Question 1

The balance of trade is the value of:

Accepted Answer

A)   exports minus the value of imports.
B)   imports minus the value of exports.
C)   goods purchased by the United States from foreign countries.
D)   goods sold by the United States to foreign parties.E) B) and C)
F) B) and D)

Question 2

When Ashlyn, who lives in Wisconsin, buys stock in BMW, a German company, U.S. net capital outflow:

Accepted Answer

A)   decreases.
B)   is unaffected.
C)   increases.
D)   becomes zero.E) A) and D)
F) B) and D)

Question 3

If $1 is worth 0.7 euros, then 1 euro is worth:

Accepted Answer

A)   $7.43.
B)   $1.43.
C)   $7.00.
D)   $0.70.E) A) and C)
F) A) and B)

Question 4

When market forces start to change a fixed exchange rate, the government:

Accepted Answer

A)   must buy or sell currency to bring the market back to the fixed rate.
B)   holds the exchange rate constant at the new equilibrium.
C)   only intervenes if the change in the exchange rate would harm export-focused domestic industries.
D)   None of these are true.E) B) and C)
F) A) and D)

Question 5

The nominal exchange rate:

Accepted Answer

A)   expresses the value of goods in one country in terms of the same goods in another country.
B)   is the stated rate at which one country's currency can be traded for another country's goods and services.
C)   is the stated rate at which one country's currency can be traded for another country's currency.
D)   expresses the value of goods in one country in terms of another country's currency.E) B) and D)
F) None of the above

Question 6

When Dwight, who lives in Pennsylvania, buys stock in Ford Motor Company, an American company, he is contributing to _______ for the United States.

Accepted Answer

A)   domestic portfolio investment
B)   capital outflow
C)   capital inflow
D)   foreign direct investmentE) A) and B)
F) A) and C)

Question 7

When interest rates in the United States decline, we can expect net capital outflow to:

Accepted Answer

A)   increase.
B)   decrease.
C)   be unaffected.
D)   become zero.E) A) and B)
F) A) and C)

Question 8

A country that has a trade deficit:

Accepted Answer

A)   imports less than it exports.
B)   has a negative trade balance.
C)   sells more goods at home than it sells abroad.
D)   trades less than comparable countries.E) A) and B)
F) B) and D)

Question 9

China imports ___________ from the United States than the United States imports from China.

Accepted Answer

A)   fewer goods
B)   more goods
C)   fewer services
D)   more goods and servicesE) A) and B)
F) A) and C)

Question 10

For nearly every year since 1970, the United States has:

Accepted Answer

A)   imported more than it exported.
B)   exported more than it imported.
C)   imported about the same amount as it has exported.
D)   conducted isolationist trade policy.E) B) and D)
F) B) and C)

Question 11

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

Accepted Answer

A)   U.S. exporters
B)   Foreign sellers to U.S. buyers
C)   U.S. buyers of foreign goods
D)   Foreign saversE) All of the above
F) A) and B)

Question 12

A country that has a trade surplus:

Accepted Answer

A)   imports more than it exports.
B)   has a negative trade balance.
C)   sells more goods abroad than it buys from abroad.
D)   buys more goods at home that it buys abroad.E) B) and C)
F) A) and D)

Question 13

Portfolio investment can generally travel across borders quickly because it usually involves:

Accepted Answer

A)   transfers between two bank accounts.
B)   the shipment of equipment from one place to another.
C)   the hiring or firing of foreign workers.
D)   two governments agreeing on trade.E) A) and B)
F) B) and C)

Question 14

During the 1997 Asian financial crisis, countries such as South Korea and Indonesia were affected by:

Accepted Answer

A)   speculative attacks, which forced the countries to abandon their fixed exchange rates.
B)   competitive devaluation, which led to plummeting exchange rates.
C)   competitive revaluation, which led to severe overvaluation and collapse for all affected countries except South Korea.
D)   contractionary monetary policy, which raised interest rates and increased government debt service.E) A) and B)
F) All of the above

Question 15

Suppose Anheuser-Busch, an American brewing company, purchases Unibroue, a Canadian brewery, in an effort to expand its market and product offerings. This is an example of:

Accepted Answer

A)   foreign direct investment.
B)   foreign portfolio investment.
C)   foreign import investment.
D)   foreign export investment.E) A) and C)
F) B) and D)

Question 16

When Maya, who lives in San Francisco, buys stock in Toyota, a Japanese company, she is contributing to:

Accepted Answer

A)   capital outflow for Japan.
B)   capital inflow for the United States.
C)   domestic investment for the United States.
D)   capital outflow for the United States.E) A) and D)
F) B) and C)

Question 17

When Hamad, who lives in France, buys stock in Disney, he is contributing to _______ for the United States.

Accepted Answer

A)   capital outflow
B)   capital inflow
C)   domestic investment
D)   private savingsE) C) and D)
F) A) and D)

Question 18

In an open economy, savings equals:

Accepted Answer

A)   investment minus net exports.
B)   investment plus net exports.
C)   net exports minus investment.
D)   investment plus imports minus exports.E) B) and C)
F) All of the above

Question 19

The demand for dollars will increase in foreign-exchange markets if:

Accepted Answer

A)   U.S. interest rates are high relative to those overseas.
B)   the United States is perceived to be a riskier place for investment relative to other nations.
C)   foreigners want to buy less U.S. goods.
D)   U.S. consumers decide to buy more foreign goods than before.E) All of the above
F) None of the above

Question 20

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

Exam 18: Open-Marketmacroeconomics

When market forces start to change a fixed exchange rate, the government:

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When Maya, who lives in San Francisco, buys stock in Toyota, a Japanese company, she is contributing to:

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For nearly every year since 1970, the United States has:

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The demand for dollars will increase in foreign-exchange markets if:

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A country that has a trade surplus:

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Portfolio investment can generally travel across borders quickly because it usually involves:

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When Dwight, who lives in Pennsylvania, buys stock in Ford Motor Company, an American company, he is contributing to _______ for the United States.

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When interest rates in the United States decline, we can expect net capital outflow to:

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If $1 is worth 0.7 euros, then 1 euro is worth:

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In an open economy, savings equals:

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The nominal exchange rate:

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The balance of trade is the value of:

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When Hamad, who lives in France, buys stock in Disney, he is contributing to _______ for the United States.

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During the 1997 Asian financial crisis, countries such as South Korea and Indonesia were affected by:

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When Ashlyn, who lives in Wisconsin, buys stock in BMW, a German company, U.S. net capital outflow:

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A country that has a trade deficit:

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

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China imports ___________ from the United States than the United States imports from China.

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

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Suppose Anheuser-Busch, an American brewing company, purchases Unibroue, a Canadian brewery, in an effort to expand its market and product offerings. This is an example of:

Correct AnswerverifiedShow Answer

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