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18 Cards in this Set
- Front
- Back
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Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By
itself, this sale a. increases U.S. net exports and decreases Russian net exports. b. increases U.S. net exports and has no effect on Russian net exports. c. decreases U.S. net exports and increases Russian net exports. d. decreases U.S. net exports and has no effect on Russian net exports. |
c. decreases U.S. net exports and increases Russian net exports.
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A firm in India hires a U.S. firm to provide economic forecasts. By itself this transaction
a. increases U.S. exports and so increases the U.S. trade balance. b. increases U.S. exports and so decreases the U.S. trade balance. c. increases U.S. imports and so increases the U.S. trade balance. d. increases U.S. imports and so decreases the U.S. trade balance. |
a. increases U.S. exports and so increases the U.S. trade balance.
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If a country had a trade surplus of $50 billion and then its exports rose by $30 billion and its imports rose by
$20 billion, its net exports would now be a. $0 billion. b. $20 billion. c. $40 billion. d. $60 billion. |
d. $60 billion.
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Which of the following is an example of U.S. foreign portfolio investment?
a. Disney builds a new amusement park near Barcelona, Spain. b. A U.S. citizen buys bonds issued by the British government. c. A Dutch hotel chain opens a new hotel in the United States. d. A citizen of Singapore buys a bond issued by a U.S. corporation. |
b. A U.S. citizen buys bonds issued by the British government.
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Julie and John are American residents. Julie buys stock issued by a Japanese company. John opens a
sporting goods store in Mexico. Whose purchase, by itself, increases the U.S.’s net capital outflow? a. Julie’s b. John’s c. both Julie’s and John’s d. neither Julie’s nor John’s |
c. both Julie’s and John’s
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Bob, a Greek citizen, opens a restaurant in Chicago. His expenditures
a. increase U.S. net capital outflow and have no affect on Greek net capital outflow. b. increase U.S. net capital outflow and increase Greek net capital outflow. c. increase U.S. net capital outflow, but decrease Greek net capital outflow. d. decrease U.S. net capital outflow, but increase Greek net capital outflow. |
d. decrease U.S. net capital outflow, but increase Greek net capital outflow.
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Which of the following is correct?
a. NCO = NX b. NCO + I = NX c. NX + NCO = Y d. Y = NCO - I |
a. NCO = NX
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If saving is greater than domestic investment, then
a. there is a trade deficit and Y > C + I + G. b. there is a trade deficit and Y < C + I + G. c. there is a trade surplus and Y > C + I + G. d. there is a trade surplus and Y < C + I + G |
c. there is a trade surplus and Y > C + I + G.
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If a country exports more than it imports, then it has
a. positive net exports and positive net capital outflows. b. positive net exports and negative net capital outflows. c. negative net exports and positive net capital outflows. d. negative net exports and negative net capital outflows. |
a. positive net exports and positive net capital outflows.
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A Mexican firm exchanges Pesos for U.S. dollars and then uses these dollars to purchase corn from the U.S.
This transaction a. increases Mexican net capital outflow, and increases U.S. net exports. b. increases Mexican net capital outflow, and decreases U.S. net exports. c. decreases Mexican net capital outflow, and increases U.S. net exports. d. decreases Mexican net capital outflow, and decreases U.S. net exports. |
c. decreases Mexican net capital outflow, and increases U.S. net exports.
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A country has a trade deficit. Its
a. net capital outflow must be positive, and saving is larger than investment. b. net capital outflow must be positive and saving is smaller than investment. c. net capital outflow must be negative and saving is larger than investment. d. net capital outflow must be negative and saving is smaller than investment. |
d. net capital outflow must be negative and saving is smaller than investment.
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During some year a country had exports of $50 billion, imports of $35 billion, and purchased $30 billion of
foreign assets. What was the value of domestic assets purchased by foreigners? a. $35 billion b. $20 billion c. $15 billion d. $5 billion |
c. $15 billion
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Other things the same, the real exchange rate between American and Mexican goods would be lower if
a. prices of Mexican goods were higher, or the number of pesos a dollar purchased was higher. b. prices of Mexican goods were higher, or the number of pesos a dollar purchased was lower. c. prices of Mexican goods were lower, or the number of pesos a dollar purchased was higher. d. prices of Mexican goods were lower, or the number of pesos a dollar purchased was lower. |
b. prices of Mexican goods were higher, or the number of pesos a dollar purchased was
lower. |
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In the United States, a three-pound can of coffee costs about $5. If the exchange rate is about 0.8 euros per
dollar and a three-pound can of coffee in Belgium costs about 7 euros. What is the real exchange rate? a. 7/4 cans of Belgian coffee per can of U.S. coffee b. 5.6/5 cans of Belgian coffee per can of U.S. coffee c. 5/5.6 cans of Belgian coffee per can of U.S. coffee d. 4/7 cans of Belgian coffee per can of U.S. coffee |
d. 4/7 cans of Belgian coffee per can of U.S. coffee
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If the real exchange rate is less than 1, then the
a. nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas. b. nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foregoing currency to buy the same good overseas. c. nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas. d. nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas. |
d. nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a
good in the U.S. would not buy enough foreign currency to buy the same good overseas. |
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The nominal exchange rate is .80 euros per U.S. dollar and a basket of goods in France costs 1,000 euros
while the same basket costs $800 in the U.S. The nominal exchange rate is 1.2 Australian dollars per U.S. dollar and a basket of goods in Australia costs 960 Australian dollars while the same basket costs $800 in the U.S.. Which country has purchasing-power parity with the U.S.? a. both France and Australia b. France but not Australia c. Australia but not France d. neither France nor Australia |
c. Australia but not France
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A Big Mac in Japan costs 320 yen while it costs $3.60 in the U.S.. The nominal exchange rate is 80 yen per
dollar. Which of the following would both make the real exchange rate move towards purchasing-power parity? a. the price of Big Macs in the U.S. falls, the nominal exchange rate falls b. the price of Big Macs in the U.S. falls, the nominal exchange rate rises c. the price of Big Macs in the U.S. rises, the nominal exchange rate falls d. the price of Big Macs in the U.S. rises, the nominal exchange rate rises |
d. the price of Big Macs in the U.S. rises, the nominal exchange rate rises
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According to purchasing power parity, if it took 1,100 Korean Won to buy a dollar this year, but it took 1,000
to buy it last year, then the dollar has a. appreciated, indicating inflation was higher in the U.S. than in Korea. b. appreciated indicating inflation was lower in the U.S. than in Korea. c. depreciated indicating inflation was higher in the U.S. than in Korea. d. depreciated indicating inflation was lower in the U.S. than in Korea. |
b. appreciated indicating inflation was lower in the U.S. than in Korea.
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