Question 1

In which of the following situations must national saving rise?

Accepted Answer

A)  Both domestic investment and net capital outflow increase.
B)  Domestic investment increases and net capital outflow decreases.
C)  Domestic investment decreases and net capital outflow increases.
D)  Net exports decrease and domestic investment is unchanged.E) B) and C)
F) A) and D)

Question 2

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Accepted Answer

Purchasing-power parity asserts that the...

Question 3

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

Accepted Answer

A)  Canadian savers would prefer to buy foreign assets.
B)  Canadian savers would prefer to wait until the real interest rate falls to equal the world interest rate.
C)  Canadian savers would sell their Canadian assets and buy foreign assets instead.
D)  Canadian savers would sell their foreign assets and buy Canadian assets instead.E) None of the above
F) B) and D)

Question 4

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances?
a.The Canadian nominal exchange rate depreciates.
b.Canadian domestic prices increase.
c.Prices in the rest of the world rise.

Accepted Answer

a.The Canadian real exchange r...

Question 5

Which of the following would be Canadian foreign direct investment?

Accepted Answer

A)  A Polish company opens a shipbuilding plant in Canada.
B)  A Bolivian bank buys Canadian corporate bonds.
C)  A Canadian bank buys Bolivian corporate bonds.
D)  A Canadian canning factory opens a plant in Ecuador.E) C) and D)
F) A) and C)

Question 6

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

Accepted Answer

A)  both a Canadian and an Italian import
B)  a Canadian export and an Italian import
C)  a Canadian import and an Italian export
D)  neither an export nor an import for either countryE) None of the above
F) B) and C)

Question 7

Table 31-1
 
-Refer to Table 31-1. Which currency (ies)  is (are)  less valuable than predicted by the doctrine of purchasing-power parity?

Accepted Answer

A)  the boliviano
B)  the yen and kroner
C)  the baht and kroner
D)  the bahtE) B) and C)
F) A) and B)

Question 8

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Accepted Answer

A) True 
 B)False

Question 9

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Accepted Answer

A)  that labour can easily move across Canada's borders
B)  that purchasing-power parity holds in Canada
C)  that Canada's net foreign investment is zero
D)  that investors' funds can easily move across Canada's bordersE) A) and D)
F) A) and C)

Question 10

How has Canadian national saving changed in recent history?

Accepted Answer

A)  It remained positive from 1999 to 2008.
B)  It decreased below 10 percent toward the end of the 1990s.
C)  It had a historic high in early 1990s.
D)  It has been decreasing since 1991.E) B) and C)
F) A) and B)

Question 11

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Accepted Answer

A)  Canadian net exports increase, and Canadian net capital outflow increases.
B)  Canadian net exports increase, and Canadian net capital outflow decreases.
C)  Canadian net exports decrease, and Canadian net capital outflow increases.
D)  Canadian net exports decrease, and Canadian net capital outflow decreases.E) All of the above
F) B) and C)

Question 12

Which of the following is the formula for an open economy's GDP?

Accepted Answer

A)  Y = C + I + G
B)  Y = C + I + G + T
C)  Y = C + I + G + S
D)  Y = C + I + G + NXE) A) and D)
F) A) and C)

Question 13

Which of the following is the formula for a closed economy's GDP?

Accepted Answer

A)  Y = C + I + G
B)  Y = C + I + G + T
C)  Y = C + I + G + S
D)  Y = C + I + G + NXE) None of the above
F) All of the above

Question 14

In which situation must domestic saving equal investment?

Accepted Answer

A)  in both closed and open economies
B)  in closed economies, but not open economies
C)  in open economies, but not closed economies
D)  in neither closed nor open economiesE) B) and C)
F) B) and D)

Question 15

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002)  for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

Accepted Answer

A)  The dollar appreciated, increasing the trade balance.
B)  The dollar depreciated, decreasing the trade balance.
C)  The dollar appreciated, decreasing the trade balance.
D)  The dollar depreciated, increasing the trade balance.E) A) and B)
F) A) and C)

Exam 12: Open-Economy Macroeconomics: Basic Concepts

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances? a.The Canadian nominal exchange rate depreciates. b.Canadian domestic prices increase. c.Prices in the rest of the world rise.

Correct Answer
verified
a.The Canadian real exchange r...
View Answer

In which of the following situations must national saving rise?

Correct Answer
verified

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Correct Answer
verified
Purchasing-power parity asserts that the...
View Answer

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Correct Answer
verified

In which situation must domestic saving equal investment?

Correct Answer
verified

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Correct Answer
verified

Which of the following is the formula for an open economy's GDP?

Correct Answer
verified

How has Canadian national saving changed in recent history?

Correct Answer
verified

Which of the following would be Canadian foreign direct investment?

Correct Answer
verified

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002) for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

Correct Answer
verified

Table 31-1 -Refer to Table 31-1. Which currency (ies) is (are) less valuable than predicted by the doctrine of purchasing-power parity?

Correct Answer
verified

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

Correct Answer
verified

Which of the following is the formula for a closed economy's GDP?

Correct Answer
verified

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Correct Answer
verified

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

Correct Answer
verified

Exam 12: Open-Economy Macroeconomics: Basic Concepts

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances? a.The Canadian nominal exchange rate depreciates. b.Canadian domestic prices increase. c.Prices in the rest of the world rise.

Correct Answerverifieda.The Canadian real exchange r...View AnswerShow Answer

In which of the following situations must national saving rise?

Correct AnswerverifiedShow Answer

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Correct AnswerverifiedPurchasing-power parity asserts that the...View AnswerShow Answer

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

Correct AnswerverifiedShow Answer

In which situation must domestic saving equal investment?

Correct AnswerverifiedShow Answer

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Correct AnswerverifiedShow Answer

Which of the following is the formula for an open economy's GDP?

Correct AnswerverifiedShow Answer

How has Canadian national saving changed in recent history?

Correct AnswerverifiedShow Answer

Which of the following would be Canadian foreign direct investment?

Correct AnswerverifiedShow Answer

Suppose that in 1999 you could purchase about 400 Greek drachmas (the former Greek currency, replaced by the euro in 2002) for a dollar. In 2000, you could purchase about 350 drachmas for a dollar. Which of the following best explain the changes that could have taken place between 1999 and 2000?

Correct AnswerverifiedShow Answer

Table 31-1 -Refer to Table 31-1. Which currency (ies) is (are) less valuable than predicted by the doctrine of purchasing-power parity?

Correct AnswerverifiedShow Answer

When Dee, a Canadian living in Canada, purchases a designer dress made in Milan, which of the following is this purchase?

Correct AnswerverifiedShow Answer

Which of the following is the formula for a closed economy's GDP?

Correct AnswerverifiedShow Answer

A Canadian firm buys sardines from Morocco and pays for them with Canadian dollars. Which of the following correctly identifies the effects of this transaction?

Correct AnswerverifiedShow Answer

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

Correct AnswerverifiedShow Answer

Correct Answer
verified
a.The Canadian real exchange r...
View Answer

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verified

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Purchasing-power parity asserts that the...
View Answer

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