Macroeconomic-Chapter 18-SmartBook

Which of the following results from China's high level of investment in the United States? Multiple choice question. A U.S./China trade balance A U.S./China trade imbalance High U.S. interest rates Low Chinese net capital outflows

A U.S./China trade imbalance

Which of the following is a consequence of very high domestic savings? Multiple choice question. Decreased domestic consumption Increased interest rates Increased domestic consumption A trade balance

Decreased domestic consumption

If a government inflates its currency, investors in that country tend to lose. True False

False

A currency whose value is determined by the market and is freely traded is a currency with a Multiple choice question. variable exchange rate. fixed exchange rate. floating exchange rate. pegged exchange rate.

floating exchange rate.

Historically, China sets the exchange rate for its currency, the yuan, Multiple choice question. equal to the market value. above the market value. below the market value.

below the market value.

When countries carry large amounts of _______, investors question the country's ability to repay it. Multiple choice question. debt capital inflows credit

debt

When foreign interest rates are high relative to those in the U.S.,demand for dollars will tend to __________. Multiple choice question. remain unchanged decrease increase

decrease

The market for buying and selling currencies is called the forex or the _________ exchange market. Multiple choice question. international foreign domestic

foreign

When foreign interest rates are low relative to those in the U.S., demand for dollars will tend to __________ (one word). Multiple choice question. remain unchanged decrease increase

increase

The value of exports minus the value of imports is called Multiple choice question. a trade surplus. the balance of trade. a trade tariff. a trade deficit.

the balance of trade.

An identity that shows the value of net exports equal to net capital outflow is called Multiple choice question. the saving-investment identity. the balance-of-payments identity. the capital-outflow identity. the capital-inflow identity.

the balance-of-payments identity.

If the dollar has appreciated against the euro, then Multiple choice question. each euro buys more dollars. each dollar buys fewer euros. arbitrage is more likely. the euro depreciated against the dollar.

the euro depreciated against the dollar.

When net capital outflow decreases, the quantity of loanable funds saved ___________. Multiple choice question. does not change decreases increases

decreases

The sum of national savings is Multiple choice question. the supply of loanable funds. the main determinant of aggregate demand. the net capital overflow. the demand for loanable funds.

the supply of loanable funds.

The balance of trade refers to Multiple choice question. a greater amount of exports than imports. the value of exports minus the value of imports. a greater amount of imports than exports. the value of imports minus the value of exports.

the value of exports minus the value of imports.

Where is the equilibrium interest rate located in the foreign investment framework? Multiple choice question. Above the intersection of national savings and the (I+NCO) curve Below the intersection of national savings and the (I+NCO) curve At the intersection of national savings and the (I+NCO) curve At the intersection of national savings and the NCO curve

At the intersection of national savings and the (I+NCO) curve

Which of the following is the largest category of U.S. exports? Multiple choice question. Automotive Consumer goods Industrial supplies Food and beverages Capital goods

Capital goods

Which of the following is the largest category of U.S. exports? Multiple choice question. Food and beverages Automotive Industrial supplies Consumer goods Capital goods

Capital goods

In order to maintain the desired exchange rate value of its currency, the yuan, China sells a great deal of yuan on the foreign exchange market. What does it tend to do with the dollars it receives from many of these sales? Multiple choice question. China invests in the U.S. stock market. China open factories in the U.S. China buys U.S. Treasury securities. China tends to take over U.S. companies.

China buys U.S. Treasury securities.

In the United States, which of the following categories has the greatest difference between imports and exports? Multiple choice question. Automotive Consumer goods Capital goods Food and beverages Industrial supplies

Consumer goods

Which of the following best describes arbitrage? Multiple choice question. Profiting from a compensating wage differential Gaining financially due to discrepancies in exchange rates Gaining from the arbitrary stock-assessment value of the S & P 500. A central bank that purchases large amounts of foreign-currency denominated investment vehicles

Gaining financially due to discrepancies in exchange rates

Indicate which of the following tend to increase demand for U.S. dollars on the foreign exchange market. Multiple select question. High U.S. interest rates A U.S. family plans a vacation in Paris U.S. market stability Low U.S. interest rates A Spanish family takes a ski vacation in Vail, CO

High U.S. interest rates U.S. market stability A Spanish family takes a ski vacation in Vail, CO

Indicate the impact of foreign investment. Multiple choice question. Increases the GDP of the host country Decreases the GDP of the investing country Moves capital from high-return locations to low-return locations Moves capital within high-return locations

Increases the GDP of the host country

Foreign investment does which of the following? Multiple select question. Increases the GDP of the host country Decreases the GDP of the investing country Increases the GDP of the investing country Decreases the GDP of the host country

Increases the GDP of the investing country Increases the GDP of the host country

The demand for loanable funds comes from which of the following? Multiple select question. The Federal Reserve Domestic investment Open market operations International investment

International investment Domestic investment

What tends to happen when countries carry large amounts of debt? Multiple choice question. Investors question the country's ability to repay the debt. Everyone who invested in the country loses their money. Net capital inflows increase.

Investors question the country's ability to repay the debt.

What role does the International Monetary Fund (IMF) play in the world economy currently? Multiple choice question. Enacts contractionary monetary policy Enacts expansionary fiscal policy The IMF takes large deposits from central banks Lender of last resort

Lender of last resort

Suppose the government runs a deficit. Predict the effect on net capital outflow. Multiple choice question. Net capital outflow increases. Net capital outflow does not change. Net capital outflow decreases.

Net capital outflow decreases.

Under a flexible exchange rate system, which of the following variables do monetary policy affect? Multiple select question. Net exports Interest rates Investment Government securities

Net exports Investment

Which of the following affect the supply of U.S. dollars on the foreign exchange market? Multiple select question. Perceived risk of the investment Number of investors relative to consumer preferences. Consumer preferences Interest rates relative to foreign interest rates Taxes and subsidies

Perceived risk of the investment Consumer preferences Interest rates relative to foreign interest rates

What happens to the supply of U.S. dollars if U.S. consumers prefer foreign goods to domestic items? Multiple choice question. The supply of U.S. dollars is unrelated to consumer preferences. Supply decreases as consumers sell dollars to obtain foreign currency. Supply increases as consumers sell dollars to obtain foreign currency.

Supply increases as consumers sell dollars to obtain foreign currency.

Lender of last resort in the world is a role currently played by Multiple choice question. The World Bank The IMF The United Nations The United States

The IMF

What would happen to the U.S. trade balance with China if China allowed its currency to float? Multiple choice question. The U.S. trade balance would not change. The effect is unclear. The U.S. trade balance would rise. The U.S. trade balance would fall.

The effect is unclear.

Consider the following statement:"Fewer imports mean more exports."Based on this statement, what do you predict will happen to the net export curve? Multiple choice question. The net export curve does not change. The net export curve shifts to the right. The net export curve shifts to the left.

The net export curve shifts to the right.

When the propensity to save is high, what happens to the savings curve? Multiple choice question. The savings curve does not change. The savings curve increases. The savings curve decreases. The savings curve becomes vertical.

The savings curve increases.

Suppose the U.S. dollar appreciates against the Hungarian forint. What is a likely consequence? Multiple select question. U.S. imports from Hungary increase. U.S. exports to Hungary increase. U.S. exports to Hungary decrease. U.S. imports from Hungary decrease.

U.S. imports from Hungary increase. U.S. exports to Hungary decrease.

A capital outflow occurs when Multiple choice question. money from abroad is invested internationally. domestic money is invested internationally. money from abroad is invested domestically. domestic money is invested domestically.

domestic money is invested internationally.

In general, the price of one currency in terms of another currency is known as the _________ rate. Multiple choice question. nominal interest exchange flexible

exchange

If an exchange rate is fixed, then monetary policy can only affect _____________

investment

When a government devalues its exchange rate, Multiple choice question. investors in the country are unaffected. investors in the country gain. investors in the country lose.

investors in the country lose.

Overall, the opportunity for arbitrage Multiple choice question. does not exist. is small. is large. only exists in U.S. dollars.

is small.

At the intersection of of national savings and the (I+NCO) curve, Multiple choice question. lies the surplus interest rate in the foreign investment framework. lies the surplus interest rate in the domestic investment framework. lies the equilibrium interest rate in the domestic investment framework. lies the equilibrium interest rate in the foreign investment framework.

lies the equilibrium interest rate in the foreign investment framework.

In the balance-of-payments identity, Multiple choice question. net exports equal net capital inflow. net exports equal net capital outflow. net imports equal net capital inflow. net imports equal net capital outflow.

net exports equal net capital outflow.

Savings has a(n) ____________ relationship with interest rate.

positive or direct

When U.S. consumers decide that they prefer Chevy trucks to the Nissan Leaf, the net export curve Multiple choice question. shifts to the right. does not shift. shifts to the left.

shifts to the right.

If the U.S. imports $500 billion worth of goods and services from China and sells $200 billion worth of goods and services, then the U.S. is running a Multiple choice question. trade deficit. trade surplus. trade imbalance. trade balance.

trade deficit.

If the U.S. imports $500 billion worth of goods and services from China and sells $200 billion worth of goods and services, then the U.S. is running a Multiple choice question. trade imbalance. trade balance. trade surplus. trade deficit.

trade deficit.

If the U.S. imports $200 billion worth of goods and services from China and sells $500 billion worth of goods and services, then the U.S. is running a _____. Multiple choice question. trade imbalance trade deficit trade surplus trade balance

trade surplus

If the U.S. imports $200 billion worth of goods and services from China and sells $500 billion worth of goods and services, then the U.S. is running a _____. Multiple choice question. trade surplus trade balance trade deficit trade imbalance

trade surplus

Decreased domestic consumption is a consequence of Multiple choice question. neutral domestic savings. very high domestic savings. very low domestic savings.

very high domestic savings.