Question 1

The real exchange rate is the nominal exchange rate,defined as foreign currency per dollar,times

Accepted Answer

A)   U.S.prices minus foreign prices.
B)   prices in the United States divided by foreign prices.
C)   foreign prices divided by U.S.prices.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 2

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

Accepted Answer

A)   fewer domestic goods and fewer foreign goods.
B)   more domestic goods and fewer foreign goods.
C)   fewer domestic goods and more foreign goods.
D)   more domestic goods and more foreign goods.E) None of the above
F) A) and D)

Question 3

By itself,the purchase of a U.S.bond by a foreign resident decreases U.S.net capital outflow and increases foreign capital outflow.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   A Swedish car manufacturer opens a plant in Tennessee.
B)   A Dutch citizen buys shares of stock in a U.S.company.
C)   A U.S.based restaurant chain opens new restaurants in China.
D)   A U.S.citizen buys stock in companies located in Japan.E) A) and B)
F) A) and C)

Question 5

From 1970 to 1998 the U.S.dollar

Accepted Answer

A)   gained value compared to the Italian lira because inflation was higher in the U.S.
B)   gained value compared to the Italian lira because inflation was lower in the U.S.
C)   lost value compared to the Italian lira because inflation was higher in the U.S.
D)   lost value compared to the Italian lira because inflation was lower in the U.S.E) A) and C)
F) None of the above

Question 6

Which of the following equations is correct?

Accepted Answer

A)   Y = C + I + G + NCO
B)   NX = NCO
C)   NCO = S - I
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 7

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Accepted Answer

According to purchasing-power parity,a d...

Question 8

How do we find the real exchange rate from the nominal exchange rate?

Accepted Answer

Real Exchange Rate =...

Question 9

According to purchasing-power parity,which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Accepted Answer

A)   the real exchange rate,but not the nominal exchange rate
B)   the nominal exchange rate,but not the real exchange rate
C)   the real exchange rate and the nominal exchange rate
D)   neither the real exchange rate nor the nominal exchange rateE) All of the above
F) A) and D)

Question 10

In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?

Accepted Answer

A)   $250 billion
B)   $300 billion
C)   $550 billion
D)   $850 billionE) C) and D)
F) A) and D)

Question 11

Which of the following is correct?

Accepted Answer

A)   U.S.exports as a percentage of GDP have more than doubled since 1950.The U.S.currently has a trade surplus.
B)   U.S.exports as a percentage of GDP have more than doubled since 1950.The U.S.currently has a trade deficit.
C)   U.S.exports as a percentage of GDP have increased,but have not nearly doubled since 1950.The U.S.currently has a trade surplus.
D)   U.S.exports as a percentage of GDP have increased,but have not nearly doubled since 1950.The U.S.currently has a trade deficit.E) A) and D)
F) B) and C)

Question 12

If citizens of a country are not saving much,it is better to

Accepted Answer

A)   force citizens to save.
B)   reduce investment.
C)   have foreigners invest in the domestic economy than no one at all.
D)   to prevent opportunities for citizens to buy capital assets abroad.E) A) and B)
F) B) and C)

Question 13

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.E) C) and D)
F) None of the above

Question 14

If the exchange rate is 10 pesos per U.S.dollar,it is also 1/10 U.S.dollars per peso.

Accepted Answer

A) True 
 B)False

Question 15

If US goods cost one dollar for each euro German goods costs,the real exchange rate would be computed as how many German goods per U.S.goods?

Accepted Answer

A)   one
B)   the price of the U.S.goods
C)   the amount of euros that can be bought with one U.S.dollar
D)   None of the above is correct.E) None of the above
F) A) and B)

Question 16

Net capital outflow equals

Accepted Answer

A)   the purchase of foreign assets by domestic residents.
B)   the purchase of domestic assets by foreign residents.
C)   the purchase of domestic assets by foreign residents - the purchase of foreign assets by domestic residents
D)   the purchase of foreign assets by domestic residents - the purchase of domestic assets by foreign residentsE) All of the above
F) A) and D)

Question 17

Suppose a Starbucks tall-latte cost $4.00 in the United States and 3.20 euros in the Euro area.Also,suppose a McDonald's Big Mac costs $3.50 in the United States and 2.45 euros in Euro area.If the nominal exchange rate is .75 euros per dollar,the prices of which goods have prices that are consistent with purchasing power parity?

Accepted Answer

A)   Both the tall-latte and the Big Mac.
B)   Neither the tall-latte nor the Big Mac.
C)   The tall-latte but not the Big Mac.
D)   The Big Mac but not the tall-latte.E) A) and D)
F) None of the above

Question 18

U.S.based John Deere sells machinery to residents of South Africa who pay with South African currency (the rand) .

Accepted Answer

A)   This increases U.S.net capital outflow because the U.S.acquires foreign assets.
B)   This decreases U.S.net capital outflow because the U.S.acquires foreign assets.
C)   This increases U.S.net capital outflow because the U.S.sells capital goods.
D)   This decreases U.S.net capital outflow because the U.S.sells capital goods.E) B) and C)
F) A) and B)

Question 19

A Swiss company sells chocolates to a retailer in the United States.These sales by themselves

Accepted Answer

A)   decrease U.S.net export and Swiss net exports.
B)   decrease U.S.net exports and increase Swiss net exports.
C)   increase U.S.and Swiss net exports.
D)   increase U.S.net exports and decrease Swiss net exports.E) B) and C)
F) B) and D)

Question 20

Table 31-1
 
-Refer to Table 31-1.What are Argentina's net exports?

Accepted Answer

A)   $30 billion
B)   $5 billion
C)   -$5 billion
D)   -$25 billionE) C) and D)
F) None of the above

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Correct Answer
verified
According to purchasing-power parity,a d...
View Answer

According to purchasing-power parity,which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Correct Answer
verified

If citizens of a country are not saving much,it is better to

Correct Answer
verified

If the exchange rate is 10 pesos per U.S.dollar,it is also 1/10 U.S.dollars per peso.

Correct Answer
verified

A Swiss company sells chocolates to a retailer in the United States.These sales by themselves

Correct Answer
verified

How do we find the real exchange rate from the nominal exchange rate?

Correct Answer
verified
Real Exchange Rate =...
View Answer

Which of the following equations is correct?

Correct Answer
verified

The real exchange rate is the nominal exchange rate,defined as foreign currency per dollar,times

Correct Answer
verified

If US goods cost one dollar for each euro German goods costs,the real exchange rate would be computed as how many German goods per U.S.goods?

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?

Correct Answer
verified

Net capital outflow equals

Correct Answer
verified

Table 31-1 -Refer to Table 31-1.What are Argentina's net exports?

Correct Answer
verified

U.S.based John Deere sells machinery to residents of South Africa who pay with South African currency (the rand) .

Correct Answer
verified

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

Correct Answer
verified

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

Correct Answer
verified

From 1970 to 1998 the U.S.dollar

Correct Answer
verified

By itself,the purchase of a U.S.bond by a foreign resident decreases U.S.net capital outflow and increases foreign capital outflow.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose a lobster supper in Maine costs fewer dollars than a Lobster supper in Paris,France.Explain why this is inconsistent with purchasing-power parity and explain why the inconsistency may exist.

Correct AnswerverifiedAccording to purchasing-power parity,a d...View AnswerShow Answer

According to purchasing-power parity,which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

Correct AnswerverifiedShow Answer

If citizens of a country are not saving much,it is better to

Correct AnswerverifiedShow Answer

If the exchange rate is 10 pesos per U.S.dollar,it is also 1/10 U.S.dollars per peso.

Correct AnswerverifiedShow Answer

A Swiss company sells chocolates to a retailer in the United States.These sales by themselves

Correct AnswerverifiedShow Answer

How do we find the real exchange rate from the nominal exchange rate?

Correct AnswerverifiedReal Exchange Rate =...View AnswerShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

The real exchange rate is the nominal exchange rate,defined as foreign currency per dollar,times

Correct AnswerverifiedShow Answer

If US goods cost one dollar for each euro German goods costs,the real exchange rate would be computed as how many German goods per U.S.goods?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?

Correct AnswerverifiedShow Answer

Net capital outflow equals

Correct AnswerverifiedShow Answer

Table 31-1 -Refer to Table 31-1.What are Argentina's net exports?

Correct AnswerverifiedShow Answer

U.S.based John Deere sells machinery to residents of South Africa who pay with South African currency (the rand) .

Correct AnswerverifiedShow Answer

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

From 1970 to 1998 the U.S.dollar

Correct AnswerverifiedShow Answer

By itself,the purchase of a U.S.bond by a foreign resident decreases U.S.net capital outflow and increases foreign capital outflow.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
According to purchasing-power parity,a d...
View Answer

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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Real Exchange Rate =...
View Answer

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