Question 1

The nominal exchange rate is 3 Malaysian ringgits per dollar.The real exchange rate is 8/5.If a Big Mac costs 7.5 ringgits in Malaysia,how much does a Big Mac cost in the U.S.? Show your work.

Accepted Answer

The real exchange rate = 8/5 =...

Question 2

Other things the same,if a country's domestic investment decreases,then

Accepted Answer

A)   net capital outflow rises,so net exports rise.
B)   net capital outflow rises,so net exports fall.
C)   net capital outflow falls,so net exports rise.
D)   net capital outflow falls,so net exports fall.E) None of the above
F) B) and D)

Question 3

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S. ,and China uses the $50 million to purchase U.S.bonds,U.S.net exports and U.S.net capital outflow both fall.

Accepted Answer

A) True 
 B)False

Question 4

If a U.S.shirt maker purchases cotton from Egypt,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) B) and C)
F) C) and D)

Question 5

A good in the U.S.costs $20.The same good costs 150 pesos in Mexico.If the nominal exchange rate is 10 pesos per dollar,what is the real exchange rate?

Accepted Answer

A)   4/3 so the good is more expensive in the U.S.
B)   4/3 so the good is more expensive in Mexico
C)   3/4 so the good is more expensive in the U.S.
D)   3/4 so the good is more expensive in MexicoE) None of the above
F) A) and B)

Question 6

Net exports measures the difference between a country's

Accepted Answer

A)   income and expenditures.
B)   sale of goods and services abroad and purchase of foreign goods and services.
C)   sale of domestic assets abroad and purchase of foreign assets.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 7

If the exchange rate is 80 yen per dollar,then a hotel room in Tokyo that costs 25,000 yen costs $200.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that purchases of Irish assets by foreigners exceed Irish purchases of foreign assets.Ireland has

Accepted Answer

A)   positive net capital outflow and a trade surplus.
B)   positive net capital outflow and a trade deficit.
C)   negative net capital outflow and a trade surplus.
D)   negative net capital outflow and a trade deficit.E) None of the above
F) A) and B)

Question 9

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 10

Table 18-2
 
-Refer to Table 18-2.For which country(ies) in the table does purchasing-power parity hold?

Accepted Answer

A)   Bolivia and Japan
B)   Bolivia and Morocco
C)   Japan and Morocco
D)   Norway and ThailandE) All of the above
F) A) and D)

Question 11

A ton of scrap iron sells for $150 in the U.S.and 1400 yuan in China.The nominal exchange rate is 6.7 yuan per dollar.

Accepted Answer

A)   A profit could be made by buying scrap iron in China and selling it in the U.S.This would tend to drive down the price of U.S.scrap iron.
B)   A profit could be made by buying scrap iron in China and selling it in the U.S.This would tend to drive down the price of Chinese scrap iron.
C)   A profit could be made by buying scrap iron in the U.S.and selling it in China.This would tend to drive down the price of U.S.scrap iron.
D)   A profit could be made by buying scrap iron in the U.S.and selling it in China.This would tend to drive down the price of Chinese scrap iron.E) B) and D)
F) All of the above

Question 12

If a country has Y > C + I + G,then it has

Accepted Answer

A)   positive net capital outflow and positive net exports.
B)   positive net capital outflow and negative net exports.
C)   negative net capital outflow and positive net exports.
D)   negative net capital outflow and negative net exports.E) A) and D)
F) B) and D)

Question 13

How do the nominal exchange rate and the real exchange rate differ?

Accepted Answer

The nominal exchange rate is the rate at...

Question 14

While on vacation in Europe you notice that a tablet computer is selling for 600 euros in France and for 533 pounds in Britain.You also know that the exchange rates are .75 euros per dollar and .65 British pounds per dollar.Where is the number of dollars you would pay for the tablet lower? How many dollars would you have to pay to buy it there?

Accepted Answer

It costs the least i...

Question 15

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

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

Question 16

If purchasing-power parity holds,a dollar will buy

Accepted Answer

A)   more goods in foreign countries than in the United States.
B)   as many goods in foreign countries as it does in the United States.
C)   fewer goods in foreign countries than it does in the United States.
D)   None of the above is implied by purchasing-power parity.E) A) and B)
F) A) and C)

Question 17

According to purchasing power parity,if it took 4 Israeli Shekels to buy a dollar this year,but it took 3.5 to buy it last year,then the dollar has

Accepted Answer

A)   appreciated,indicating inflation was higher in the U.S.than in Israel.
B)   appreciated,indicating inflation was lower in the U.S.than in Israel.
C)   depreciated,indicating inflation was higher in the U.S.than in Israel.
D)   depreciated,indicating inflation was lower in the U.S.than in Israel.E) None of the above
F) A) and D)

Question 18

Which of the following is correct?

Accepted Answer

A)   U.S.exports as a percentage of GDP have more than doubled since 1950.The U.S.currently has a trade surplus.
B)   U.S.exports as a percentage of GDP have more than doubled since 1950.The U.S.currently has a trade deficit.
C)   U.S.exports as a percentage of GDP have increased,but have not nearly doubled since 1950.The U.S.currently has a trade surplus.
D)   U.S.exports as a percentage of GDP have increased,but have not nearly doubled since 1950.The U.S.currently has a trade deficit.E) None of the above
F) A) and B)

Question 19

If purchasing-power parity holds,a dollar will buy

Accepted Answer

A)   one unit of each foreign currency.
B)   foreign currency equal to the U.S.price level divided by the foreign country's price level.
C)   enough foreign currency to buy as many goods as it does in the United States.
D)   None of the above is implied by purchasing-power parity.E) None of the above
F) C) and D)

Question 20

Colonial America had little industry and so had mostly raw materials to export.At the same time,there were many opportunities to purchase capital goods and earn a high rate of return because there was little existing capital so that the marginal product of capital was relatively high.What does this suggest about net exports and net capital outflow in colonial America?

Accepted Answer

Net exports were negative because the va...

Exam 31: Open-Economy Macroeconomic Models

The nominal exchange rate is 3 Malaysian ringgits per dollar.The real exchange rate is 8/5.If a Big Mac costs 7.5 ringgits in Malaysia,how much does a Big Mac cost in the U.S.? Show your work.

Correct Answer
verified
The real exchange rate = 8/5 =...
View Answer

How do the nominal exchange rate and the real exchange rate differ?

Correct Answer
verified
The nominal exchange rate is the rate at...
View Answer

According to purchasing power parity,if it took 4 Israeli Shekels to buy a dollar this year,but it took 3.5 to buy it last year,then the dollar has

Correct Answer
verified

If purchasing-power parity holds,a dollar will buy

Correct Answer
verified

A good in the U.S.costs $20.The same good costs 150 pesos in Mexico.If the nominal exchange rate is 10 pesos per dollar,what is the real exchange rate?

Correct Answer
verified

If the exchange rate is 80 yen per dollar,then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct Answer
verified

Correct Answer
verified
It costs the least i...
View Answer

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S. ,and China uses the $50 million to purchase U.S.bonds,U.S.net exports and U.S.net capital outflow both fall.

Correct Answer
verified

Suppose that purchases of Irish assets by foreigners exceed Irish purchases of foreign assets.Ireland has

Correct Answer
verified

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Correct Answer
verified

Net exports measures the difference between a country's

Correct Answer
verified

Table 18-2 -Refer to Table 18-2.For which country(ies) in the table does purchasing-power parity hold?

Correct Answer
verified

If purchasing-power parity holds,a dollar will buy

Correct Answer
verified

If a U.S.shirt maker purchases cotton from Egypt,U.S.net exports

Correct Answer
verified

Which of the following is correct?

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 a(n)

Correct Answer
verified

A ton of scrap iron sells for $150 in the U.S.and 1400 yuan in China.The nominal exchange rate is 6.7 yuan per dollar.

Correct Answer
verified

Correct Answer
verified
Net exports were negative because the va...
View Answer

If a country has Y > C + I + G,then it has

Correct Answer
verified

Other things the same,if a country's domestic investment decreases,then

Correct Answer
verified

Exam 31: Open-Economy Macroeconomic Models

The nominal exchange rate is 3 Malaysian ringgits per dollar.The real exchange rate is 8/5.If a Big Mac costs 7.5 ringgits in Malaysia,how much does a Big Mac cost in the U.S.? Show your work.

Correct AnswerverifiedThe real exchange rate = 8/5 =...View AnswerShow Answer

How do the nominal exchange rate and the real exchange rate differ?

Correct AnswerverifiedThe nominal exchange rate is the rate at...View AnswerShow Answer

According to purchasing power parity,if it took 4 Israeli Shekels to buy a dollar this year,but it took 3.5 to buy it last year,then the dollar has

Correct AnswerverifiedShow Answer

If purchasing-power parity holds,a dollar will buy

Correct AnswerverifiedShow Answer

A good in the U.S.costs $20.The same good costs 150 pesos in Mexico.If the nominal exchange rate is 10 pesos per dollar,what is the real exchange rate?

Correct AnswerverifiedShow Answer

If the exchange rate is 80 yen per dollar,then a hotel room in Tokyo that costs 25,000 yen costs $200.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt costs the least i...View AnswerShow Answer

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S. ,and China uses the $50 million to purchase U.S.bonds,U.S.net exports and U.S.net capital outflow both fall.

Correct AnswerverifiedShow Answer

Suppose that purchases of Irish assets by foreigners exceed Irish purchases of foreign assets.Ireland has

Correct AnswerverifiedShow Answer

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Correct AnswerverifiedShow Answer

Net exports measures the difference between a country's

Correct AnswerverifiedShow Answer

Table 18-2 -Refer to Table 18-2.For which country(ies) in the table does purchasing-power parity hold?

Correct AnswerverifiedShow Answer

If purchasing-power parity holds,a dollar will buy

Correct AnswerverifiedShow Answer

If a U.S.shirt maker purchases cotton from Egypt,U.S.net exports

Correct AnswerverifiedShow Answer

Which of the following is correct?

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 a(n)

Correct AnswerverifiedShow Answer

A ton of scrap iron sells for $150 in the U.S.and 1400 yuan in China.The nominal exchange rate is 6.7 yuan per dollar.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNet exports were negative because the va...View AnswerShow Answer

If a country has Y > C + I + G,then it has

Correct AnswerverifiedShow Answer

Other things the same,if a country's domestic investment decreases,then

Correct AnswerverifiedShow Answer

Correct Answer
verified
The real exchange rate = 8/5 =...
View Answer

Correct Answer
verified
The nominal exchange rate is the rate at...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It costs the least i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Net exports were negative because the va...
View Answer

Correct Answer
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Correct Answer
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