Question 1

Net capital outflow

Accepted Answer

A)  is always greater than net exports.
B)  is always less than net exports.
C)  is always equal to net exports.
D)  could be any of the above.E) B) and C)
F) A) and D)

Question 2

A country has net capital outflow of -10 billion euros and domestic investment of 20 billion euros. What is its national saving?

Accepted Answer

A)  30 billion euros
B)  10 billion euros
C)  -10 billion euros
D)  -30 billion eurosE) A) and D)
F) None of the above

Question 3

Net capital outflow measures the imbalance between the amount of

Accepted Answer

A)  foreign assets held by domestic residents and domestic assets held by foreign residents.
B)  foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners.
C)  foreign assets bought by domestic residents and the amount of domestic goods and services sold to foreigners.
D)  None of the above is correct.E) A) and D)
F) B) and C)

Question 4

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company.
As a result of these transactions, by how much 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 5

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

Accepted Answer

A)  $60 billion
B)  $35 billion
C)  $10 billion
D)  None of the above are correct.E) A) and D)
F) B) and C)

Question 6

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

Accepted Answer

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

Question 7

A country has $20 billion of domestic investment and net capital outflow of $10 billion. What is saving?

Accepted Answer

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

Question 8

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Accepted Answer

A)  The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
B)  The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera there.
C)  The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
D)  The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera.E) C) and D)
F) A) and B)

Question 9

Other things the same, the real exchange rate between U.S. and Belgian goods would be higher if

Accepted Answer

A)  ​prices in the U.S. were higher, or the number of euro the dollar purchased were higher.
B)  ​prices in the U.S. were higher, or the number of euro the dollar purchased were lower.
C)  ​prices in the U.S. were lower, or the number of euro the dollar purchased were higher.
D)  ​prices in the U.S. were lower, or the number of euro the dollar purchased were lower.E) All of the above
F) B) and D)

Question 10

According to purchasing-power parity, inflation in the U.S. causes the dollar to

Accepted Answer

A)  depreciate relative to all other currencies.
B)  depreciate relative to currencies of countries that have lower inflation rates.
C)  appreciate relative to all other countries.
D)  appreciate relative to currencies of countries that have lower inflation rates.E) A) and D)
F) None of the above

Question 11

Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases,

Accepted Answer

A)  the first action by itself raises U.S. net exports, the second action by itself raises U.S. net capital outflow.
B)  the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow.
C)  the first action by itself lowers U.S. net exports, the second action by itself raises U.S. net capital outflow.
D)  the first action by itself lowers U.S. net exports, the second action by itself lowers U.S. net capital outflow.E) B) and C)
F) A) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Suppose that in 2015 the nominal exchange rate was 9 Egyptian pounds per dollar, the price of a basket of goods in the U.S. was $600 and the price of the same basket of goods in Egypt was 6000 pounds. Suppose that in 2016 these values were 10 Egyptian pounds per dollar, $620, and 7200 pounds. From 2015 to 2016 U.S. real exchange rate

Accepted Answer

A)  appreciated which by itself would make U.S. net exports fall.
B)  appreciated which by itself would make U.S. net exports rise.
C)  depreciated which by itself would make U.S. net exports fall.
D)  depreciated which by itself would make U.S. net exports rise.E) A) and D)
F) B) and C)

Question 14

Reductions in transportation costs help explain the increase in U.S. trade flows.

Accepted Answer

A) True 
 B)False

Question 15

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

Accepted Answer

A)  $280 billion
B)  $780 billion
C)  $890 billion
D)  $1,170 billionE) A) and B)
F) A) and C)

Question 16

When making investment decisions, investors

Accepted Answer

A)  compare the real interest rates offered on different bonds.
B)  compare the nominal, but not the real, interest rates offered on different bonds.
C)  purchase the highest-priced bond available.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 17

Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. What is the value of net exports?

Accepted Answer

A)  $170 million
B)  $80 million
C)  $10 million
D)  -$10 millionE) A) and D)
F) All of the above

Question 18

Which of the following equations is correct?

Accepted Answer

A)  S = I + C
B)  S = I - NX
C)  S = I + NCO
D)  S = NX - NCO.E) A) and B)
F) A) and C)

Question 19

Over the last 5 years the amount of country A's currency it took to buy a unit of country B's currency more than doubled.
A. Did country A's currency depreciate or appreciate?
B. According to purchasing-power parity, what explains the change in the value of country B's currency?

Accepted Answer

A. It depreciated.B....

Question 20

Other things the same, a country could move from having a trade surplus to having a trade deficit if either

Accepted Answer

A)  saving rose or domestic investment rose.
B)  saving rose or domestic investment fell.
C)  saving fell or domestic investment rose.
D)  saving fell or domestic investment fell.E) B) and C)
F) A) and D)

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases,

Correct Answer
verified

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

Correct Answer
verified

Other things the same, a country could move from having a trade surplus to having a trade deficit if either

Correct Answer
verified

A country has $20 billion of domestic investment and net capital outflow of $10 billion. What is saving?

Correct Answer
verified

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

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

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

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
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Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. What is the value of net exports?

Correct Answer
verified

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Correct Answer
verified

Reductions in transportation costs help explain the increase in U.S. trade flows.

Correct Answer
verified

A country has net capital outflow of -10 billion euros and domestic investment of 20 billion euros. What is its national saving?

Correct Answer
verified

Other things the same, the real exchange rate between U.S. and Belgian goods would be higher if

Correct Answer
verified

Over the last 5 years the amount of country A's currency it took to buy a unit of country B's currency more than doubled. A. Did country A's currency depreciate or appreciate? B. According to purchasing-power parity, what explains the change in the value of country B's currency?

Correct Answer
verified
A. It depreciated.B....
View Answer

According to purchasing-power parity, inflation in the U.S. causes the dollar to

Correct Answer
verified

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

Correct Answer
verified

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

Correct Answer
verified

Correct Answer
verified

Net capital outflow

Correct Answer
verified

When making investment decisions, investors

Correct Answer
verified

Net capital outflow measures the imbalance between the amount of

Correct Answer
verified

Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same, a country could move from having a trade surplus to having a trade deficit if either

Correct AnswerverifiedShow Answer

A country has $20 billion of domestic investment and net capital outflow of $10 billion. What is saving?

Correct AnswerverifiedShow Answer

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

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

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

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. What is the value of net exports?

Correct AnswerverifiedShow Answer

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?

Correct AnswerverifiedShow Answer

Reductions in transportation costs help explain the increase in U.S. trade flows.

Correct AnswerverifiedShow Answer

A country has net capital outflow of -10 billion euros and domestic investment of 20 billion euros. What is its national saving?

Correct AnswerverifiedShow Answer

Other things the same, the real exchange rate between U.S. and Belgian goods would be higher if

Correct AnswerverifiedShow Answer

Over the last 5 years the amount of country A's currency it took to buy a unit of country B's currency more than doubled. A. Did country A's currency depreciate or appreciate? B. According to purchasing-power parity, what explains the change in the value of country B's currency?

Correct AnswerverifiedA. It depreciated.B....View AnswerShow Answer

According to purchasing-power parity, inflation in the U.S. causes the dollar to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In an open economy, gross domestic product equals $1,970 billion, government expenditure equals $300 billion, investment equals $500 billion, and net capital outflow equals $280 billion. What is consumption expenditure?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Net capital outflow

Correct AnswerverifiedShow Answer

When making investment decisions, investors

Correct AnswerverifiedShow Answer

Net capital outflow measures the imbalance between the amount of

Correct AnswerverifiedShow Answer

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A. U.S. net exports ...
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A. It depreciated.B....
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