ECO/302 Intermediate Macroeconomics Week 11 Quiz - Strayer

ECO 302 Week 11 Quiz - Strayer 

Chapter 17

 

TRUE/FALSE

 

            1.         With an international sector real GNP is consumption plus gross investment plus government purchases plus net real asset income from abroad.

 

                                     

 

            2.         The balance of trade is net exports or imports less exports.

 

                                     

 

            3.         A higher current account deficit is caused by a declining domestic economy.

 

                                     

 

            4.         The real current account balance is real national saving less net domestic investment.

 

                                     

 

            5.         Tariffs and quotas lead to a higher real GDP growth rate in the country imposing them.

 

                                     

 

            6.         The law of one price says that there must be a unique price for a good in each location where it is sold.

 

                                     

 

            7.         If the home country has a real GNP which is greater than real domestic expenditure, then the home country has a current-account deficit.

 

                                     

 

            8.         Foreign direct investment occurs when the home country acquires additional ownership of capital located in the rest of the world.

 

                                     

 

            9.         If the home country has negative trade balance, then its real GDP is less than real domestic expenditure.

 

                                     

 

            10.       The equilibrium business-cycle model predicts that the real current-account balance will be countercyclical.

 

                                     

 

 

MULTIPLE CHOICE

 

            1.         The law of one price:

a.         prohibits price discrimination.            c.         is a tax on imports.

b.         is that markets work to ensure that the same good has the same price in all locations.         d.         prohibits price increases unless firms can show their are unusual circumstances.

 

 

                                     

 

            2.         The difference between real GDP in a closed economy and real GNP  in a open economy is:

a.         net real asset income from abroad.      c.         net international investment position.

b.         net imports.    d.         the trade balance.

 

 

                                     

 

            3.         Real GNP in an open economy is:

a.         the closed economy real output less net real asset income from abroad.       c.         the closed economy real output less gross real asset income from abroad. 

b.         the closed economy real output plus gross real asset income from abroad.  d.         the closed economy real output plus net real asset income from abroad. 

 

 

                                     

 

            4.         Net real asset income from abroad is:

a.         rt-1•Bft-1/P.    c.         (Bft - Bft-1)/P.

b.         Yt  - (Ct +It +Gt ).     d.         ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

 

 

                                     

 

            5.         Net real foreign investment is:

a.         rt-1•Bft-1/P.    c.         (Bft - Bft-1)/P.

b.         Yt  - (Ct +It +Gt ).     d.         ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

 

 

                                     

 

            6.         The trade balance is:

a.         rt-1•Bft-1/P.    c.         (Bft - Bft-1)/P.

b.         Yt  - (Ct +It +Gt ).     d.         ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

 

 

                                     

 

            7.         The balance on the current account:

a.         rt-1•Bft-1/P.    c.         (rt-1•Bft-1/P) + ((Bft - Bft-1)/P).

b.         Yt  + (rt-1•Bft-1/P) - (Ct +It +Gt ).   d.         ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

 

 

                                     

 

            8.         The balance on the current account is:

a.         real GNP less net foreign investment income.            c.         real GNP less the net international investment position.

b.         real GNP less net foreign investment.            d.         real GNP less real domestic expenditure.

 

 

                                     

 

            9.         The real current-account balance is:

a.         net real asset income from abroad less trade balance c.         trade balance times the net real asset income from abroad.

b.         trade balance plus the net real asset income from abroad.      d.         trade balance less the net real income from abroad.

 

 

                                     

 

            10.       The real current account balance equals:

a.         net foreign investments.          c.         the trade balance plus net real asset income from abroad.

b.         real GNP less real domestic expenditure.       d.         all of the above.

 

 

                                     

 

            11.       The real current account balance equals:

a.         net foreign investments.          c.         the trade balance.

b.         the net international investment position.      d.         all of the above.

 

 

                                     

 

            12.       The real current account balance equals:

a.         the trade balance.        c.         the net international investment position.

b.         real GNP less real domestic expenditure.       d.         all of the above.

 

 

                                     

 

            13.       The real current account balance equals

a.         the net international investment position.      c.         the trade balance plus net real asset income from abroad.

b.         the trade balance.        d.         all of the above.

 

 

                                     

 

            14.       The trade balance is:

a.         the difference between exports and imports. c.         the real current-account balance less net real asset income from abroad.

b.         real GDP less real domestic expenditure.       d.         all of the above.

 

 

                                     

 

            15.       The trade balance is:

a.         the difference between exports and imports. c.         net foreign investment.

b.         real asset income from abroad.            d.         all of the above.

 

 

                                     

 

            16.       The trade balance is:

a.         the balance on the current account.     c.         net foreign investment.

b.         real GDP less real domestic expenditure.       d.         all of the above.

 

 

                                     

 

            17.       The trade balance is:

a.         net foreign investment.           c.         the real current-account balance less net real asset income from abroad.

b.         the net international investment position.      d.         all of the above.

 

 

                                     

 

            18.       In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

a.         an increase in the MPK.         c.         an increase in borrowing from foreigners.

b.         an increase in home country gross domestic investment.       d.         all of the above.

 

 

                                     

 

            19.       In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

a.         an increase in the MPK.         c.         an increase in lending to foreigners.

b.         an decrease in home country gross domestic investment.      d.         all of the above.

 

 

                                     

 

            20.       In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

a.         an decrease in the MPK.         c.         an increase in lending to foreigners.

b.         an increase in home country gross domestic investment.       d.         all of the above.

Chapter 18

 

TRUE/FALSE

 

            1.         If the dollar per yen exchange rate rises, then so does the value of the dollar.

 

                                     

 

            2.         When absolute purchasing power parity holds, the real exchange rate is 1.

 

                                     

 

            3.         Relative purchasing power parity says that the country with the higher inflation rate will see its currency depreciate.

 

                                     

 

            4.         The interest rate differential between two countries is the real interest rate.

 

                                     

 

            5.         If a country fixes its exchange rate, it gives up control of its money supply.

 

                                     

 

            6.         The nominal exchange rate is measured by quantities of currencies exchanged, while the real exchange rate is measured by quantities of goods exchanged.

 

                                     

 

            7.         Fixed exchange rates are determined by market forces.

 

                                     

 

            8.         Flexible exchange rates are determined by market forces.

 

                                     

 

            9.         Poorer countries tend to have high real exchange rates because the prices for nontradable goods is low in these countries.

 

                                     

 

            10.       The combination of interest rate parity and relative purchasing power parity implies that expected real incomes are the same in the home country and the foreign country.

 

                                     

 

 

 

MULTIPLE CHOICE

 

            1.         The nominal exchange rate is:

a.         foreign good per home good.   c.         the number of units of foreign currency per one unit of the home currency.

b.         the number of units of foreign currency per one unit of home currency divided by the ratio of the foreign price level to the home price level.      d.            all of the above.

 

 

                                     

 

            2.         The real exchange rate is:

a.         foreign good per home good.   c.         the number of units of foreign currency per one unit of the home currency.

b.         nominal exchange rate divided by the ratio of the foreign price level to the home price level.           d.         all of the above.

 

 

                                     

 

            3.         Flexible exchange rates are determined by:

a.         the market.      c.         the UN.

b.         the home country government.           d.         the International Monetary Fund.

 

 

                                     

 

            4.         Fixed exchange rates are determined by:

a.         the market.      c.         the UN.

b.         the governments of the two countries.           d.         the International Monetary Fund.

 

 

                                     

 

            5.         Purchasing power parity is the idea that:

a.         the nominal exchange equals the ratio of the foreign price to the home price.            c.         the nominal exchange equals the home price less the foreign price.

b.         the nominal exchange rate equals the foreign price time the home price.        d.         the nominal exchange equals the home price less the foreign price.


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ECO 302 Week 11 Quiz - Strayer

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