Micro chap 26 & 31

Refer to Table 31-1. What are Costa Rica's exports

$55 billion

Oceania buys $40 of wine from Escudia and Escudia buys $100 dollars of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order

$60 and -$60

If a country had a trade surplus of $50 billion and then it's exports rose by $30 billion and it's imports rose by $20 billion, its net exports would now be

$60 billion

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

$7.2 billion of exports and $4.8 billion of imports

If the exchange rate is 5 units of Peruvian currency per dollar and a hotel room in Lima cost 300 unites of Peruvian currency, then how many dollars do you need to get a room

60 and your purchase will increase Peru's net exports

Which of the following statements is correct

A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices may mean the people are expecting low corporate profits

According to the laonable funds model, which of the following events would result in higher interest rates and greater savings

Congress passes a reform of the tax laws that enocurages greater investment

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale

Decreases U.S. net exports and increases Russian net exports

Which of the following both rise net exports?

Exports rise, imports fall

Refer to figure 26-2. Which of the following events would shit the demand cure from D1 to D2

Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories

Lacey, a financial advisor, has told her clients the following things. Which of her statements is not correct

If you purchase a bond, you must hold it until it matures

Which of the following is correct

In a closed economy equilibrium in the market for loanable funds occurs were saving=investment

Refer to figure 26-1. Which of the following events would shift the supply curve from S1 to S2

In response to tax reform, households are encouraged to save more than they previously saved

Which of the following is not correct

Purchases of capital good are excluded from GDP

If U.S. exports are $150 billion and U.S. imports are $100 billion, which of the following is correct?

The U.S. has a trade surplus of $50 billion

Other things the same, which of the following would make both foreigners more willing to engage in U.S. portfolio investment?

U.S. interest rates rise, the default risk of U.S. assets fall

Which of the following equations represents GDP for a closed economy

Y=C+I+G

Which of the following equations represents GDP for an open economy

Y=C+I+G+NX

Refer to figure 26-3. A shift of the supply curve S1 to S2 is called

a decrease in the supply of loanable funds

Which of the following would be included as investment in the GDP accounts

a firm increases its capital stock

A checking deposit function as

a medium of exchange and as a store of value, its part of M1

Refer to figure 26-3. A shift of the demand curve from D1 to D2 is called

an increase in the demand for loanble funds, and that increase would originate from households and firms who wish to borrow to make investments

Other things the same, if the exchange rate changes from .30 Kuwaiti dinar per dollar to .35 Kuwaiti dinar per dollar, then the dollar has

appreciated and so buys more Kuwaiti good

If the exchange rate changes from 135 Kazakhstan tenge per dollar to 150 Kazakhstan tenge per dollar, the dollar has

appreciated. Other thigns the same, it now takes fewer dollars to buy Kazakhstani goods

Suppose the government ran a budget surplus in 2008 and a larger surplus in 2009. The loanable funds model would predict that, as a result of the increase in the surplus

boththe government debt and interest rates decreased between 2008 and 2009

An increase in the

budget deficit makes investment spending fall

An increase in the

budget deficit would cause a shortage of loanable funds at the original interest rate, which would lead to rising interest

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

buying cotton in the United States and selling it to Egypt, which would tend to raise the price of cotton in the United States

If the US has exportss of $1.5 trillion and imports of $2.2 trillion, then the US

buys more from overseas then it sells overseas; it has a trade defecit

Domestic saving equals domestic investment in

closed, but not open economies

Which of the following list correctly indentifies the four expenditure categories of GDP

consumption, govern,ent purchases, investment, net-exports

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Whish list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?

corporate bond, U.S. government bond, municipal bond

A Swiss company sells chocolates to a retailer in the Untied STates. These sales by themselves

decrease U.S, net exports and increase Swiss net exports

Sonya, a citizen of Denmark, produces boots and shoes that she sells to department stores in the United States. Other things the same, these sales

decrease U.S. net exports and increase Danish net exports

In the late summer of 2005 some regions of the country were suffering from drought. What effect would we expect this to have on the stock of companies such as John Deere that manufacture farm equiptment

decrease the demand for existing shares of the shock, causing prices to rise

A larger budget

deficit raises the interest rate and reduces investment

Other things the same, if the exchange rate changes from 125 yen per dollar to 115 yen per dollar, the dollar has

depreciated and so buys fewer Japanese goods

Retained earnings are

earning of a company that are not paid out to stockholders

All saving in the U.S. economy shows up as

either investment in the U.S. economy or U.S. net capital outflow

Is U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's

exports and next exports rise

A country purchases $3 billion of foreign-produced goods and services to foreign countries. It has

exports of $2 billion and a trade deficit of $1 billion

You hold currency from a foreign country. If that country has a higher rate of inflation than the United States, then over time the foreign currency will buy

fewer foods in that country and buy fewer dollars

John, a U.S. citizen opens up a Sports bar in Tokyo. This is an example of U.S.

foreign direct investmentq

Suppose the U.S. goevernment changed tax laws, with the result that people were encouraged to consume more and save less. Using the loanable funds model, a consequence would be

higher interest rates and lower investment

Crowding out occurs when

investment declines because a budget deficit makes interest rates fall

A country's trade balance

is greater than zero only if exports are greater than imports

If a county has a trade deficit

it has negative net exports and negative new capital outflow

If a country has a trade surplus

it has positive net exports and a positive net capital outflow

One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports

its trade deficit rose

One year a country has positive net exports. The next year it still has positive but larger next exports

its trade surplus rose

When a country's central bank increases the money supply, a unit of money

loses value in both terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy

Municipal bonds pay a relatively

low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax

Which of the following would a macro-economist consider as investment

mariah builds a new coffee shop

A corporation's earnings are the amount of revenue it receives for the sale of its products

minues its cost of production at measured by its accountants. Earnings must be paid out as dividends or retained by the corporation

Compared to short-term bonds, other things the same, long-term bonds generally have

more risk and so the pay higher interest rates

If Germany purchased more abroad than it sold abroad last year, then it had

negative net exports which is a trade deficit

If there is shortage of loanable funds, then

neither curve shifts, but the quantity of loanable funds supplied incrases and the quantitiy demanded decreases as the interest rate rises to equilibrium

Larry buys stock in A to Z express company. Curly Corporation builds a new factory. Mo Inc. ads finished goods that it cannot sell to its inventory. Whose transaction would be an act of investment in the language of macroeconomists

only Curly's Corporation

When a country's central bank decreases the money supply, its

price level falls and its currency appreciates relative to other currencies in the world

When a country's central bank increases the money supply, its

price level rises and its currency depreciates relative to other currencies in the world

Other things the same, a higher real interest rate

raises the quantity of loanable funds supplied

The nominal exchange rate is the

rate at which a person can trade the currency of one country for another

In the loanable fund model, an increase in an investment tax credit would create a

shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate

If Saudi Arabia had positive net exports last year, then it

sold more abroad than it purchased abroad and had a trade surplus

Suppose a government that taxed all interest income changed its tax law tho that the first $5,000 of a taxpayer's interest income was tax free. This would shift the

supply of loanable funds to the right, causing interest rates to fall

Catherine, a citizen of Spain, decides to purchase bonds issued by Chile instead of ones issued by the United States even though Chilean bonds have a higher risk of default. An economic reason for her decision might be that

the Chilean bonds pay a higher rate of interest

If U.S. exports are $300 billion and U.S. imports total $350 billion, which of the following is correct

the U.S. has a trade deficit of $50 billion

A corporation's earnings are

the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants

A change in the tax laws that increases the supply of loanable funds will have a bigger effect on investment when

the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then

the demand for loanable funds would shift rightwards, initially creating a shortage of funds at the original interest rate

You are planning a graduation trip to Nepal. Other things the same, if the dollar appreciates relative to the Nepalese rupee, then

the dollar buys more rupees. Your purchases in Nepal will require fewer dollars

You are staying in London over the summer and you have a number of dollars with you. If the dollar depreciates relative to the British pound, then other things the same,

the dollar would buy fewer pounds. The depreciation would discourage you from buying as many British goods and services

Other thinks the same, if the dollar depreciates relative to the British pound, then

the exchange rate falls. It will cost fewer pounds to travel in the US

Refer to figure 26-2. What is measure along the horizontal axis of the graph

the quantity of loanable funds

A policy that induces people to sabe more shifts

the supply of loanable funds and reduces interest rates

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income

the supply of loanable funds would shift rightward and investment would increase

The prices of stock traded on exchanges are determined by

the supply of, and demand for, the stock

If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs.

these purchases are called capital investment. If you raise the funds from others to purchase them you are a borrower

Nominal exchange rates

vary substantially over time

If we were to changw the interpretation of the term loanable funds in such a way that government budget deficits would affect the demand for loanable funds, rather than the supply of loanable funds, then

we would be making only a semantic change in how we analyze the effects of government budget deficits. The interest rate changes would still be the same