Question 1

When Wilma in Wisconsin buys stock in BMW in Germany,NCO:

Accepted Answer

A)  decreases.
B)  is unaffected.
C)  increases.
D)  is zero.E) B) and D)
F) A) and D)

Question 2

The Argentinian crisis of 2001 was characterized by:

Accepted Answer

A)  investors losing confidence and shifting the demand for loanable funds to the right.
B)  government debt becoming more expensive,shifting savings to the left.
C)  increasing interest rates.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 3

If $1 is worth .8 Canadian dollars,then 1 Canadian dollar is worth:

Accepted Answer

A)  $1.25.
B)  $1.80.
C)  $0.20.
D)  $1.20.E) None of the above
F) A) and D)

Question 4

Portfolio investment can generally travel across borders quickly because it usually involves:

Accepted Answer

A)  transfers between two bank accounts.
B)  the shipment of equipment from one place to another.
C)  the hiring or firing of foreign workers.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 5

When interest rates in the U.S.decline,we can expect:

Accepted Answer

A)  net capital outflow to increase.
B)  net capital outflow to decrease.
C)  net capital outflow to be unaffected.
D)  net capital outflow to be zero.E) All of the above
F) A) and B)

Question 6

When the U.S.dollar appreciates against a foreign currency,U.S.goods become:

Accepted Answer

A)  more expensive to people abroad,and we expect net exports to decrease.
B)  less expensive to people abroad,and we expect net exports to increase.
C)  more expensive to people abroad,and we expect net exports to increase.
D)  less expensive to people abroad,and we expect net exports to decrease.E) None of the above
F) B) and D)

Question 7

Savings for an economy is equal to:

Accepted Answer

A)  private savings - public savings.
B)  public savings - private savings.
C)  private savings + public savings.
D)  investment - net exports.E) C) and D)
F) B) and C)

Question 8

In an economy with a fixed exchange rate,an increased demand for foreign goods would increase the supply of local currency,and the government would have to buy:

Accepted Answer

A)  foreign currency in the foreign exchange market to prevent the domestic currency from depreciating.
B)  local currency in the foreign-exchange market to prevent the currency from depreciating.
C)  local currency in the foreign-exchange market to prevent the currency from appreciating.
D)  foreign currency in the foreign exchange market to prevent the domestic currency from appreciating.E) C) and D)
F) B) and D)

Question 9

The exchange rate is the:

Accepted Answer

A)  value of one currency expressed in terms of another currency.
B)  reciprocal of the currency's real value.
C)  value of one currency expressed in terms of the goods and services it can buy.
D)  value of currency adjusted for inflation.E) A) and B)
F) A) and C)

Question 10

When interest rates in the U.S.increase,we can expect:

Accepted Answer

A)  NCO to decrease,because capital inflow is increasing.
B)  NCO to increase,because capital inflow is increasing.
C)  NCO to decrease,because capital outflow is increasing.
D)  NCO to increase,because capital outflow is increasing.E) C) and D)
F) None of the above

Question 11

When interest rates in the U.S.increase,we could expect:

Accepted Answer

A)  more foreigners investing in U.S.assets.
B)  less foreigners investing in U.S.assets.
C)  more U.S.citizens investing abroad.
D)  less U.S.citizens investing in U.S.assets.E) None of the above
F) All of the above

Question 12

Your Uncle Harry gives you stock in Samsung for your birthday.The stock is an example of:

Accepted Answer

A)  foreign direct investment.
B)  foreign portfolio investment.
C)  importing.
D)  exporting.E) A) and D)
F) A) and B)

Question 13

A country that typically runs a trade deficit is:

Accepted Answer

A)  the United States.
B)  Germany.
C)  China.
D)  Japan.E) None of the above
F) B) and C)

Question 14

When the dollar appreciates against the euro,the euro has:

Accepted Answer

A)  appreciated against the dollar.
B)  depreciated against the dollar.
C)  become more valuable relative to all other currencies.
D)  become less valuable relative to all other currencies.E) B) and C)
F) B) and D)

Question 15

When the U.S.dollar drops in value:

Accepted Answer

A)  exports tend to go up,which decreases the trade deficit.
B)  exports tend to fall,which increases the trade deficit.
C)  exports tend to go up,which increases the trade deficit.
D)  exports tend to fall,which decreases the trade deficit.E) A) and B)
F) All of the above

Question 16

When the Fed practices contractionary monetary policy,the interest rate:

Accepted Answer

A)  goes up,and the exchange rate will appreciate as a result.
B)  goes up,and the exchange rate will depreciate as a result.
C)  goes down,and the exchange rate will appreciate as a result.
D)  goes down,and the exchange rate will depreciate as a result.E) None of the above
F) A) and C)

Question 17

In a closed economy S = I,so in an open economy:

Accepted Answer

A)  S = I - NX.
B)  S = I + NX.
C)  S + I = NX.
D)  S + NX = I.E) B) and D)
F) A) and D)

Question 18

A country that typically runs a trade surplus is:

Accepted Answer

A)  the United States.
B)  China.
C)  France.
D)  Canada.E) A) and B)
F) B) and C)

Question 19

In the last three decades,the U.S.has seen money flow __________ in search of profitable investment opportunities.

Accepted Answer

A)  out of the U.S.to foreign countries
B)  into the U.S.from foreign countries
C)  into the market for loanable funds
D)  out of the market for loanable fundsE) B) and C)
F) C) and D)

Question 20

The Asian financial crisis was brought about by:

Accepted Answer

A)  debt crisis.
B)  exchange rate crisis.
C)  excessive loss of national resources.
D)  None of these statements is true.E) A) and B)
F) All of the above

Exam 34: Open-Market Macroeconomics

When interest rates in the U.S.increase,we can expect:

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When the U.S.dollar drops in value:

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The Argentinian crisis of 2001 was characterized by:

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The exchange rate is the:

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When the Fed practices contractionary monetary policy,the interest rate:

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In an economy with a fixed exchange rate,an increased demand for foreign goods would increase the supply of local currency,and the government would have to buy:

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When the dollar appreciates against the euro,the euro has:

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Your Uncle Harry gives you stock in Samsung for your birthday.The stock is an example of:

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When the U.S.dollar appreciates against a foreign currency,U.S.goods become:

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In the last three decades,the U.S.has seen money flow __________ in search of profitable investment opportunities.

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When Wilma in Wisconsin buys stock in BMW in Germany,NCO:

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Portfolio investment can generally travel across borders quickly because it usually involves:

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Savings for an economy is equal to:

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When interest rates in the U.S.increase,we could expect:

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The Asian financial crisis was brought about by:

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A country that typically runs a trade surplus is:

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If $1 is worth .8 Canadian dollars,then 1 Canadian dollar is worth:

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When interest rates in the U.S.decline,we can expect:

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In a closed economy S = I,so in an open economy:

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A country that typically runs a trade deficit is:

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