Question 1

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Accepted Answer

A)  are an export of the U.S. and increase U.S. net exports.
B)  are an export of the U.S. and decrease U.S. net exports.
C)  are an import of the U.S. and increase U.S. net exports.
D)  are an import of the U.S. and decrease U.S. net exports.E) None of the above
F) All of the above

Question 2

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Accepted Answer

A)  $65 million.
B)  -$65 million.
C)  $35 million.
D)  -$35 million.E) A) and D)
F) B) and C)

Question 3

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Accepted Answer

A)  decrease by 5 percent
B)  decrease by 1 percent
C)  increase by 5 percent
D)  increase by 1 percentE) B) and D)
F) B) and C)

Question 4

The U.S. has a trade surplus. Which of the following is correct?

Accepted Answer

A)  capital is flowing into the U.S. and S > I
B)  capital is flowing into the U.S. and S 
C)  capital is flowing out of the U.S. and S > I
D)  capital is flowing out of the U.S. and S < IE) None of the above
F) B) and D)

Question 5

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

Accepted Answer

A)  more willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
B)  more willing to purchase U.S. bonds, so U.S. net capital outflow would rise.
C)  less willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
D)  less willing to purchase U.S. bonds, so U.S. net capital outflow would rise.E) A) and D)
F) A) and C)

Question 7

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Accepted Answer

A)  buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras.
B)  buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala.
C)  buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala.
D)  buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.E) None of the above
F) A) and D)

Question 8

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Accepted Answer

A)  U.S. interest rates rise, the default risk of U.S. assets rise
B)  U.S. interest rates rise, the default risk of U.S. assets fall
C)  U.S. interest rates fall, the default risk of U.S. assets rise
D)  U.S. interest rates fall, the default risk of U.S. assets fallE) B) and C)
F) B) and D)

Exam 18: Open-Economy Macroeconomic Models

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Correct Answer
verified

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

Correct Answer
verified

The U.S. has a trade surplus. Which of the following is correct?

Correct Answer
verified

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Correct Answer
verified

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Correct Answer
verified

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Correct Answer
verified

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Correct Answer
verified

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

Correct Answer
verified

Exam 18: Open-Economy Macroeconomic Models

If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity?

Correct AnswerverifiedShow Answer

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing-power parity the U.S. nominal exchange rate should fall.

Correct AnswerverifiedShow Answer

The U.S. has a trade surplus. Which of the following is correct?

Correct AnswerverifiedShow Answer

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

Correct AnswerverifiedShow Answer

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales

Correct AnswerverifiedShow Answer

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

Correct AnswerverifiedShow Answer

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment?

Correct AnswerverifiedShow Answer

Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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