Econ 202 - ch 18
Suppose the real exchange rate between Russia and United States is defined in terms of bottles of Russian vodka per bottle of us vodka which of the following will increase the real exchange rate
All of the above will increase the real exchange rate
Which of the following people or firms would be pleased by the depreciation of the dollar
An Italian importer of us Steel
The most accurate measure of the international value of the dollar is
An exchange rate index that accounts for money exchange rates
An economy that interacts with other economies is known as
An open economy
When people take advantage of differences in prices for the same good by buying it where it is cheap and selling it where it is expensive, it is known as
Arbitrage
Which of the following products would likely be the least accurate if used to calculate purchasing power parity
Dental Services
A country that exports more than it Imports is said to have a trade deficit
F
Arbitrage tends to cause prices for the same good to diverge from one another
F
If Great Britain's money supply grows faster than Mexico's, the value of the British pound should rise relative to the value of the peso
F
If a case of Pepsi cost $8 in the United States and 720 yen in Japan then according to the purchasing power parity theory of exchange rates the Yen / dollar exchange rate should be 5760 Yen per dollar
F
If a company based in the United States prefers a strong dollar a dollar with a high exchange value than the company likely exports more than it Imports
F
If Japan exports more than it Imports
Japan's net capital outflow must bePositive
Which of the following is an example of a foreign direct investment
McDonald's build a restaurant in Moscow
Which of the following would directly increase us net capital outflow
Microsoft build a new distribution facility in Sweden
Which of the following statements is true about a country with a trade deficit
Net exports are negative
If the nominal exchange rate is 2 British pounds to the dollar and if the price of a Big Mac is $2 in the United States and 6 pounds and Great Britain than the real exchange rate is 2/3 British Big Mac per American Big Mac
T
Suppose the money supply in Mexico grows more quickly than the money supply in the United States. We would expect that
The peso should depreciate relative to the dollar
Suppose the inflation rate over the last 20 years has been 10% in Great Britain, 7% in Japan, and 3% in the United States. If purchasing power parity holds which of the following statements is true? Over this period,
They yen should have risen in value compared to the pound and Fallen compared to the dollar
Net exports are defined as imports minus exports.
F
Valuable technologically advanced goods are less likely to be traded internationally because shipping costs absorb too much of the potential profit
F
Which of the following statements is not true about the relationship between National saving, investment, and net capital outflow?
For a given amount of saving, a decrease in net capital outflow must decrease domestic investment
Each of the following is a reason why the US economy continues to engage in Greater amounts of trade except which one
NASA imposes requirements for increased trade between countries in North America
Suppose a US resident by the Jaguar automobile from Great Britain and the British exporter uses the receipts to buy stock in General Electric. Which of the following statements is true from the perspective of the United States?
Net exports fall, and net capital outflow Falls
Arbitrage is the process of taking advantage of differences and prices of the same good by buying them where the good is cheap and selling where it is expensive
T
For a given amount of US national saving an increase in u.s. net capital outflow decreases us domestic investment
T
For any country, net exports are always equal to net capital outflow because every international transaction involves an exchange of an equal value of some combination of goods and assets.
T
If purchasing power parity holds the real exchange rate is always equal to 1
T
If the Yen / dollar exchange rate rises the dollar has appreciated
T
In order to increase domestic investment a country must either increase its saving or decrease its net foreign investment
T
US net capital outflow falls when Toyota buys stock in Hilton hotels, an american corporation.
T
