Question 1

Which of the following affects the quantity of U.S.dollars supplied in the currency market?

Accepted Answer

A)  Foreign purchases of U.S.goods and services
B)  Payments to U.S.owners of foreign assets
C)  Domestic purchases of U.S.goods and services
D)  U.S.purchases of foreign assets

Question 2

From 2008 to 2011, which euro nation had the greatest lack of fiscal discipline and the greatest risk of default on its debt?

Accepted Answer

A)  Germany
B)  France
C)  Denmark
D)  Greece

Question 3

In a simple currency board arrangement, a country can issue

Accepted Answer

A)  domestic currency at its discretion.
B)  at its discretion, the foreign currency to which the domestic currency is pegged.
C)  domestic currency when the board has an equivalent amount of foreign currency to which the domestic currency is pegged.
D)  foreign currency to which the domestic currency is pegged when the board has an equivalent amount of domestic currency.

Question 4

Net exports equal

Accepted Answer

A)  imports − exports.
B)  domestic consumption − foreign consumption.
C)  exports − imports.
D)  foreign consumption − domestic consumption.

Question 5

If there is a decline in home bias, U.S.residents are more likely to invest their savings in

Accepted Answer

A)  the domestic economy and this will lead to a decrease in the capital account surplus.
B)  foreign economies and this will lead to an increase in the capital account surplus.
C)  the domestic economy and this will lead to an increase in the capital account surplus.
D)  foreign economies and this will lead to a decrease in the capital account surplus.

Question 6

For fixed exchange rates among nations to work, participating nations must

Accepted Answer

A)  maintain domestic economic conditions that maintain equilibrium currency values close to the fixed rates.
B)  pursue independent fiscal and monetary policies.
C)  agree to adopt a uniform currency.
D)  refrain from trading with non-participating countries.

Question 7

The international trade effect results in

Accepted Answer

A)  a shift to the right in the aggregate demand curve.
B)  a shift to the left in the aggregate demand curve.
C)  a movement along the aggregate demand curve.
D)  a shift in the aggregate demand curve equal to the change in net exports times the multiplier.

Question 8

An increase in net exports due to a change in the exchange rate will shift aggregate demand

Accepted Answer

A)  left by the amount of the initial increase in net exports.
B)  right by the amount of the initial increase in net exports.
C)  left by the amount of the initial change in net exports * the multiplier.
D)  right by the amount of the initial increase in net exports * the multiplier.

Question 9

Under the simplifying assumptions made in the text, a current account surplus

Accepted Answer

A)  arises when a country's exchange rate rises.
B)  arises when the purchase of foreign assets by a nation's citizens exceed the purchase of domestic assets by a nation's citizens.
C)  is necessary for a long run economic growth.
D)  arises when exports exceed imports.

Question 10

Suppose a nation fixes the exchange rate of its currency relative to a specific amount of
Gold.This system is an example of a

Accepted Answer

A)  managed float system.
B)  free-floating exchange rate system.
C)  commodity standard system.
D)  fiat standard system.

Question 11

If compared to Akerji, Bunyan can produce palm oil by giving up less of an alternative good
Then, Bunyan has

Accepted Answer

A)  a higher foreign-trade multiplier than Akerji.
B)  a lower foreign-trade multiplier than Akerji.
C)  an absolute advantage in palm oil production.
D)  a comparative advantage in palm oil production.

Question 12

The purchase of U.S.goods by foreigners generates a demand for U.S.dollars in the foreign currency market.

Accepted Answer

A) True 
 B)False

Question 13

While members of the European Union that are part of the eurozone continue to have their own central bank, these national central banks agree to cede the conduct of monetary policy to the European Central Bank.

Accepted Answer

A) True 
 B)False

Question 14

International trade affects the economy's real wage in the long run.

Accepted Answer

A) True 
 B)False

Question 15

What are the three broad categories of exchange rate systems?

Accepted Answer

A)  Private market system, government (public) system, fixed exchange rate system
B)  Fixed exchange rate system, flexible exchange rate system, gold-standard system
C)  Managed float system, flexible exchange rate system, fixed exchange rate system
D)  Central bank system, flexible exchange rate system, fixed exchange rate system

Question 16

Managed floating is typically undertaken by a country to

Accepted Answer

A)  maximize a country's net exports.
B)  attract foreign investors to invest in the country.
C)  keep inflation moderate.
D)  prevent sudden large swings in the value of a nation's currency.

Question 17

Consider the market for U.S.dollars.Which of the following is true in equilibrium?
I.The quantity demanded of U.S.dollars equals the U.S.money supply.
II.U.S.exports + foreign purchases of U.S.assets equal U.S.imports + purchases of foreign
Assets by U.S.citizens.
III.The quantity demanded of U.S.dollars equals the quantity supplied of U.S.dollars.
IV.The quantity supplied of U.S.dollars by U.S.nationals equals the quantity demanded of U.S.dollars by foreign nationals.

Accepted Answer

A)  I and II.
B)  II and III.
C)  II and IV.
D)  III only.

Question 18

Which of the following is a reason why nations began abandoning the gold standard in the 1930s?

Accepted Answer

A)  World supply of gold dropped drastically in the 1930s, severely limiting a country's ability to increase its money supply.
B)  Imbalances in a country's balance of payments can be corrected only through changes in the entire economy.
C)  In order to correct imbalances in its balance of payments, a country was forced on its trading partners to intervene in currency markets.
D)  Some nations started hoarding gold in order to manipulate relative exchange rates.

Question 19

A country has a comparative advantage if it can produce a good or service

Accepted Answer

A)  at a higher opportunity cost than can other nations.
B)  at a lower opportunity cost than can other nations.
C)  by using less resources than other nations.
D)  that lies outside its production possibilities curve.

Question 20

Suppose the U.S.imposes an import quota on lamb meat from New Zealand.Which of the following individuals is most likely to oppose this quota?

Accepted Answer

A)  Iceland's lamb exporters
B)  The U.S.lamb industry
C)  Buyers of lambs' wool
D)  Restaurants that specialize in lamb dishes

Exam 15: Net Exports and International Finance

Suppose the U.S.imposes an import quota on lamb meat from New Zealand.Which of the following individuals is most likely to oppose this quota?

Correct Answer
verified

If compared to Akerji, Bunyan can produce palm oil by giving up less of an alternative good Then, Bunyan has

Correct Answer
verified

If there is a decline in home bias, U.S.residents are more likely to invest their savings in

Correct Answer
verified

For fixed exchange rates among nations to work, participating nations must

Correct Answer
verified

The purchase of U.S.goods by foreigners generates a demand for U.S.dollars in the foreign currency market.

Correct Answer
verified

An increase in net exports due to a change in the exchange rate will shift aggregate demand

Correct Answer
verified

From 2008 to 2011, which euro nation had the greatest lack of fiscal discipline and the greatest risk of default on its debt?

Correct Answer
verified

Correct Answer
verified

Which of the following is a reason why nations began abandoning the gold standard in the 1930s?

Correct Answer
verified

Which of the following affects the quantity of U.S.dollars supplied in the currency market?

Correct Answer
verified

Under the simplifying assumptions made in the text, a current account surplus

Correct Answer
verified

In a simple currency board arrangement, a country can issue

Correct Answer
verified

While members of the European Union that are part of the eurozone continue to have their own central bank, these national central banks agree to cede the conduct of monetary policy to the European Central Bank.

Correct Answer
verified

A country has a comparative advantage if it can produce a good or service

Correct Answer
verified

The international trade effect results in

Correct Answer
verified

International trade affects the economy's real wage in the long run.

Correct Answer
verified

Managed floating is typically undertaken by a country to

Correct Answer
verified

Net exports equal

Correct Answer
verified

What are the three broad categories of exchange rate systems?

Correct Answer
verified

Suppose a nation fixes the exchange rate of its currency relative to a specific amount of Gold.This system is an example of a

Correct Answer
verified

Exam 15: Net Exports and International Finance

Suppose the U.S.imposes an import quota on lamb meat from New Zealand.Which of the following individuals is most likely to oppose this quota?

Correct AnswerverifiedShow Answer

If compared to Akerji, Bunyan can produce palm oil by giving up less of an alternative good Then, Bunyan has

Correct AnswerverifiedShow Answer

If there is a decline in home bias, U.S.residents are more likely to invest their savings in

Correct AnswerverifiedShow Answer

For fixed exchange rates among nations to work, participating nations must

Correct AnswerverifiedShow Answer

The purchase of U.S.goods by foreigners generates a demand for U.S.dollars in the foreign currency market.

Correct AnswerverifiedShow Answer

An increase in net exports due to a change in the exchange rate will shift aggregate demand

Correct AnswerverifiedShow Answer

From 2008 to 2011, which euro nation had the greatest lack of fiscal discipline and the greatest risk of default on its debt?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a reason why nations began abandoning the gold standard in the 1930s?

Correct AnswerverifiedShow Answer

Which of the following affects the quantity of U.S.dollars supplied in the currency market?

Correct AnswerverifiedShow Answer

Under the simplifying assumptions made in the text, a current account surplus

Correct AnswerverifiedShow Answer

In a simple currency board arrangement, a country can issue

Correct AnswerverifiedShow Answer

While members of the European Union that are part of the eurozone continue to have their own central bank, these national central banks agree to cede the conduct of monetary policy to the European Central Bank.

Correct AnswerverifiedShow Answer

A country has a comparative advantage if it can produce a good or service

Correct AnswerverifiedShow Answer

The international trade effect results in

Correct AnswerverifiedShow Answer

International trade affects the economy's real wage in the long run.

Correct AnswerverifiedShow Answer

Managed floating is typically undertaken by a country to

Correct AnswerverifiedShow Answer

Net exports equal

Correct AnswerverifiedShow Answer

What are the three broad categories of exchange rate systems?

Correct AnswerverifiedShow Answer

Suppose a nation fixes the exchange rate of its currency relative to a specific amount of Gold.This system is an example of a

Correct AnswerverifiedShow Answer

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