Question 1

The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia is 1,200 markas while in the U.S. it is $1,000. The real exchange rate is

Accepted Answer

A)   9/5
B)   5/4
C)   4/5
D)   None of the above are correct.E) B) and C)
F) A) and B)

Question 2

In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 and net capital outflow equals $225 billion. What is national saving?

Accepted Answer

A)   $225 billion
B)   $510 billion
C)   $735 billion
D)   $1,390 billionE) All of the above
F) B) and C)

Question 3

The price of a basket of goods is $2000 in the U.S. If purchasing-power parity holds, and the dollar buys two units of some country's currency, then how many units of foreign currency does the same basket of goods cost in that country?

Accepted Answer

A)   4000
B)   2000
C)   1000
D)   None of the above are correct.E) A) and B)
F) All of the above

Question 4

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 5

If the U.S. real exchange rate appreciates, U.S. exports

Accepted Answer

A)   increase and U.S. imports decrease.
B)   decrease and U.S. imports increase.
C)   and U.S. imports both increase.
D)   and U.S. imports both decrease.E) All of the above
F) B) and D)

Question 6

The nominal exchange rate is 32 Russian rubles per dollar. The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S.
A. What is the real exchange rate? Show your work.
B. Can arbitragers make a profit?
C. If your answer to B is yes, where would arbitragers buy and where would they sell.

Accepted Answer

A. The real exchange rate = $7...

Question 7

Eric, a resident of Sweden, purchases a book printed in the U.S. Which country's exports increase?

Accepted Answer

A)   Sweden's
B)   the U.S.'s
C)   Sweden's and the U.S.'s
D)   neither Sweden's nor the U.S.'sE) B) and D)
F) None of the above

Question 8

If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,

Accepted Answer

A)   U.S. net capital outflow is $300 billion; capital is flowing into the U.S.
B)   U.S. net capital outflow is $300 billion; capital is flowing out of the U.S.
C)   U.S. net capital outflow is -$300 billion; capital is flowing into the U.S.
D)   U.S. net capital outflow is -$300 billion; capital is flowing out of the U.S.E) All of the above
F) None of the above

Question 9

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

Question 10

A pair of running shoes costs $70 in the U.S. If the price of the same shoes is 4500 rupees in India and the exchange rate is 60 rupees per dollar, than the real exchange rate is

Accepted Answer

A)   more than 1, so a profit could be made by buying these shoes in the U.S. and selling them in India.
B)   more than 1, so a profit could be made by buying these shoes in India and selling them in the U.S.
C)   less than 1, so a profit could be made by buying these shoes in the U.S. and selling them in India.
D)   less than 1, so a profit could be made by buying these shoes in India and selling them in the U.S.E) A) and B)
F) None of the above

Question 11

If U.S. consumers decrease their demand for cell phones from Finland, then other things the same Finland's

Accepted Answer

A)   exports and net exports fall.
B)   exports fall and net exports rise.
C)   imports and net exports fall.
D)   imports fall and net exports rise.E) A) and C)
F) B) and C)

Question 12

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 D)
F) B) and C)

Question 13

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

Question 14

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

Question 15

If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?

Accepted Answer

A)   2
B)   3/2
C)   2/3
D)   1/2E) B) and C)
F) None of the above

Question 16

Last year a country purchased $1.5 trillion worth of goods and services from foreign countries, sold $2 trillion worth of goods and services to foreign countries and had national saving of $1.25 trillion. What was the value of its domestic investment? Show your work.

Accepted Answer

Net capital outflow = Net expo...

Question 17

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

Question 18

Most of the change from 1980 to 1987 in U.S. net capital outflow as a percent of GDP was due to an)

Accepted Answer

A)   decrease in U.S. investment.
B)   decrease in U.S. national saving.
C)   increase in U.S. investment.
D)   increase in U.S. national saving.E) None of the above
F) A) and D)

Question 19

Last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion worth of foreign assets. What was the value of domestic assets purchased by foreigners?

Accepted Answer

A)   $70 billion
B)   $40 billion
C)   $30 billion
D)   $10 billionE) B) and C)
F) A) and B)

Question 20

From 1991-2000, 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) B) and D)
F) B) and C)

Exam 18: Open-Economy Macroeconomics: Basic Concepts

The price of a basket of goods is $2000 in the U.S. If purchasing-power parity holds, and the dollar buys two units of some country's currency, then how many units of foreign currency does the same basket of goods cost in that country?

Correct Answer
verified

A pair of running shoes costs $70 in the U.S. If the price of the same shoes is 4500 rupees in India and the exchange rate is 60 rupees per dollar, than the real exchange rate is

Correct Answer
verified

Eric, a resident of Sweden, purchases a book printed in the U.S. Which country's exports increase?

Correct Answer
verified

When making investment decisions, investors

Correct Answer
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In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 and net capital outflow equals $225 billion. What is national saving?

Correct Answer
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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
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If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,

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 purchased $1.5 trillion worth of goods and services from foreign countries, sold $2 trillion worth of goods and services to foreign countries and had national saving of $1.25 trillion. What was the value of its domestic investment? Show your work.

Correct Answer
verified
Net capital outflow = Net expo...
View Answer

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

Correct Answer
verified

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Correct Answer
verified

If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
verified

If the U.S. real exchange rate appreciates, U.S. exports

Correct Answer
verified

If U.S. consumers decrease their demand for cell phones from Finland, then other things the same Finland's

Correct Answer
verified

The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia is 1,200 markas while in the U.S. it is $1,000. The real exchange rate is

Correct Answer
verified

Most of the change from 1980 to 1987 in U.S. net capital outflow as a percent of GDP was due to an)

Correct Answer
verified

Correct Answer
verified
A. The real exchange rate = $7...
View Answer

Last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion worth of foreign assets. What was the value of domestic assets purchased by foreigners?

Correct Answer
verified

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

Exam 18: Open-Economy Macroeconomics: Basic Concepts

The price of a basket of goods is $2000 in the U.S. If purchasing-power parity holds, and the dollar buys two units of some country's currency, then how many units of foreign currency does the same basket of goods cost in that country?

Correct AnswerverifiedShow Answer

A pair of running shoes costs $70 in the U.S. If the price of the same shoes is 4500 rupees in India and the exchange rate is 60 rupees per dollar, than the real exchange rate is

Correct AnswerverifiedShow Answer

Eric, a resident of Sweden, purchases a book printed in the U.S. Which country's exports increase?

Correct AnswerverifiedShow Answer

When making investment decisions, investors

Correct AnswerverifiedShow Answer

In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 and net capital outflow equals $225 billion. What is national saving?

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

If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,

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 purchased $1.5 trillion worth of goods and services from foreign countries, sold $2 trillion worth of goods and services to foreign countries and had national saving of $1.25 trillion. What was the value of its domestic investment? Show your work.

Correct AnswerverifiedNet capital outflow = Net expo...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

If the U.S. real exchange rate appreciates, U.S. exports

Correct AnswerverifiedShow Answer

If U.S. consumers decrease their demand for cell phones from Finland, then other things the same Finland's

Correct AnswerverifiedShow Answer

The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia is 1,200 markas while in the U.S. it is $1,000. The real exchange rate is

Correct AnswerverifiedShow Answer

Most of the change from 1980 to 1987 in U.S. net capital outflow as a percent of GDP was due to an)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA. The real exchange rate = $7...View AnswerShow Answer

Last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion worth of foreign assets. What was the value of domestic assets purchased by foreigners?

Correct AnswerverifiedShow 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

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

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Net capital outflow = Net expo...
View Answer

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A. The real exchange rate = $7...
View Answer

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