Macroeconomics [ch. 18]

20 Questions | Total Attempts: 700

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Macroeconomics Quizzes & Trivia

Questions and Answers
  • 1. 
    An economy that interacts with other economies is known as
    • A. 

      A balanced trade economy

    • B. 

      An export economy

    • C. 

      An import economy

    • D. 

      A closed economy

    • E. 

      An open economy

  • 2. 
    • A. 

      There are larger cargo ships and airplanes

    • B. 

      High-technology goods are more valuable per pound and, thus, more likely to be traded

    • C. 

      NAFTA imposes requirements for increase trade between countries in North America

    • D. 

      There have been improvements in technology that have improved telecommunications between countries

    • E. 

      All of the above are reasons for increase trade by the U.S.

  • 3. 
    If Japan exports more than it imports,
    • A. 

      Japan's net exports are negative

    • B. 

      Japan's net capital outflow must be negative

    • C. 

      Japan's net capital outflow must be positive

    • D. 

      Japan is running a trade deficit

  • 4. 
    If the exchange rate changes from 3 Brazilian reals per dollar to 4 reals per dollar,
    • A. 

      The dollar has depreciated

    • B. 

      The dollar has appreciated

    • C. 

      The dollar could have appreciated or depreciated depending on what happened to relative prices in Brazil and the United States

    • D. 

      None of the above is true

  • 5. 
    If the nominal exchange rate between British pounds and dollars is .5 pound per dollar, how many dollars can you get for a British pound?
    • A. 

      2 dollars

    • B. 

      1.5 dollars

    • C. 

      1 dollar

    • D. 

      .5 of a dollar

    • E. 

      None of the above is correct

  • 6. 
    If the United States saves $1,000 billion and U.S. net capital outflow is -$200 billion, U.S. domestic investment is
    • A. 

      -$200 billion

    • B. 

      $200 billion

    • C. 

      $800 billion

    • D. 

      $1,000 billion

    • E. 

      $1,200 billion

  • 7. 
    Suppose a cup of coffee is 1.5 euros in Germany and $.50 in the United States.  If purchasing-power parity holds, what is the nominal exchange rate between euros and dollars?
    • A. 

      1/3 euro per dollar

    • B. 

      3 euros per dollar

    • C. 

      1.5 euros per dollar

    • D. 

      .75 euro per dollar

  • 8. 
    • A. 

      Net exports fall, and net capital outflow falls

    • B. 

      Net exports rise, and net capital outflow rises

    • C. 

      Net exports fall, and net capital outflow rises

    • D. 

      Net exports rise, and net capital outflow rises

    • E. 

      None of the above is true

  • 9. 
    Suppose the inflation rate over the last 20 years has been 10 percent in Great Britain, 7 percent in Japan, and 3 percent in the United States.  If purchasing-power parity holds, which of the following statements is true? Over this period,
    • A. 

      The value of the dollar should have fallen compared to the value of the pound and the yen

    • B. 

      The yen should have risen in the value compared to the pound and fallen compared to the dollar

    • C. 

      The yen should have fallen in value compared to the pound and risen compared to the dollar

    • D. 

      The value of the pound should have risen compared to the value of the yen and the dollar

    • E. 

      None of the above is true

  • 10. 
    • A. 

      The peso should depreciate relative to the dollar

    • B. 

      The peso should appreciate relative to the dollar

    • C. 

      The peso should maintain a constant exchange rate with the dollar because of purchasing-power parity

    • D. 

      None of the above is true

  • 11. 
    • A. 

      .5 pound of Japanese hamburger/pound of American hamburger

    • B. 

      .8 pound of Japanese hamburger/pound of American hamburger

    • C. 

      1.25 pounds of Japanese hamburger/pound of American hamburger

    • D. 

      2.5 pounds of Japanese hamburger/pound of American hamburger

    • E. 

      None of the above

  • 12. 
    • A. 

      A decrease int he ruble price of Russian vodka

    • B. 

      An increase in the dollar price of U.S. vodka

    • C. 

      An increase in the number of rubles for which the dollar can be exchanged

    • D. 

      All of the above will increase the real exchange rate

    • E. 

      None of the above will increase the real exchange rate

  • 13. 
    The most accurate measure of the international value of the dollar is
    • A. 

      The yen/dollar exchange rate

    • B. 

      The Brazilian real/dollar exchange rate

    • C. 

      The peso/dollar exchange rate

    • D. 

      The British pound/dollar exchange rate

    • E. 

      An exchange rate index that accounts for many exchange rates

  • 14. 
    When people take advantage of differences in prices for the same good by buying it where it is cheap and selling it where it is expensive, it is known as
    • A. 

      Purchasing-power parity

    • B. 

      Net capital outflow

    • C. 

      Arbitrage

    • D. 

      Net exports

    • E. 

      Currency appreciation

  • 15. 
    Which of the following is an example of foreign direct investment?
    • A. 

      McDonald's builds a restaurant in Moscow

    • B. 

      Columbia Pictures sells the rights to a movie to a Russia movie studio

    • C. 

      General Motors buys stock in Volvo

    • D. 

      General Motors buys steel from Japan

  • 16. 
    Which of the following people or firms would be pleased by a depreciation of the dollar?
    • A. 

      A U.S. tourist traveling in Europe

    • B. 

      A U.S. importer of Russian vodka

    • C. 

      A French exporter of wine to the United States

    • D. 

      An Italian importer of U.S. steel

    • E. 

      A Saudi Arabian prince exporting oil to the United States

  • 17. 
    Which of the following products would likely be the least accurate if used to calculate purchasing-power parity?
    • A. 

      Gold

    • B. 

      Automobiles

    • C. 

      Diamonds

    • D. 

      Dental services

  • 18. 
    • A. 

      Saving is the sum of investment and net capital outflow

    • B. 

      For a given amount of saving, an increase in net capital outflow must decrease domestic investment

    • C. 

      For a given amount of saving, a decrease in net capital outflow must decrease domestic investment

    • D. 

      An increase in saving associated with an equal increase in net capital outflow leaves domestic investment unchanged

  • 19. 
    Which of the following statements is true about a country with a trade deficit?
    • A. 

      Net capital outflow must be positive

    • B. 

      Net exports are negative

    • C. 

      Net exports are positive

    • D. 

      Exports exceed imports

    • E. 

      None of the above is true

  • 20. 
    Which of the following would directly increase U.S. net capital outflow?
    • A. 

      General Electric sells an aircraft engine to Airbus in Great Britain

    • B. 

      Microsoft builds a new distribution facility in Sweden

    • C. 

      Honda builds a new plant in Ohio

    • D. 

      Toyota buys stock in AT&T