Question 1

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Accepted Answer

A)   $7.2 billion of exports and $4.8 billion of imports.
B)   $7.2 billion of imports and $4.8 billion of exports.
C)   $4.8 billion of exports and $2.4 billion of imports.
D)   $4.8 billion of imports and $2.4 billion of exports.E) A) and B)
F) A) and C)

Question 2

A U.S. firm opens a factory that produces power tools in Korea.

Accepted Answer

A)   This increases U.S. net capital outflow and decreases Korean net capital outflow.
B)   This decreases U.S. net capital outflow and increases Korean net capital outflow.
C)   This increases only U.S. net capital outflow.
D)   This increases only Korean net capital outflow.E) B) and C)
F) A) and C)

Question 3

Jen and Alica are both U.S. citizens. Jen opens a cafe in France. Alicia buys equipment from a company in Canada to use in her factory. Whose action is an example of U.S. foreign direct investment?

Accepted Answer

A)   Jen's and Alica's
B)   Jen's but not Alicia's
C)   Alicia's but not Jen's
D)   Neither Anthony's nor Tom's.E) A) and B)
F) A) and C)

Question 4

If a country has positive net capital outflows, then its net exports are

Accepted Answer

A)   positive, and its saving is larger than its domestic investment.
B)   positive, and its saving is smaller than its domestic investment.
C)   negative, and its saving is larger than its domestic investment.
D)   negative, and its saving is smaller than its domestic investment.E) A) and D)
F) A) and C)

Question 5

The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is

Accepted Answer

A)   3/8
B)   2/3
C)   3/2
D)   8/3E) A) and B)
F) A) and C)

Question 6

An open economy's GDP is always given by

Accepted Answer

A)   Y = C + I + G.
B)   Y = C + I + G + T.
C)   Y = C + I + G + S.
D)   Y = C + I + G + NX.E) C) and D)
F) B) and D)

Question 7

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

Accepted Answer

A)   buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States.
B)   buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in Egypt.
C)   buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in Egypt.
D)   buying cotton in Egypt and selling it in the United States, which would tend to raise the price of cotton in the United States.E) A) and D)
F) None of the above

Question 8

When the Sykes Corporation (an American company)  buys shares of Audi stock (a German company)  for its pension fund, U.S. net capital outflow

Accepted Answer

A)   increases because an American company makes a portfolio investment in Germany.
B)   declines because an American company makes a portfolio investment in Germany.
C)   increases because an American company makes a direct investment in Germany.
D)   declines because an American company makes a direct investment in Germany.E) C) and D)
F) All of the above

Question 9

Nominal exchange rates

Accepted Answer

A)   vary little over time.
B)   vary substantially over time.
C)   appreciate over time for most countries.
D)   depreciate over time for most countries.E) B) and D)
F) A) and B)

Question 10

Which of the following statements is incorrect for an open economy?

Accepted Answer

A)   A country can have a trade deficit, trade surplus, or balanced trade.
B)   A country that has a trade deficit has positive net capital outflow.
C)   Net exports must equal net capital outflow.
D)   National saving equals domestic investment plus net capital outflow.E) B) and C)
F) C) and D)

Question 11

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 12

Table 31-2 
-Refer to Table 31-2. Which currency(ies)  is(are)  have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)   the euro and the riyal
B)   the pound and the yen
C)   the bolivar
D)   the yenE) All of the above
F) B) and D)

Question 13

A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S.

Accepted Answer

A)   foreign direct investment that increase U.S. net capital outflow.
B)   foreign direct investment that decrease U.S. net capital outflow.
C)   foreign portfolio investment that increase U.S. net capital outflow.
D)   foreign portfolio investment that decrease U.S. net capital outflow.E) A) and D)
F) None of the above

Question 14

Foreign-produced goods and services that are purchased domestically are called

Accepted Answer

A)   imports.
B)   exports.
C)   net imports.
D)   net exports.E) B) and D)
F) None of the above

Question 15

You buy a new car built in Sweden. Other things the same, your purchase by itself

Accepted Answer

A)   raises both U.S. exports and U.S. net exports.
B)   raises U.S. exports and lowers U.S. net exports.
C)   raises both U.S. imports and U.S. net exports.
D)   raises U.S. imports and lowers U.S. net exports.E) A) and D)
F) All of the above

Question 16

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) None of the above
F) B) and D)

Question 17

Last month a country sold more goods and services to residents of foreign countries than it purchased from them. What does this imply about this country's trade balance?

Accepted Answer

This count...

Question 18

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Accepted Answer

The answer of A country had a net capital outflow...

Question 19

A country sells more to foreign countries than it buys from them. It has

Accepted Answer

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

Question 20

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Accepted Answer

A)   7/4 cans of Belgian coffee per can of U.S. coffee
B)   5.6/5 cans of Belgian coffee per can of U.S. coffee
C)   5/5.6 cans of Belgian coffee per can of U.S. coffee
D)   4/7 cans of Belgian coffee per can of U.S. coffeeE) B) and D)
F) B) and C)

Exam 31: Open-Economy Macroeconomics: Basic Concepts

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

You buy a new car built in Sweden. Other things the same, your purchase by itself

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If a country has positive net capital outflows, then its net exports are

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In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

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A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S.

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Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

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Nominal exchange rates

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The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is

Correct AnswerverifiedShow Answer

Jen and Alica are both U.S. citizens. Jen opens a cafe in France. Alicia buys equipment from a company in Canada to use in her factory. Whose action is an example of U.S. foreign direct investment?

Correct AnswerverifiedShow Answer

An open economy's GDP is always given by

Correct AnswerverifiedShow Answer

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

Correct AnswerverifiedShow Answer

Last month a country sold more goods and services to residents of foreign countries than it purchased from them. What does this imply about this country's trade balance?

Correct AnswerverifiedThis count...View AnswerShow Answer

A country sells more to foreign countries than it buys from them. It has

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Foreign-produced goods and services that are purchased domestically are called

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Which of the following statements is incorrect for an open economy?

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A U.S. firm opens a factory that produces power tools in Korea.

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If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

Correct AnswerverifiedShow Answer

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

Correct AnswerverifiedShow Answer

Table 31-2 -Refer to Table 31-2. Which currency(ies) is(are) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

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When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund, U.S. net capital outflow

Correct AnswerverifiedShow Answer

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