Econ Quiz 7

Front 1

You buy a new car built in Sweden. Other things the same, your purchase by itself

a. raises both U.S. exports and U.S. net exports.b. raises U.S. exports and lowers U.S. net exports.c. raises both U.S. imports and U.S. net exports.d. raises U.S. imports and lowers U.S. net exports.

Back 1

D

Front 2

A country sells more to foreign countries than it buys from them. It has

a. a trade surplus and positive net exports.

b. a trade surplus and negative net exports.

c. a trade deficit and positive net exports.

d. a trade deficit and negative net exports.

Back 2

A

Front 3

A country's trade balance

a. must be zero.

b. must be greater than zero.

c. is greater than zero only if exports are greater than imports.

d. is greater than zero only if imports are greater than exports.

Back 3

C

Front 4

Net capital outflow measures

a. foreign assets held by domestic residents minus domestic assets held by foreign residents.

b. the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners.

c. the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic goods and services sold to foreigners.
d. None of the above is correct.

Back 4

B

Front 5

Net capital outflow

a. is always greater than net exports.

b. is always less than net exports.

c. is always equal to net exports.

d. could be any of the above.

Back 5

C

Front 6

A Mexican flour mill buys wheat from the U.S. and pays for it with pesos. Other things the same, Mexican

a. net exports increase, and U.S. net capital outflow increases.

b. net exports increase, and U.S. net capital outflow decreases.

c. net exports decrease, and U.S. net capital outflow increases.

d. net exports decrease, and U.S. net capital outflow decreases.

Back 6

C

Front 7

If a country has a trade deficit

a. it has positive net exports and positive net capital outflow.

b. it has positive net exports and negative net capital outflow.

c. it has negative net exports and positive net capital outflow.

d. it has negative net exports and negative net capital outflow.

Back 7

D

Front 8

If Argentina's domestic investment exceeds national saving, then Argentina has

a. positive net capital outflows and negative net exports.

b. positive net capital outflows and positive net exports.

c. negative net capital outflows and negative net exports.

d. negative net capital outflows and positive net exports.

Back 8

C

Front 9

You are staying in London over the summer and you have a number of dollars with you. If the dollar appreciated relative to the British pound then, other things the same,

a. the dollar would buy more pounds. The appreciation would discourage you from buying as many British goods and services.

b. the dollar would buy more pounds. The appreciation would encourage you to buy more British goods and services.

c. the dollar would buy fewer pounds. The appreciation would discourage you from buying as many British goods and services.

d. the dollar would buy fewer pounds. The appreciation would encourage you to buy more British goods and services.

Back 9

B

Front 10

If the U.S. real exchange rate appreciates, U.S. net exports

a. increase and U.S. net capital outflow decreases.

b. decrease and U.S. net capital outflow increases.

c. and U.S. net capital outflow both increase.

d. and U.S. net capital outflow both decrease.

Back 10

D

Front 11

The law of one price states that

a. a good must sell at the price fixed by law.

b. a good must sell at the same price at all locations.

c. a good cannot sell for a price greater than the legal price ceiling.

d. domestic producers of a good are guaranteed a subsidy by law.

Back 11

B

Front 12

Which of the following does purchasing-power parity imply?

a. The purchasing power of the dollar is the same in the U.S. as in foreign countries.

b. The price of domestic goods relative to foreign goods cannot change.

c. The nominal exchange rate is the ratio of U.S. prices to foreign prices.

d. All of the above are correct.

Back 12

A

Front 13

The exchange rate is about 17 Nicaraguan cordoba per dollar. According to purchasing-power parity, this exchange rate would rise if

a. the price level in either the United States or Nicaragua rose.

b. the price level in either the United States or Nicaragua fell.

c. the price level in the United States rose or the price level in Nicaragua fell.

d. the price level in the United States fell or the price level in Nicaragua rose.

Back 13

D