Question 1

If we consider the savings, investment, and net exports in the United States in recent years, the gap between savings and investment is almost exactly:

Accepted Answer

A)   the government deficit.
B)   the balance of payments.
C)   direct foreign investment.
D)   the trade balance.E) A) and B)
F) B) and C)

Question 2

When the U.S. exchange rate rises, the trade deficit will:

Accepted Answer

A)   usually fall.
B)   remain unaffected.
C)   be balanced by an increase in net exports.
D)   usually rise, too.E) B) and C)
F) A) and B)

Question 3

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

Question 4

When the Fed practices contractionary monetary policy, the interest rate goes:

Accepted Answer

A)   up, and the exchange rate will appreciate as a result.
B)   up, and the exchange rate will depreciate as a result.
C)   down, and the exchange rate will appreciate as a result.
D)   down, and the exchange rate will depreciate as a result.E) A) and C)
F) C) and D)

Question 5

Josh runs a landscaping business in Vermont and decides to hire two people in India to maintain his bookkeeping for him electronically. Josh can pay them much less than he would pay a bookkeeper in the U.S., and the workers enjoy a higher quality of life in India thanks to their jobs with Josh's company. Josh's actions are an example of:

Accepted Answer

A)   foreign portfolio investment.
B)   foreign direct investment.
C)   importing.
D)   exporting.E) B) and C)
F) A) and D)

Question 6

In 2015, imports represented:

Accepted Answer

A)   about 15 percent of U.S. GDP.
B)   about 1 percent of U.S. GDP.
C)   about 40 percent of U.S. GDP.
D)   nearly 70 percent of U.S. GDP.E) C) and D)
F) A) and C)

Question 7

The balance of payments is:

Accepted Answer

A)   the accounting of trade in financial assets.
B)   the accounting of trade in goods and capital.
C)   positive when a country has a trade deficit.
D)   negative when a country has a trade surplus.E) B) and C)
F) A) and D)

Question 8

If foreign interest rates are high relative to those in the U.S. demand for dollars will:

Accepted Answer

A)   decrease as investors sell their dollars to buy foreign currency for investment abroad.
B)   increase as investors sell their currency to buy dollars for investment.
C)   decrease as investors sell their currency to buy dollars for investment.
D)   increase as investors sell their dollars to buy foreign currency for investment.E) A) and D)
F) All of the above

Question 9

The investment when a firm runs part of its operation abroad or invests in another company abroad is called:

Accepted Answer

A)   portfolio investment.
B)   import investment.
C)   export investment.
D)   foreign direct investment.E) A) and D)
F) None of the above

Question 10

The income-expenditure identity for a closed economy is:

Accepted Answer

A)   Y = C + I +G.
B)   Im − Ex = C + I.
C)   Y = C + I + G + NX.
D)   Y + G = C + I − NX.E) A) and B)
F) B) and C)

Question 11

If a country allows its currency's value to be determined in the market for foreign exchange, it has a:

Accepted Answer

A)   fixed exchange rate.
B)   floating exchange rate.
C)   prime exchange rate.
D)   key exchange rate.E) A) and B)
F) C) and D)

Question 12

The majority of export in the U.S. come from:

Accepted Answer

A)   capital goods and consumption goods.
B)   industrial goods and consumption goods.
C)   capital goods and industrial supplies.
D)   consumption goods and automotive vehicles.E) A) and B)
F) B) and C)

Question 13

All of the following is likely to increase the supply of U.S. dollars in the forex market except?

Accepted Answer

A)   If U.S. interest rates are low relative to foreign interest rates
B)   If investors' confidence in foreign economies increases
C)   If U.S. consumers prefer foreign goods to U.S. goods
D)   If investors' confidence in US investments increases.E) All of the above
F) A) and D)

Question 14

A country that typically runs a trade surplus is:

Accepted Answer

A)   the United States.
B)   China.
C)   France.
D)   Canada.E) None of the above
F) All of the above

Question 15

When Kim in Korea buys stock in GE (General Electric) , NCO:

Accepted Answer

A)   decreases.
B)   is unaffected.
C)   increases.
D)   is zero.E) None of the above
F) All of the above

Question 16

If the cost of a typical basket of goods in the U.S. is $100 and in France it is 400 euros, and the nominal exchange rate is 2 euro per dollar, what is the real exchange rate?

Accepted Answer

A)   0.5.
B)   1.0.
C)   1.5.
D)   2.0.E) None of the above
F) A) and B)

Question 17

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

Question 18

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

Accepted Answer

A)   trade value.
B)   net budget balance.
C)   balance of trade.
D)   net trade value.E) A) and B)
F) A) and C)

Question 19

If $1 is worth 0.70 euros, then 1 euro is worth:

Accepted Answer

A)   $7.43.
B)   $1.43.
C)   $7.00.
D)   $0.70.E) All of the above
F) A) and B)

Question 20

The institution that is responsible for maintaining international monetary stability is the:

Accepted Answer

A)   International Monetary Fund.
B)   World Bank.
C)   United Nations.
D)   International Reserve Bank.E) B) and C)
F) B) and D)

Exam 18: Open-Market Macroeconomics

The balance of payments is:

Correct Answer
verified

When Kim in Korea buys stock in GE (General Electric) , NCO:

Correct Answer
verified

If $1 is worth 0.70 euros, then 1 euro is worth:

Correct Answer
verified

If a country allows its currency's value to be determined in the market for foreign exchange, it has a:

Correct Answer
verified

If foreign interest rates are high relative to those in the U.S. demand for dollars will:

Correct Answer
verified

A country that typically runs a trade surplus is:

Correct Answer
verified

The majority of export in the U.S. come from:

Correct Answer
verified

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

Correct Answer
verified

If we consider the savings, investment, and net exports in the United States in recent years, the gap between savings and investment is almost exactly:

Correct Answer
verified

The investment when a firm runs part of its operation abroad or invests in another company abroad is called:

Correct Answer
verified

All of the following is likely to increase the supply of U.S. dollars in the forex market except?

Correct Answer
verified

The income-expenditure identity for a closed economy is:

Correct Answer
verified

If the cost of a typical basket of goods in the U.S. is $100 and in France it is 400 euros, and the nominal exchange rate is 2 euro per dollar, what is the real exchange rate?

Correct Answer
verified

When the U.S. exchange rate rises, the trade deficit will:

Correct Answer
verified

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

Correct Answer
verified

The institution that is responsible for maintaining international monetary stability is the:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

When the Fed practices contractionary monetary policy, the interest rate goes:

Correct Answer
verified

In 2015, imports represented:

Correct Answer
verified

Exam 18: Open-Market Macroeconomics

The balance of payments is:

Correct AnswerverifiedShow Answer

When Kim in Korea buys stock in GE (General Electric) , NCO:

Correct AnswerverifiedShow Answer

If $1 is worth 0.70 euros, then 1 euro is worth:

Correct AnswerverifiedShow Answer

If a country allows its currency's value to be determined in the market for foreign exchange, it has a:

Correct AnswerverifiedShow Answer

If foreign interest rates are high relative to those in the U.S. demand for dollars will:

Correct AnswerverifiedShow Answer

A country that typically runs a trade surplus is:

Correct AnswerverifiedShow Answer

The majority of export in the U.S. come from:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If we consider the savings, investment, and net exports in the United States in recent years, the gap between savings and investment is almost exactly:

Correct AnswerverifiedShow Answer

The investment when a firm runs part of its operation abroad or invests in another company abroad is called:

Correct AnswerverifiedShow Answer

All of the following is likely to increase the supply of U.S. dollars in the forex market except?

Correct AnswerverifiedShow Answer

The income-expenditure identity for a closed economy is:

Correct AnswerverifiedShow Answer

If the cost of a typical basket of goods in the U.S. is $100 and in France it is 400 euros, and the nominal exchange rate is 2 euro per dollar, what is the real exchange rate?

Correct AnswerverifiedShow Answer

When the U.S. exchange rate rises, the trade deficit will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The institution that is responsible for maintaining international monetary stability is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the Fed practices contractionary monetary policy, the interest rate goes:

Correct AnswerverifiedShow Answer

In 2015, imports represented:

Correct AnswerverifiedShow Answer

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