Question 1

Paine Pharmaceuticals produces medicines in the U.S.Its overseas sales

Accepted Answer

A)   are an export of the U.S.and increase U.S.net exports.
B)   are an export of the U.S.and decrease U.S.net exports.
C)   are an import of the U.S.and increase U.S.net exports.
D)   are an import of the U.S.and decrease U.S.net exports.E) C) and D)
F) A) and B)

Question 2

The nominal exchange rate is the

Accepted Answer

A)   nominal interest rate in one country divided by the nominal interest rate in the other country.
B)   the ratio of a foreign country's interest rate to the domestic interest rate.
C)   rate at which a person can trade the currency of one country for another.
D)   the real exchange rate minus the inflation rate.E) A) and B)
F) A) and C)

Question 3

A German mutual fund sells euros to a U.S.bank for $20,000.The mutual fund then uses these dollars to purchase a bond issued by United Express,a U.S.delivery company.As a result of these two transactions,what happened to U.S.net capital outflow?

Accepted Answer

A)   It fell by $40,000.
B)   It fell by $20,000.
C)   It was unchanged.
D)   It rose by $20,000.E) A) and B)
F) A) and C)

Question 4

You are planning a graduation trip to Nepal.Other things the same,if the dollar appreciates relative to the Nepalese rupee,then

Accepted Answer

A)   the dollar buys fewer rupees.Your purchases in Nepal will require fewer dollars.
B)   the dollar buys fewer rupees.Your purchases in Nepal will require more dollars.
C)   the dollar buys more rupees.Your purchases in Nepal will require fewer dollars.
D)   the dollar buys more rupees.Your purchases in Nepal will require more dollars.E) All of the above
F) A) and B)

Question 5

A Turkish firm excahnges lira (Turkish currency)for dollars.It then uses these dollars to purchase computers from the U.S.These actions decrease U.S.net capital outflow and increase U.S.net exports.

Accepted Answer

A) True 
 B)False

Question 6

Clear Brook Farms,a U.S.manufacturer of frozen vegetarian entrees,sells cases of its product to stores overseas.These sales

Accepted Answer

A)   decrease U.S.exports but increase U.S.net exports.
B)   decrease both U.S.exports and U.S.net exports.
C)   increase both U.S.exports and U.S.net exports.
D)   increase U.S.exports but decrease U.S.net exports.E) C) and D)
F) B) and C)

Question 7

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) C) and D)

Question 8

Other things the same,if a country has a trade deficit and saving rises,

Accepted Answer

A)   net capital outflow rises,so the trade deficit increases.
B)   net capital outflow rises,so the trade deficit decreases.
C)   net capital outflow falls,so the trade deficit increases.
D)   net capital outflow falls,so the trade deficit decreases.E) None of the above
F) A) and B)

Question 9

A country with negative net exports has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 10

What is the logic behind the theory of purchasing-power parity?

Accepted Answer

The logic behind purchasing-power parity...

Question 11

In the U.S.a candy bar costs $1.If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2,then,what would be the price of a candy bar in China?

Accepted Answer

A)   7.2 yuan
B)   6 yuan
C)   5 yuan
D)   3.6 yuanE) C) and D)
F) A) and D)

Question 12

In an open economy national saving equals domestic investment plus net capital outflow.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that Bill,a resident of the U.S. ,buys software from a company in Japan.Explain why and in what directions this changes U.S.net exports and U.S.net capital outflow.

Accepted Answer

The purchase of a foreign good by a U.S....

Question 14

Other things the same,an increase in the foreign price level

Accepted Answer

A)   reduces the real exchange rate.This reduction could be offset by a decrease in the domestic price level.
B)   reduces the real exchange rate.This reduction could be offset by an increase in the domestic price level.
C)   increases the real exchange rate.This increase could be offset by a decrease in the domestic price level.
D)   increases the real exchange rate.This increase could be offset by an increase in the domestic price level.E) None of the above
F) A) and D)

Question 15

U.S- based Dell sells computers to an Irish company that pays with previously obtained U.S.currency.This exchange

Accepted Answer

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

Question 16

The value of the goods and services Australia purchases from the U.S.are greater than the value of goods and services the U.S.purchases from Australia.The U.S.has

Accepted Answer

A)   positive net exports with Australia and a trade surplus with Australia.
B)   positive net exports with Australia and a trade deficit with Australia.
C)   negative net exports with Australia and a trade surplus with Australia.
D)   negative net exports with Australia and a trade deficit with Australia.E) B) and C)
F) A) and D)

Question 17

Which of the following both reduce net exports?

Accepted Answer

A)   exports rise,imports rise
B)   exports rise,imports fall
C)   imports rise,exports rise
D)   imports rise,exports fallE) A) and B)
F) All of the above

Question 18

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

Accepted Answer

A)   The U.S.has a trade surplus of $100 billion.
B)   The U.S.has a trade surplus of $50 billion.
C)   The U.S.has a trade deficit of $100 billion.
D)   The U.S.has a trade deficit of $50 billion.E) A) and B)
F) A) and C)

Question 19

Net capital outflow equals

Accepted Answer

A)   the value of domestic assets purchased by foreigners.
B)   the value of foreign assets purchased by domestic residents.
C)   the value of domestic assets purchased by foreigners - the value of foreign assets purchased by domestic residents.
D)   the value of foreign assets purchased by domestic residents - the value of domestic assets purchased by foreigners.E) B) and C)
F) A) and B)

Question 20

Suppose the real exchange rate is .80 pounds of bananas in Guatemala per pound of bananas in the U.S.If a pound of bananas in the U.S.costs $.50,and the exchange rate is 8 Guatemalan Quetzals per dollar,what is the price of bananas in Guatemala?

Accepted Answer

A)   3.20 Quetzals per pound
B)   4.00 Quetzals per pound
C)   5.00 Quetzals per pound
D)   6.40 Quetzals per poundE) B) and D)
F) A) and D)

Exam 31: Open-Economy Macroeconomic Models

Net capital outflow equals

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You are planning a graduation trip to Nepal.Other things the same,if the dollar appreciates relative to the Nepalese rupee,then

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Suppose that Bill,a resident of the U.S. ,buys software from a company in Japan.Explain why and in what directions this changes U.S.net exports and U.S.net capital outflow.

Correct AnswerverifiedThe purchase of a foreign good by a U.S....View AnswerShow Answer

In an open economy national saving equals domestic investment plus net capital outflow.

Correct AnswerverifiedShow Answer

Clear Brook Farms,a U.S.manufacturer of frozen vegetarian entrees,sells cases of its product to stores overseas.These sales

Correct AnswerverifiedShow Answer

Other things the same,if a country has a trade deficit and saving rises,

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A country with negative net exports has a trade surplus.

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U.S- based Dell sells computers to an Irish company that pays with previously obtained U.S.currency.This exchange

Correct AnswerverifiedShow Answer

In the U.S.a candy bar costs $1.If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2,then,what would be the price of a candy bar in China?

Correct AnswerverifiedShow Answer

A Turkish firm excahnges lira (Turkish currency)for dollars.It then uses these dollars to purchase computers from the U.S.These actions decrease U.S.net capital outflow and increase U.S.net exports.

Correct AnswerverifiedShow Answer

Paine Pharmaceuticals produces medicines in the U.S.Its overseas sales

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?

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What is the logic behind the theory of purchasing-power parity?

Correct AnswerverifiedThe logic behind purchasing-power parity...View AnswerShow Answer

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

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Other things the same,an increase in the foreign price level

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A German mutual fund sells euros to a U.S.bank for $20,000.The mutual fund then uses these dollars to purchase a bond issued by United Express,a U.S.delivery company.As a result of these two transactions,what happened to U.S.net capital outflow?

Correct AnswerverifiedShow Answer

The nominal exchange rate is the

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The value of the goods and services Australia purchases from the U.S.are greater than the value of goods and services the U.S.purchases from Australia.The U.S.has

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Which of the following both reduce net exports?

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Suppose the real exchange rate is .80 pounds of bananas in Guatemala per pound of bananas in the U.S.If a pound of bananas in the U.S.costs $.50,and the exchange rate is 8 Guatemalan Quetzals per dollar,what is the price of bananas in Guatemala?

Correct AnswerverifiedShow Answer

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The purchase of a foreign good by a U.S....
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The logic behind purchasing-power parity...
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