Question 1

A dozen eggs cost $2 in the U.S. and 12 pesos in Argentina. If the real exchange rate is 5/6, what is the nominal exchange rate? Show your work.

Accepted Answer

The real exchange rate = 5/6 =...

Question 2

Other things the same, the real exchange rate between American and French goods would be lower if

Accepted Answer

A)   prices of French goods were higher, or the number of euros a dollar purchased was higher.
B)   prices of French goods were higher, or the number of euros a dollar purchased was lower.
C)   prices of French goods were lower, or the number of euros a dollar purchased was higher.
D)   prices of French goods were lower, or the number of euros a dollar purchased was lower.E) C) and D)
F) None of the above

Question 3

A U.S. firm called EcoWind produces windmills for households to generate electricity. It uses 25,000 recently obtained pesos to buy copper from a mining company in Argentina. As a result of this exchange, by how much, if at all, and in which direction did:
A. U.S. net exports change?
B. U.S. net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 4

A U.S. fast food restaurant chain sells dollars for Argentinean pesos and then uses the pesos to buy Argentinean beef. Which of the following do these transactions increase?

Accepted Answer

A)   Argentinean net capital outflow and Argentinean net exports
B)   only Argentinean net exports
C)   only Argentinean net capital outflow
D)   neither Argentinean net exports nor Argentinean capital outflowE) C) and D)
F) None of the above

Question 5

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods. Foreigners purchased $300 billion dollars of country A's assets. What was the value of country A's exports?

Accepted Answer

The value of country...

Question 6

Last year a country had exports of $50 billion, imports of $60 billion, and domestic investment of $40 billion. What was its saving last year?

Accepted Answer

A)   $30 billion
B)   $20 billion
C)   $10 billion
D)   -$10 billionE) A) and D)
F) B) and C)

Question 7

If the real exchange rate is less than 1, then the

Accepted Answer

A)   nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more than enough foreign currency to buy the same good overseas.
B)   nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foregoing currency to buy the same good overseas.
C)   nominal exchange rate x U.S. price 
D)   nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas.E) None of the above
F) A) and B)

Question 8

For an economy as a whole, net exports must equal minus one times net capital outflow.

Accepted Answer

A) True 
 B)False

Question 9

If Canada's national saving exceeds its domestic investment, then Canada has

Accepted Answer

A)   positive net capital outflows and negative net exports.
B)   positive net capital outflows and positive net exports.
C)   negative net capital outflows and negative net exports.
D)   negative net capital outflows and positive net exports.E) B) and C)
F) A) and D)

Question 10

If a country has a trade surplus

Accepted Answer

A)   it has positive net exports and positive net capital outflow.
B)   it has positive net exports and negative net capital outflow.
C)   it has negative net exports and positive net capital outflow.
D)   it has negative net exports and negative net capital outflow.E) B) and D)
F) C) and D)

Question 11

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Accepted Answer

A)   A U.S. electronics company opens and operates a new factory in India.
B)   A Swiss bank buys bonds issued by a U.S. company.
C)   A U.S. pension fund buys bonds issued by the Japanese government.
D)   A French restaurant opens and operates a restaurant in New York.E) B) and C)
F) A) and D)

Question 12

If a country has saving of $2 trillion and investment of $1.5 trillion, then it has

Accepted Answer

A)   a trade surplus and its net capital outflow = $.5 trillion.
B)   a trade surplus and its net capital outflow = -$.5 trillion.
C)   a trade deficit and its net capital outflow = $.5 trillion.
D)   a trade deficit and its net capital outflow = -$.5 trillion.E) None of the above
F) A) and D)

Question 13

If a country's imports exceed its exports it has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 14

Prices in both the U.S. and China rise, but prices in China increase by a larger percentage. According to purchasing- power parity, the U.S. dollar

Accepted Answer

A)   gains value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.
B)   gains value in terms of the domestic goods and services it can buy, but loses value in terms of the Chinese currency it can buy.
C)   loses value in terms of the domestic goods and services it can buy, but gains value in terms of the Chinese currency it can buy.
D)   loses value both in terms of the domestic goods and services it can buy and in terms of the Chinese currency it can buy.E) A) and B)
F) B) and D)

Question 15

If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion, its net exports would now be

Accepted Answer

A)   $37 billion
B)   $3 billion
C)   -$3 billion
D)   -$37 billionE) A) and D)
F) All of the above

Question 16

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) All of the above
F) A) and B)

Question 17

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad, then it has

Accepted Answer

A)   $48 billion of imports and $40 billion of exports.
B)   $48 billion of exports and $40 billion of imports.
C)   $40 billion of imports and $32 billion of exports.
D)   $40 billion of exports and $32 billion of imports.E) All of the above
F) None of the above

Question 18

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) A) and C)
F) A) and B)

Question 19

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods, which of the following increases?

Accepted Answer

A)   Saudi Arabian net exports but not Saudi Arabian net capital outflow
B)   Saudi Arabian net capital outflow but not Saudi Arabian net exports
C)   both Saudi Arabian net exports and net capital outflow
D)   neither Saudi Arabian net exports nor net capital outflowE) B) and C)
F) A) and D)

Question 20

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Accepted Answer

A)   larger positive number.
B)   smaller positive number.
C)   larger negative number.
D)   smaller negative number.E) None of the above
F) B) and D)

Exam 13: Open-Economy Macroeconomics: Basic Concepts

If a country has saving of $2 trillion and investment of $1.5 trillion, then it has

Correct Answer
verified

For an economy as a whole, net exports must equal minus one times net capital outflow.

Correct Answer
verified

If a country's imports exceed its exports it has a trade surplus.

Correct Answer
verified

If the real exchange rate is less than 1, then the

Correct Answer
verified

Other things the same, the real exchange rate between American and French goods would be lower if

Correct Answer
verified

A dozen eggs cost $2 in the U.S. and 12 pesos in Argentina. If the real exchange rate is 5/6, what is the nominal exchange rate? Show your work.

Correct Answer
verified
The real exchange rate = 5/6 =...
View Answer

Last year a country had exports of $50 billion, imports of $60 billion, and domestic investment of $40 billion. What was its saving last year?

Correct Answer
verified

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Correct Answer
verified

If a country has a trade surplus

Correct Answer
verified

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods. Foreigners purchased $300 billion dollars of country A's assets. What was the value of country A's exports?

Correct Answer
verified
The value of country...
View Answer

A U.S. fast food restaurant chain sells dollars for Argentinean pesos and then uses the pesos to buy Argentinean beef. Which of the following do these transactions increase?

Correct Answer
verified

Prices in both the U.S. and China rise, but prices in China increase by a larger percentage. According to purchasing- power parity, the U.S. dollar

Correct Answer
verified

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

Correct Answer
verified

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad, then it has

Correct Answer
verified

Correct Answer
verified
A. U.S. net exports ...
View Answer

If Canada's national saving exceeds its domestic investment, then Canada has

Correct Answer
verified

Net exports of a country are the value of

Correct Answer
verified

If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion, its net exports would now be

Correct Answer
verified

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct Answer
verified

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods, which of the following increases?

Correct Answer
verified

Exam 13: Open-Economy Macroeconomics: Basic Concepts

If a country has saving of $2 trillion and investment of $1.5 trillion, then it has

Correct AnswerverifiedShow Answer

For an economy as a whole, net exports must equal minus one times net capital outflow.

Correct AnswerverifiedShow Answer

If a country's imports exceed its exports it has a trade surplus.

Correct AnswerverifiedShow Answer

If the real exchange rate is less than 1, then the

Correct AnswerverifiedShow Answer

Other things the same, the real exchange rate between American and French goods would be lower if

Correct AnswerverifiedShow Answer

A dozen eggs cost $2 in the U.S. and 12 pesos in Argentina. If the real exchange rate is 5/6, what is the nominal exchange rate? Show your work.

Correct AnswerverifiedThe real exchange rate = 5/6 =...View AnswerShow Answer

Last year a country had exports of $50 billion, imports of $60 billion, and domestic investment of $40 billion. What was its saving last year?

Correct AnswerverifiedShow Answer

Which of the following is an example of U.S. foreign direct investment and by itself increases U.S. net capital outflow?

Correct AnswerverifiedShow Answer

If a country has a trade surplus

Correct AnswerverifiedShow Answer

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods. Foreigners purchased $300 billion dollars of country A's assets. What was the value of country A's exports?

Correct AnswerverifiedThe value of country...View AnswerShow Answer

A U.S. fast food restaurant chain sells dollars for Argentinean pesos and then uses the pesos to buy Argentinean beef. Which of the following do these transactions increase?

Correct AnswerverifiedShow Answer

Prices in both the U.S. and China rise, but prices in China increase by a larger percentage. According to purchasing- power parity, the U.S. dollar

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad, then it has

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA. U.S. net exports ...View AnswerShow Answer

If Canada's national saving exceeds its domestic investment, then Canada has

Correct AnswerverifiedShow Answer

Net exports of a country are the value of

Correct AnswerverifiedShow Answer

If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion, its net exports would now be

Correct AnswerverifiedShow Answer

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

If sales of Saudi Arabian oil to the rest of the world increase and Saudis use the proceeds to buy foreign goods, which of the following increases?

Correct AnswerverifiedShow Answer

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The real exchange rate = 5/6 =...
View Answer

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The value of country...
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A. U.S. net exports ...
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