Econ HW Quiz CH 10 & 16
The Open economy multiplier is
1/ 1- (MPC - MPM)
goods and services, international flows of income, and foreign aid
A country's current account balance refers to a broad measure of the balance of trade that includes:
the demand and supply of both countries' currencies
A flexible exchange rate between two countries is determined by
goods, rather than services
At the outset of the 21st century, most global trade took the form of:
planned aggregate expenditure in an open economy equals
C + I + G + EX - IM
floating exchange rates
Exchange rates that are determined by the unregulated forces of supply and demand are
swings in exchange rates
For firms engaged in international lending and borrowing, ____________________ can have an enormous effect on profits.
exports
Goods and services produced in one country that are then sold in other countries are called ____________.
the dollar depreciated against the yen.
If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then:
it has appreciated in terms of other currencies.
If the Canadian dollar is strengthening, then:
as the MS decreases, IR increases, and the price of US exports will rise and the price of imports will fall.
If the Fed reduces the money supply to reduce inflation, a floating exchange rate will aid the Fed in fighting inflation because
increase imports by 800
If the MPM is 0.4, then a 2000 increase in income will
foreign exchange market
People or firms use one currency to purchase another currency at the
MPC - MPM
The Marginal propensity to consume domestic goods is the
Canadian prices increase --- Canadian exports decrease --- US prices increase
The US and Canada have significant trade with each other. Which of the following is true?
to purchase goods produced in another country
The most common reason for exchanging one currency for another is
the US dollar
The most commonly traded currency in foreign exchange markets is the:
is smaller than
The open-economy multiplier _____ than the closed-economy multiplier.
trade feedback effect
The tendency for an increase in the economic activity of one country to lead to a worldwide increase in economic activity is the
imports
The term __________ is used to describe what those in one country buy from those in other countries.
trade surplus
The term _____________ describes circumstances where a country's exports exceed its imports.
US exports tend to decrease when
US prices are rising relative to those in the rest of the world
appreciation of that currency
Under a system of floating exchange rates, a shortage in a currency will lead to a
a common currency
What do the economies of Greece, Ireland and Germany all share?
An expansionary fiscal policy
Which of the following policies tends to cause the dollar to appreciate?
financial capital supplied; equal to the quantity of financial capital demanded
With respect to the national saving and investment identity for any country, the quantity of _______________ at any given time by savings must ________________ for purposes of making investments.
A U.S. firm builds a factory in South Africa. This will be entered as a
a debit in the US Capital account
A record of a country's transactions in goods, services, and assets with the rest of the world is its
balance of payments
a decrease in the supply of dollars and an increase in the demand for Mexican peso
has an indeterminate effect on the exchange rate between dollars and pesos
trade feedback
the _____ effect illustrates the fact that imports affect exports and exports affect imports.
balance of trade
the difference between a country's merchandise exports and its merchandise imports is the
exchange rate
the price of one country's currency in terms of another country's currency is the
The value of the dollar relative to the euro would decrease if
the supply of dollars increases and the demand for euros increases
If planned aggregates are 400 billion, C is 120, I is 60, and G is 70, there is a
trade surplus of 150 billion
US exports tend to increase
when US prices are falling relative to those in the rest of the world
trade surplus
when a country's exports of goods are greater than its imports of goods in a given period, it has a
an increase in the supply of dollars
which of the following decreases the price of the dollar relative to the British pound?
2010: 113.6 yen, 2013: 107.5 yen
In 2010, 100 Japanese yen purchased .88 U.S. dollars and in 2013, it purchased .93 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013?
aggregate demand
Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ________________ in the economy as a whole.
a soft peg
When a government uses a ______________ exchange rate policy, it usually allows the exchange rate to be set by the market.
if the current account is in surplus, the capital account must be in deficit.
which of the following statements is true?
the Canadian dollar
which of the following would not be considered foreign exchange for Canada?
