Question 1

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company.
As a result of this exchange,by how much,if at all,and in which direction did:
A.U.S.net exports change?
B.U.S.net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 2

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Accepted Answer

Yes.
reduced transportation co...

Question 3

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 4

If a country's exports were 500 billion pesos and its imports were 300 billion pesos,what would its trade balance be?

Accepted Answer

a 200 bill...

Question 5

What is the logic behind the theory of purchasing-power parity?

Accepted Answer

The logic behind purchasing-power parity...

Question 6

A country recently had a GDP of $1000 billion.Its consumption expenditures were $650 billion,its government spent $250 billion,and it had domestic investment of $150 billion.What was the value of this country's net capital outflow? Explain how you found your answer.

Accepted Answer

saving = GDP - consumption - government ...

Question 7

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods.Foreigners purchased $300 billion dollars of country A's assets.What was the value of country A's exports?

Accepted Answer

The value of country...

Question 8

While vacationing in Turkey you see a rug you consider purchasing.The seller tells you the rug costs 1,200 Turkish lire.
A.If the exchange rate is .60 lira per dollar,how many dollars does the rug cost?
B.If the dollar depreciates against the lira,will it take more or fewer dollars to buy the rug? Explain.

Accepted Answer

A. 1200 lire = $x times .60 li...

Question 9

During 2011 the inflation rate in Brazil was about 6.6% while in the U.S.it was about 3.3%.At the start of 2011 the nominal exchange rate was about 1.7 Brazilian real per U.S.dollar.
If purchasing-power parity holds,about what should the nominal exchange rate have been at the end of 2011? Show your work.

Accepted Answer

1.7(1.066)...

Question 10

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

Accepted Answer

a.The U.S. dollar real exchang...

Question 11

How do we find the real exchange rate from the nominal exchange rate?

Accepted Answer

Real Exchange Rate =...

Question 12

If a nation produces more than it spends what do we know about:
A.its net exports?
B.its net capital outflow?
C.its saving in relation to its domestic investment?

Accepted Answer

A. Its net exports are positiv...

Question 13

Last year a country had $700 billion of saving and $900 of investment.This year it had $1000 billion of saving and $800 billion of investment.By how much did net capital outflow change? By how much did net exports change? How is it possible for a country to have saving that is greater than investment?

Accepted Answer

Both net capital outflows and net export...

Question 14

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros.What was the value of its imports?

Accepted Answer

The answer of A country had a net capital outflow...

Question 15

In the U.S.a television costs $400.In South Africa the same television costs 3000 rand (the currency of South Africa).The nominal exchange rate is 8 rand per dollar.
A.Find the real exchange rate.Show your work.
B.In terms of dollars where is the television cheapest?

Accepted Answer

The real exchange rate = 8 x 4...

Question 16

While on a study abroad program you see a McDonald's in Paris.A combo meal costs 8 euros.The same meal costs $6 in the U.S.and the exchange rate is .75 euros per dollar.
A.Find the real exchange rate.Show your work.
B.In terms of dollars where is the combo meal cheaper?

Accepted Answer

The real exchange rate = $300 ...

Question 17

While vacationing in Agra,India,the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees.If the exchange rate was previously 55 rupees per dollar,what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

Accepted Answer

At an exchange rate of 55 rupees the roo...

Question 18

Last month a country sold more goods and services to residents of foreign countries than it purchased from them.What does this imply about this country's trade balance?

Accepted Answer

This count...

Question 19

Suppose that money supply growth continues to be higher in Turkey than it is in the United States.What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

Accepted Answer

Higher money growth leads to higher pric...

Question 20

The nominal exchange rate is 32 Russian rubles per dollar.The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S.
A.What is the real exchange rate? Show your work.
B.Can arbitragers make a profit?
C.If your answer to B is yes,where would arbitragers buy and where would they sell.

Accepted Answer

A. The real exchange rate = $7...

Exam 18: Open Economy Macroeconomics Basic Concepts: Part A

A country recently had a GDP of $1000 billion.Its consumption expenditures were $650 billion,its government spent $250 billion,and it had domestic investment of $150 billion.What was the value of this country's net capital outflow? Explain how you found your answer.

Correct Answer
verified
saving = GDP - consumption - government ...
View Answer

If a nation produces more than it spends what do we know about: A.its net exports? B.its net capital outflow? C.its saving in relation to its domestic investment?

Correct Answer
verified
A. Its net exports are positiv...
View Answer

What is the logic behind the theory of purchasing-power parity?

Correct Answer
verified
The logic behind purchasing-power parity...
View Answer

Correct Answer
verified
At an exchange rate of 55 rupees the roo...
View Answer

Correct Answer
verified
A. 1200 lire = $x times .60 li...
View Answer

Correct Answer
verified
Both net capital outflows and net export...
View Answer

Correct Answer
verified
1.7(1.066)...
View Answer

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros.What was the value of its imports?

Correct Answer
verified

If a country's exports were 500 billion pesos and its imports were 300 billion pesos,what would its trade balance be?

Correct Answer
verified
a 200 bill...
View 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 Answer
verified
Purchasing-power parity asserts that the...
View Answer

Last month a country sold more goods and services to residents of foreign countries than it purchased from them.What does this imply about this country's trade balance?

Correct Answer
verified
This count...
View Answer

How do we find the real exchange rate from the nominal exchange rate?

Correct Answer
verified
Real Exchange Rate =...
View Answer

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods.Foreigners purchased $300 billion dollars of country A's assets.What was the value of country A's exports?

Correct Answer
verified
The value of country...
View Answer

In the U.S.a television costs $400.In South Africa the same television costs 3000 rand (the currency of South Africa).The nominal exchange rate is 8 rand per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the television cheapest?

Correct Answer
verified
The real exchange rate = 8 x 4...
View Answer

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

Correct Answer
verified
a.The U.S. dollar real exchang...
View Answer

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company. As a result of this exchange,by how much,if at all,and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

Correct Answer
verified
A. U.S. net exports ...
View Answer

While on a study abroad program you see a McDonald's in Paris.A combo meal costs 8 euros.The same meal costs $6 in the U.S.and the exchange rate is .75 euros per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the combo meal cheaper?

Correct Answer
verified
The real exchange rate = $300 ...
View Answer

Suppose that money supply growth continues to be higher in Turkey than it is in the United States.What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

Correct Answer
verified
Higher money growth leads to higher pric...
View Answer

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Correct Answer
verified
Yes.
reduced transportation co...
View Answer

The nominal exchange rate is 32 Russian rubles per dollar.The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S. A.What is the real exchange rate? Show your work. B.Can arbitragers make a profit? C.If your answer to B is yes,where would arbitragers buy and where would they sell.

Correct Answer
verified
A. The real exchange rate = $7...
View Answer

Exam 18: Open Economy Macroeconomics Basic Concepts: Part A

A country recently had a GDP of $1000 billion.Its consumption expenditures were $650 billion,its government spent $250 billion,and it had domestic investment of $150 billion.What was the value of this country's net capital outflow? Explain how you found your answer.

Correct Answerverifiedsaving = GDP - consumption - government ...View AnswerShow Answer

If a nation produces more than it spends what do we know about: A.its net exports? B.its net capital outflow? C.its saving in relation to its domestic investment?

Correct AnswerverifiedA. Its net exports are positiv...View AnswerShow Answer

What is the logic behind the theory of purchasing-power parity?

Correct AnswerverifiedThe logic behind purchasing-power parity...View AnswerShow Answer

Correct AnswerverifiedAt an exchange rate of 55 rupees the roo...View AnswerShow Answer

Correct AnswerverifiedA. 1200 lire = $x times .60 li...View AnswerShow Answer

Correct AnswerverifiedBoth net capital outflows and net export...View AnswerShow Answer

Correct Answerverified1.7(1.066)...View AnswerShow Answer

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros.What was the value of its imports?

Correct AnswerverifiedShow Answer

If a country's exports were 500 billion pesos and its imports were 300 billion pesos,what would its trade balance be?

Correct Answerverifieda 200 bill...View AnswerShow 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

Last month a country sold more goods and services to residents of foreign countries than it purchased from them.What does this imply about this country's trade balance?

Correct AnswerverifiedThis count...View AnswerShow Answer

How do we find the real exchange rate from the nominal exchange rate?

Correct AnswerverifiedReal Exchange Rate =...View AnswerShow Answer

Last year residents of country A purchased $400 billion of foreign assets and $200 of foreign goods.Foreigners purchased $300 billion dollars of country A's assets.What was the value of country A's exports?

Correct AnswerverifiedThe value of country...View AnswerShow Answer

In the U.S.a television costs $400.In South Africa the same television costs 3000 rand (the currency of South Africa).The nominal exchange rate is 8 rand per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the television cheapest?

Correct AnswerverifiedThe real exchange rate = 8 x 4...View AnswerShow Answer

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

Correct Answerverifieda.The U.S. dollar real exchang...View AnswerShow Answer

The Norwegian government uses $500,000 of previously obtained U.S.dollars to buy $500,000 of police cars from a U.S.company. As a result of this exchange,by how much,if at all,and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

Correct AnswerverifiedA. U.S. net exports ...View AnswerShow Answer

While on a study abroad program you see a McDonald's in Paris.A combo meal costs 8 euros.The same meal costs $6 in the U.S.and the exchange rate is .75 euros per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the combo meal cheaper?

Correct AnswerverifiedThe real exchange rate = $300 ...View AnswerShow Answer

Suppose that money supply growth continues to be higher in Turkey than it is in the United States.What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

Correct AnswerverifiedHigher money growth leads to higher pric...View AnswerShow Answer

As measured by the amount of trade it does,has the U.S.economy become more internationalized? Provide two reasons for this change.

Correct AnswerverifiedYes.reduced transportation co...View AnswerShow Answer

The nominal exchange rate is 32 Russian rubles per dollar.The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S. A.What is the real exchange rate? Show your work. B.Can arbitragers make a profit? C.If your answer to B is yes,where would arbitragers buy and where would they sell.

Correct AnswerverifiedA. The real exchange rate = $7...View AnswerShow Answer

Correct Answer
verified
saving = GDP - consumption - government ...
View Answer

Correct Answer
verified
A. Its net exports are positiv...
View Answer

Correct Answer
verified
The logic behind purchasing-power parity...
View Answer

Correct Answer
verified
At an exchange rate of 55 rupees the roo...
View Answer

Correct Answer
verified
A. 1200 lire = $x times .60 li...
View Answer

Correct Answer
verified
Both net capital outflows and net export...
View Answer

Correct Answer
verified
1.7(1.066)...
View Answer

Correct Answer
verified

Correct Answer
verified
a 200 bill...
View Answer

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

Correct Answer
verified
This count...
View Answer

Correct Answer
verified
Real Exchange Rate =...
View Answer

Correct Answer
verified
The value of country...
View Answer

Correct Answer
verified
The real exchange rate = 8 x 4...
View Answer

Correct Answer
verified
a.The U.S. dollar real exchang...
View Answer

Correct Answer
verified
A. U.S. net exports ...
View Answer

Correct Answer
verified
The real exchange rate = $300 ...
View Answer

Correct Answer
verified
Higher money growth leads to higher pric...
View Answer

Correct Answer
verified
Yes.
reduced transportation co...
View Answer

Correct Answer
verified
A. The real exchange rate = $7...
View Answer