Question 1

The net capital outflow is the:

Accepted Answer

A)  net flow of capital goods owned outside a country.
B)  net flow of funds invested outside of a country.
C)  net flow of capital goods owned within a country.
D)  net flow of funds invested within a country.E) B) and C)
F) All of the above

Question 2

In the U.S.over the last 50 years:

Accepted Answer

A)  imports have grown and exports have fallen.
B)  both imports and exports have grown dramatically.
C)  both imports and exports have fallen dramatically.
D)  the percent of GDP that represents imports and exports has remained fairly steady.E) B) and C)
F) C) and D)

Question 3

The institution that is responsible for maintaining international monetary stability is:

Accepted Answer

A)  the International Monetary Fund.
B)  the World Bank.
C)  the United Nations.
D)  the International Reserve Bank.E) None of the above
F) A) and C)

Question 4

IBM buys treasury bonds from the UK as part of its investment portfolio.This is an example of:

Accepted Answer

A)  foreign direct investment.
B)  foreign portfolio investment.
C)  importing.
D)  exporting.E) None of the above
F) C) and D)

Question 5

If $1 is worth 0.70 euros,then 1 euro is worth:

Accepted Answer

A)  $7.43.
B)  $1.43.
C)  $7.00.
D)  $0.70.E) All of the above
F) A) and B)

Question 6

If a country has a floating exchange rate,it means their currency:

Accepted Answer

A)  is set by the government.
B)  has a value determined by the market for loanable funds.
C)  can be freely traded and their value is determined by the market.
D)  All of these statements are true.E) B) and D)
F) A) and C)

Question 7

If the U.S.dollar was worth .8 euros,and the dollar appreciated,it might now be worth:

Accepted Answer

A)  0.7 euros.
B)  0.9 euros.
C)  0.8 euros.
D)  None of these statements is possible.E) All of the above
F) A) and B)

Question 8

If a country has a fixed exchange rate,it:

Accepted Answer

A)  has a value that is set by the government.
B)  allows for more predictability and stability.
C)  helps attract foreign investment and gives businesses that depend on overseas trade more confidence to invest.
D)  All of these statements are true.E) B) and D)
F) A) and C)

Question 9

When a country suffers from a speculative attack:

Accepted Answer

A)  the supply of currency available shifts right.
B)  it lowers the equilibrium exchange rate.
C)  it forces the government to spend its reserves to defend its fixed exchange rate.
D)  All of these statements are true.E) B) and D)
F) A) and B)

Question 10

For nearly every year since 1970,the United States has:

Accepted Answer

A)  imported more than it exported.
B)  exported more than it imported.
C)  imported about the same as it has exported.
D)  held to very isolationist trade policy.E) B) and D)
F) C) and D)

Question 11

The balance-of-payments identity is an equation that shows that the value of:

Accepted Answer

A)  net exports equals the net capital outflow.
B)  net capital inflow equals the net capital outflow.
C)  imports must equal exports.
D)  payments from a country equals payments to a country.E) B) and C)
F) A) and D)

Question 12

A main trading partner with the U.S.is:

Accepted Answer

A)  South Africa.
B)  Japan.
C)  Norway.
D)  Saudi Arabia.E) All of the above
F) A) and B)

Question 13

A speculative attack:

Accepted Answer

A)  can occur with any currency.
B)  can occur to currencies with floating exchange rates.
C)  can occur to currencies with fixed exchange rates.
D)  are illegal and no longer occur.E) All of the above
F) B) and C)

Question 14

In order to maintain a fixed exchange rate:

Accepted Answer

A)  a country cannot change its money supply.
B)  a country must constantly increase its money supply.
C)  a country must constantly decrease its money supply.
D)  Maintaining a fixed exchange rate is unrelated to the money supply.E) B) and C)
F) None of the above

Question 15

If people have a sudden increase in confidence in the open economy of the U.S.and want to invest there,the:

Accepted Answer

A)  demand for loanable funds curve would shift left.
B)  demand for loanable funds curve would shift right.
C)  supply of loanable funds curve would shift left.
D)  supply of loanable funds curve would shift right.E) B) and D)
F) B) and C)

Question 16

When Kim in Korea buys stock in GE (General Electric) ,NCO:

Accepted Answer

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

Question 17

The type of good with the largest trade deficit in the U.S.is:

Accepted Answer

A)  capital goods.
B)  consumption goods.
C)  industrial goods.
D)  None of these statements is true.E) C) and D)
F) All of the above

Question 18

Monetary policy is more effective when:

Accepted Answer

A)  the exchange rate is fixed.
B)  the exchange rate is floating.
C)  it is contractionary.
D)  it is expansionary.E) All of the above
F) None of the above

Question 19

When a country imports more than it exports,it has a:

Accepted Answer

A)  trade deficit.
B)  trade surplus.
C)  zero trade balance.
D)  policy which forbids exportation.E) A) and B)
F) A) and C)

Question 20

One of the largest portfolio investments comes from:

Accepted Answer

A)  U.S.purchases of Chinese consumption goods.
B)  U.S.purchases of Chinese government debt.
C)  Chinese purchases of U.S.government debt.
D)  Chinese purchases of U.S.capital goods.E) A) and B)
F) B) and C)

Exam 34: Open-Market Macroeconomics

If people have a sudden increase in confidence in the open economy of the U.S.and want to invest there,the:

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In the U.S.over the last 50 years:

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A main trading partner with the U.S.is:

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The type of good with the largest trade deficit in the U.S.is:

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For nearly every year since 1970,the United States has:

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In order to maintain a fixed exchange rate:

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If a country has a floating exchange rate,it means their currency:

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The institution that is responsible for maintaining international monetary stability is:

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If a country has a fixed exchange rate,it:

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A speculative attack:

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When a country suffers from a speculative attack:

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The net capital outflow is the:

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The balance-of-payments identity is an equation that shows that the value of:

Correct AnswerverifiedShow Answer

IBM buys treasury bonds from the UK as part of its investment portfolio.This is an example of:

Correct AnswerverifiedShow Answer

Monetary policy is more effective when:

Correct AnswerverifiedShow Answer

When Kim in Korea buys stock in GE (General Electric) ,NCO:

Correct AnswerverifiedShow Answer

If $1 is worth 0.70 euros,then 1 euro is worth:

Correct AnswerverifiedShow Answer

If the U.S.dollar was worth .8 euros,and the dollar appreciated,it might now be worth:

Correct AnswerverifiedShow Answer

When a country imports more than it exports,it has a:

Correct AnswerverifiedShow Answer

One of the largest portfolio investments comes from:

Correct AnswerverifiedShow Answer

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