Macroeconomics [ch. 18]

20 Questions | Total Attempts: 1975

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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. 
    Each of the following is a reason why the U.S. economy continues to engage in greater amounts of international trade except which one?
    • 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. 
    Suppose a U.S. resident buys a Jaguar automobile from Great Britain and the British exporter uses the receipts to buy stock in General Electric.  Which of the following statements is true from the perspective of the United States?
    • 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. 
    Suppose the money supply in Mexico grows more quickly than the money supply in the United States.  We would expect that
    • 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. 
    Suppose the nominal exchange rate between the Japanese yen and the U.S. dollar is 100 yen per dollar.  Further, suppose that a pound of hamburger costs $2 in the United States and 250 yen in Japan.  What is the real exchange rate between Japan and the United States?
    • 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. 
    Suppose the real exchange rate between Russia and the United States is defined in terms of bottles of Russian vodka per bottle of U.S. vodka.  Which of the following will increase the real exchange rate (that is, increase the number of bottles of Russian vodka per bottle of U.S. vodka)?
    • 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. 
    Which of the following statements is not true about the relationship between national saving, investment, and net capital outflow?
    • 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

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