Question 1

In general,the accounting of trade in goods and capital is known as the:

Accepted Answer

A)  balance of trade.
B)  net capital outflow.
C)  balance of payments.
D)  trade surplus.E) None of the above
F) B) and D)

Question 2

Anheuser-Busch purchased the Labatt brewery in Canada and has expanded its market and product offerings.This is an example of:

Accepted Answer

A)  foreign direct investment.
B)  foreign portfolio investment.
C)  importing.
D)  exporting.E) All of the above
F) A) and B)

Question 3

If purchasing power parity holds between the U.S.and China:

Accepted Answer

A)  the real exchange rate must be 1.
B)  the nominal exchange rate must be 1.
C)  the U.S.must no longer have a trade deficit.
D)  China must no longer have a trade deficit.E) C) and D)
F) A) and D)

Question 4

Who is most likely to benefit when the dollar appreciates against the euro?

Accepted Answer

A)  U.S.buyers of foreign goods
B)  Foreign buyers of U.S.goods
C)  U.S.buyers of U.S.goods
D)  Foreign buyers of foreign goodsE) B) and C)
F) None of the above

Question 5

When we demand Mexican pesos,the price we pay for those pesos is the:

Accepted Answer

A)  exchange rate.
B)  interest rate.
C)  savings rate.
D)  prime rate.E) B) and D)
F) All of the above

Question 6

When Pierre in Paris,France buys stock in Disney,Inc. ,he is contributing to:

Accepted Answer

A)  capital outflow for the U.S.
B)  capital inflow for the U.S.
C)  domestic investment in the U.S.
D)  private savings in the U.S.E) C) and D)
F) None of the above

Question 7

If foreign interest rates are high relative to those in the U.S.:

Accepted Answer

A)  demand for dollars will decrease as investors sell their dollars to buy foreign currency for investment.
B)  demand for dollars will increase as investors sell their currency to buy dollars for investment.
C)  demand for dollars will decrease as investors sell their currency to buy dollars for investment.
D)  demand for dollars will increase as investors sell their dollars to buy foreign currency for investment.E) B) and D)
F) None of the above

Question 8

In the market for loanable funds in an open economy,international investment:

Accepted Answer

A)  comes from capital outflow.
B)  comes from capital inflow.
C)  is money invested outside its originating country.
D)  All of these statements are true.E) A) and B)
F) All of the above

Question 9

When the value of a currency experiences exchange-rate appreciation,it's value:

Accepted Answer

A)  increases relative to the value of another currency.
B)  can buy more goods and services in its own country.
C)  decreases relative to the value of another currency.
D)  has experienced inflation relative to other currency.E) C) and D)
F) B) and D)

Question 10

When interest rates in the U.S.decline,we can expect:

Accepted Answer

A)  capital inflows and capital outflows to decrease.
B)  capital inflows and capital outflows to increase.
C)  capital inflow to decrease,and capital outflow to increase.
D)  capital outflow to decrease,and capital inflow to increase.E) A) and C)
F) B) and D)

Question 11

The value of exports minus the value of imports is called the:

Accepted Answer

A)  trade value.
B)  net trade balance.
C)  balance of trade.
D)  net trade value.E) None of the above
F) A) and D)

Question 12

The market for buying and selling foreign currencies is often referred to as the:

Accepted Answer

A)  market for foreign exchange.
B)  market for loanable funds.
C)  market for international trade.
D)  market for direct foreign investment.E) All of the above
F) A) and B)

Question 13

One reason the Chinese buy a great deal of U.S.government debt is because:

Accepted Answer

A)  they have dollars left over from the sale of their goods to the U.S.and want to buy something dollar denominated.
B)  they know the risk involved is lower for U.S.government bonds than it is for any other government bond in the world.
C)  the rate of return for U.S.government bonds is higher than any other investment.
D)  None of these statements is true.E) All of the above
F) C) and D)

Question 14

The rapid movement of money across borders can easily overwhelm a country's financial markets when:

Accepted Answer

A)  a country has a heavily leveraged banking system.
B)  the required reserves are relatively low.
C)  the interest rates are relatively high.
D)  a country is small.E) B) and C)
F) None of the above

Question 15

China's high net exports must be balanced by:

Accepted Answer

A)  low net capital outflows.
B)  high net capital outflows.
C)  high net imports.
D)  high net capital inflows.E) All of the above
F) A) and C)

Question 16

If $1 is worth 10 yen,then 1 yen is worth:

Accepted Answer

A)  $0.01.
B)  $0.10.
C)  $1.00.
D)  $1.10.E) A) and B)
F) A) and C)

Question 17

The U.S.is able to maintain a large trade deficit because:

Accepted Answer

A)  when the business cycle is in a boom,it will be a trade surplus.
B)  it is balanced by a large capital surplus.
C)  it is balanced by a large capital deficit.
D)  None of these statements is true.E) B) and D)
F) A) and D)

Question 18

A trade surplus occurs when a country:

Accepted Answer

A)  imports more than it exports.
B)  imports less than it exports.
C)  has a negative balance of trade.
D)  has a zero balance of trade.E) B) and D)
F) C) and D)

Question 19

When interest rates in the U.S.decrease,we can expect:

Accepted Answer

A)  NCO to decrease,because capital inflow is increasing.
B)  NCO to increase,because capital inflow is decreasing.
C)  NCO to decrease,because capital inflow is decreasing.
D)  NCO to increase,because capital inflow is increasing.E) C) and D)
F) A) and B)

Question 20

If the value of the dollar appreciates in the foreign exchange market:

Accepted Answer

A)  net exports will increase.
B)  net exports will decrease.
C)  net exports will be unaffected.
D)  It is impossible to say how net exports will be affected without knowing how net capital outflow is affected.E) A) and B)
F) All of the above

Exam 34: Open-Market Macroeconomics

The rapid movement of money across borders can easily overwhelm a country's financial markets when:

Correct AnswerverifiedShow Answer

When Pierre in Paris,France buys stock in Disney,Inc. ,he is contributing to:

Correct AnswerverifiedShow Answer

If the value of the dollar appreciates in the foreign exchange market:

Correct AnswerverifiedShow Answer

The market for buying and selling foreign currencies is often referred to as the:

Correct AnswerverifiedShow Answer

When we demand Mexican pesos,the price we pay for those pesos is the:

Correct AnswerverifiedShow Answer

In the market for loanable funds in an open economy,international investment:

Correct AnswerverifiedShow Answer

Anheuser-Busch purchased the Labatt brewery in Canada and has expanded its market and product offerings.This is an example of:

Correct AnswerverifiedShow Answer

If foreign interest rates are high relative to those in the U.S.:

Correct AnswerverifiedShow Answer

The value of exports minus the value of imports is called the:

Correct AnswerverifiedShow Answer

When the value of a currency experiences exchange-rate appreciation,it's value:

Correct AnswerverifiedShow Answer

A trade surplus occurs when a country:

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In general,the accounting of trade in goods and capital is known as the:

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If purchasing power parity holds between the U.S.and China:

Correct AnswerverifiedShow Answer

The U.S.is able to maintain a large trade deficit because:

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Who is most likely to benefit when the dollar appreciates against the euro?

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If $1 is worth 10 yen,then 1 yen is worth:

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China's high net exports must be balanced by:

Correct AnswerverifiedShow Answer

When interest rates in the U.S.decline,we can expect:

Correct AnswerverifiedShow Answer

One reason the Chinese buy a great deal of U.S.government debt is because:

Correct AnswerverifiedShow Answer

When interest rates in the U.S.decrease,we can expect:

Correct AnswerverifiedShow Answer

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