) C) and D)
F) A) and B)

Question 16

Net capital outflow is the net flow of:

Accepted Answer

A)   capital goods owned outside a country.
B)   funds invested outside of a country.
C)   capital goods owned within a country.
D)   funds invested within a country.E) All of the above
F) A) and D)

Question 17

Foreign portfolio investment:

Accepted Answer

A)   can be withdrawn from a country very quickly.
B)   is very difficult to trace.
C)   is often invested in the assets that yield the highest returns.
D)   earnings often go untaxed by the home government.E) All of the above
F) B) and C)

Question 18

Net capital outflow plus domestic investment equals the _______ loanable funds in a(n)  _______ economy.

Accepted Answer

A)   demand for; open
B)   demand for; closed
C)   supply of; open
D)   supply of; closedE) A) and B)
F) A) and D)

Question 19

Suppose the cost of a typical basket of goods is $100 in the United States and 200 euros in Germany. If the nominal exchange rate is 0.7 euros per dollar, what is the real exchange rate?

Accepted Answer

A)   0.35
B)   0.50
C)   3.50
D)   1.50E) B) and D)
F) All of the above

Question 20

Amber, who lives in Boston, decides to buy a pair of hockey skates from Canada for $100. At the same time, Jean, a Canadian, buys a baseball hat and jersey from Boston for $100. Which of the following statements describes the effect these transactions have on the U.S. balance of trade and payments?

Accepted Answer

A)   Net exports and net capital outflow are both zero.
B)   Net exports and net capital outflow both equal −$100.
C)   Net exports are zero and net capital outflow equals −$100.
D)   Net exports equal −$100 and net capital outflow is zero.E) All of the above
F) A) and B)

Exam 18: Open-Marketmacroeconomics

Suppose the cost of a typical basket of goods is $100 in the United States and 500 yuan in China. If the nominal exchange rate is 10 yuan per dollar, what is the real exchange rate?

Correct AnswerverifiedShow Answer

When the U.S. government runs a deficit, the savings curve in the market for loanable funds shifts to the _______, _______ interest rates and _______ domestic investment and net capital outflow.

Correct AnswerverifiedShow Answer

The Argentine crisis of 2001 was brought about by:

Correct AnswerverifiedShow Answer

We might observe a rise in U.S. net capital outflow when interest rates are:

Correct AnswerverifiedShow Answer

If $1 is worth 10 yen, then 1 yen is worth:

Correct AnswerverifiedShow Answer

If $1 is worth 0.8 Canadian dollars, then 1 Canadian dollar is worth:

Correct AnswerverifiedShow Answer

Foreign portfolio investment:

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One of the largest foreign portfolio investments in the United States comes from:

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Which of the following countries is a major trading partner with the United States?

Correct AnswerverifiedShow Answer

When the value of a currency experiences exchange-rate appreciation, its value:

Correct AnswerverifiedShow Answer

Net capital outflow is the net flow of:

Correct AnswerverifiedShow Answer

Suppose the cost of a typical basket of goods is $100 in the United States and 200 euros in Germany. If the nominal exchange rate is 0.7 euros per dollar, what is the real exchange rate?

Correct AnswerverifiedShow Answer

Alan buys 20 shares of Unibroue stock because it's his favorite foreign beer company. Alan's purchase is an example of:

Correct AnswerverifiedShow Answer

The currency of a country with a floating exchange rate:

Correct AnswerverifiedShow Answer

Amber, who lives in Boston, decides to buy a pair of hockey skates from Canada for $100. At the same time, Jean, a Canadian, buys a baseball hat and jersey from Boston for $100. Which of the following statements describes the effect these transactions have on the U.S. balance of trade and payments?

Correct AnswerverifiedShow Answer

Apple is an American company, but its iPhones are assembled in China. The sale of each iPhone is counted in U.S. GDP as:

Correct AnswerverifiedShow Answer

The balance of payments is the accounting of trade:

Correct AnswerverifiedShow Answer

Apple is an American company, but its iPhones are assembled in China. The sale of each iPhone is counted in China's GDP as:

Correct AnswerverifiedShow Answer

A country that uses a fixed exchange rate to undervalue its currency will:

Correct AnswerverifiedShow Answer

Net capital outflow plus domestic investment equals the _______ loanable funds in a(n) _______ economy.

Correct AnswerverifiedShow Answer

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When the U.S. government runs a deficit, the savings curve in the market for loanable funds shifts to the ___, _ interest rates and _____ domestic investment and net capital outflow.

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Net capital outflow plus domestic investment equals the _ loanable funds in a(n) _ economy.

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