Question 1

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Accepted Answer

The building of the ...

Question 2

How do the nominal exchange rate and the real exchange rate differ?

Accepted Answer

The nominal exchange rate is the rate at...

Question 3

While vacationing in Italy,you see an interesting meal on a menu.The price is 24 euros.
A.If the exchange rate is .80 euros per dollar,how many dollars would you have to give up to buy the meal?
B.If the dollar appreciated against the euro,but the price of the meal remained 24 euro,would the meal cost more or fewer dollars? Explain.

Accepted Answer

A. 24 euros = $x times .80 eur...

Question 4

A country recently had a trade deficit of $2.5 trillion and purchased $3 trillion of foreign assets.How many of its assets did foreigners purchase?

Accepted Answer

The answer of A country recently had a trade deficit...

Question 5

A country recently had GDP of $1,200 billion.Its consumption expenditures were $700 billion,its government spent $200 billion,and it had domestic investment of $175 billion.What was the value of this country's net capital outflow? Show your work.

Accepted Answer

Y = C + I + G + NX
$1,200 bill...

Question 6

The price level in Country A is 250.The price level in Country B is 300.If purchasing-power parity holds,what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Accepted Answer

The answer of The price level in Country A is...

Question 7

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Accepted Answer

The real exchange rate 2/3 = $...

Question 8

A country recently had saving of 300 billion euros and domestic investment of 200 billion euros.What was the value of this country's net exports? Explain how you found your answer.

Accepted Answer

saving = domestic investment + net capit...

Question 9

A quality men's suit in the U.S.costs $400.The same suit costs 300 British pounds in the U.K.The nominal exchange rate is .60 pounds per dollar.
A.Find the real exchange rate.Show your work.
B.In terms of dollars where is the suit cheaper?

Accepted Answer

The real exchange rate = $400 ...

Question 10

Last year country A's residents purchased $700 billion of goods and services from and sold $500 billion of goods and services to residents of foreign countries.Its domestic investment was $1,100.What was country A's saving? Show your work.

Accepted Answer

net capital outflow = net expo...

Question 11

A bushel of apples costs $15.00 in the U.S.The same apples cost 1,600 yen in Japan.If the exchange rate is 80 yen per dollar,is there a possibility for arbitrage? Explain and defend your answer.As part of your defense,find the real exchange rate.

Accepted Answer

There is a possibility for profit by buy...

Question 12

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Accepted Answer

The real exchange rate = nomin...

Question 13

A pair of hiking boots costs $120 in the U.S. ,if the real exchange rate is 6/5 and the nominal exchange rate is 2 Brazilian reais per dollar,what is the price of the same hiking boots in Brazil?
Show your work.

Accepted Answer

The real exchange rate 6/5 = $...

Question 14

A U.S.bank loaned a Canadian oil company 1 million U.S.dollars.The Canadian company then used the entire loan to buy mining equipment from a U.S.company.
As a result of these transactions,by how much and in which direction did:
A.U.S.net exports change?
B.U.S.net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 15

Why are net exports and net capital outflow always equal?

Accepted Answer

Net exports and net capital outflow are ...

Question 16

While on vacation in Europe you notice that a tablet computer is selling for 600 euros in France and for 533 pounds in Britain.You also know that the exchange rates are .75 euros per dollar and .65 British pounds per dollar.Where is the number of dollars you would pay for the tablet lower? How many dollars would you have to pay to buy it there?

Accepted Answer

It costs less in France where ...

Question 17

A U.S.mutual fund uses $1 million to buy yen from a Japanese bank.It then uses these yen to buy stocks in a Japanese electronics firm.The Japanese electronic firm then exchanges the $1 million dollars of yen for dollars from a U.S.bank.It uses these dollars to buy equipment manufactured by a company located in the U.S.
As a result of these exchanges,by how much,if at all,and in which direction does:
A.U.S.net exports change?
B.U.S.net capital outflow change?

Accepted Answer

A. U.S. net exports ...

Question 18

A certain cell phone sells for 2400 yuan in China and for $300 in the U.S.The nominal exchange rate is 6.5 yuan per dollar.
A.Find the real exchange rate.Show your work.
B.In terms of dollars where is the cell phone cheaper?

Accepted Answer

The real exchange rate = $300 ...

Question 19

Suppose that a U.S.dollar buys more gold in Australia than it buys in Russia.What does purchasing-power parity imply should happen?

Accepted Answer

People can make a profit by buying gold ...

Question 20

A country recently had a trade deficit of 350 billion euros.Its residents also purchased 400 billion euros of foreign assets.What was the value of this country's assets purchased by foreigners?

Accepted Answer

Foreigners purchased...

Exam 18: Open Economy Macroeconomics Basic Concepts: Part A

Last year country A's residents purchased $700 billion of goods and services from and sold $500 billion of goods and services to residents of foreign countries.Its domestic investment was $1,100.What was country A's saving? Show your work.

Correct Answer
verified
net capital outflow = net expo...
View Answer

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Correct Answer
verified
The real exchange rate = nomin...
View Answer

A country recently had GDP of $1,200 billion.Its consumption expenditures were $700 billion,its government spent $200 billion,and it had domestic investment of $175 billion.What was the value of this country's net capital outflow? Show your work.

Correct Answer
verified
Y = C + I + G + NX
$1,200 bill...
View Answer

A country recently had a trade deficit of 350 billion euros.Its residents also purchased 400 billion euros of foreign assets.What was the value of this country's assets purchased by foreigners?

Correct Answer
verified
Foreigners purchased...
View Answer

A country recently had saving of 300 billion euros and domestic investment of 200 billion euros.What was the value of this country's net exports? Explain how you found your answer.

Correct Answer
verified
saving = domestic investment + net capit...
View Answer

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Correct Answer
verified
The building of the ...
View Answer

How do the nominal exchange rate and the real exchange rate differ?

Correct Answer
verified
The nominal exchange rate is the rate at...
View Answer

Correct Answer
verified
It costs less in France where ...
View Answer

A pair of hiking boots costs $120 in the U.S. ,if the real exchange rate is 6/5 and the nominal exchange rate is 2 Brazilian reais per dollar,what is the price of the same hiking boots in Brazil? Show your work.

Correct Answer
verified
The real exchange rate 6/5 = $...
View Answer

A certain cell phone sells for 2400 yuan in China and for $300 in the U.S.The nominal exchange rate is 6.5 yuan per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the cell phone cheaper?

Correct Answer
verified
The real exchange rate = $300 ...
View Answer

Correct Answer
verified
A. U.S. net exports ...
View Answer

The price level in Country A is 250.The price level in Country B is 300.If purchasing-power parity holds,what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Correct Answer
verified

Correct Answer
verified
A. 24 euros = $x times .80 eur...
View Answer

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Correct Answer
verified
The real exchange rate 2/3 = $...
View Answer

Why are net exports and net capital outflow always equal?

Correct Answer
verified
Net exports and net capital outflow are ...
View Answer

A bushel of apples costs $15.00 in the U.S.The same apples cost 1,600 yen in Japan.If the exchange rate is 80 yen per dollar,is there a possibility for arbitrage? Explain and defend your answer.As part of your defense,find the real exchange rate.

Correct Answer
verified
There is a possibility for profit by buy...
View Answer

A quality men's suit in the U.S.costs $400.The same suit costs 300 British pounds in the U.K.The nominal exchange rate is .60 pounds per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the suit cheaper?

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

A country recently had a trade deficit of $2.5 trillion and purchased $3 trillion of foreign assets.How many of its assets did foreigners purchase?

Correct Answer
verified

Suppose that a U.S.dollar buys more gold in Australia than it buys in Russia.What does purchasing-power parity imply should happen?

Correct Answer
verified
People can make a profit by buying gold ...
View Answer

A U.S.bank loaned a Canadian oil company 1 million U.S.dollars.The Canadian company then used the entire loan to buy mining equipment from a U.S.company. As a result of these transactions,by how much and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

Correct Answer
verified
A. U.S. net exports ...
View Answer

Exam 18: Open Economy Macroeconomics Basic Concepts: Part A

Last year country A's residents purchased $700 billion of goods and services from and sold $500 billion of goods and services to residents of foreign countries.Its domestic investment was $1,100.What was country A's saving? Show your work.

Correct Answerverifiednet capital outflow = net expo...View AnswerShow Answer

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States.If the exchange rate is .80 euros per dollar,what is the real exchange rate?

Correct AnswerverifiedThe real exchange rate = nomin...View AnswerShow Answer

A country recently had GDP of $1,200 billion.Its consumption expenditures were $700 billion,its government spent $200 billion,and it had domestic investment of $175 billion.What was the value of this country's net capital outflow? Show your work.

Correct AnswerverifiedY = C + I + G + NX$1,200 bill...View AnswerShow Answer

A country recently had a trade deficit of 350 billion euros.Its residents also purchased 400 billion euros of foreign assets.What was the value of this country's assets purchased by foreigners?

Correct AnswerverifiedForeigners purchased...View AnswerShow Answer

A country recently had saving of 300 billion euros and domestic investment of 200 billion euros.What was the value of this country's net exports? Explain how you found your answer.

Correct Answerverifiedsaving = domestic investment + net capit...View AnswerShow Answer

A U.S.mutual fund buys stock issued by a corporation in Colombia.A U.S.grocery store chain builds and manages a new warehouse in Honduras.Which one(s)of these is foreign direct investment? Which one(s)would be taken into account when computing U.S.net capital outflows?

Correct AnswerverifiedThe building of the ...View AnswerShow Answer

How do the nominal exchange rate and the real exchange rate differ?

Correct AnswerverifiedThe nominal exchange rate is the rate at...View AnswerShow Answer

Correct AnswerverifiedIt costs less in France where ...View AnswerShow Answer

A pair of hiking boots costs $120 in the U.S. ,if the real exchange rate is 6/5 and the nominal exchange rate is 2 Brazilian reais per dollar,what is the price of the same hiking boots in Brazil? Show your work.

Correct AnswerverifiedThe real exchange rate 6/5 = $...View AnswerShow Answer

A certain cell phone sells for 2400 yuan in China and for $300 in the U.S.The nominal exchange rate is 6.5 yuan per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the cell phone cheaper?

Correct AnswerverifiedThe real exchange rate = $300 ...View AnswerShow Answer

Correct AnswerverifiedA. U.S. net exports ...View AnswerShow Answer

The price level in Country A is 250.The price level in Country B is 300.If purchasing-power parity holds,what is the nominal value of Country A's currency in the market for foreign exchange with Country B? Show your work.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA. 24 euros = $x times .80 eur...View AnswerShow Answer

A pound of steak costs $10 in the U.S.and 56.25 riyals (the currency of Saudi Arabia)in Saudi Arabia.If the real exchange rate is 2/3,what is the nominal exchange rate? Show your work.

Correct AnswerverifiedThe real exchange rate 2/3 = $...View AnswerShow Answer

Why are net exports and net capital outflow always equal?

Correct AnswerverifiedNet exports and net capital outflow are ...View AnswerShow Answer

A bushel of apples costs $15.00 in the U.S.The same apples cost 1,600 yen in Japan.If the exchange rate is 80 yen per dollar,is there a possibility for arbitrage? Explain and defend your answer.As part of your defense,find the real exchange rate.

Correct AnswerverifiedThere is a possibility for profit by buy...View AnswerShow Answer

A quality men's suit in the U.S.costs $400.The same suit costs 300 British pounds in the U.K.The nominal exchange rate is .60 pounds per dollar. A.Find the real exchange rate.Show your work. B.In terms of dollars where is the suit cheaper?

Correct AnswerverifiedThe real exchange rate = $400 ...View AnswerShow Answer

A country recently had a trade deficit of $2.5 trillion and purchased $3 trillion of foreign assets.How many of its assets did foreigners purchase?

Correct AnswerverifiedShow Answer

Suppose that a U.S.dollar buys more gold in Australia than it buys in Russia.What does purchasing-power parity imply should happen?

Correct AnswerverifiedPeople can make a profit by buying gold ...View AnswerShow Answer

A U.S.bank loaned a Canadian oil company 1 million U.S.dollars.The Canadian company then used the entire loan to buy mining equipment from a U.S.company. As a result of these transactions,by how much and in which direction did: A.U.S.net exports change? B.U.S.net capital outflow change?

Correct AnswerverifiedA. U.S. net exports ...View AnswerShow Answer

Correct Answer
verified
net capital outflow = net expo...
View Answer

Correct Answer
verified
The real exchange rate = nomin...
View Answer

Correct Answer
verified
Y = C + I + G + NX
$1,200 bill...
View Answer

Correct Answer
verified
Foreigners purchased...
View Answer

Correct Answer
verified
saving = domestic investment + net capit...
View Answer

Correct Answer
verified
The building of the ...
View Answer

Correct Answer
verified
The nominal exchange rate is the rate at...
View Answer

Correct Answer
verified
It costs less in France where ...
View Answer

Correct Answer
verified
The real exchange rate 6/5 = $...
View Answer

Correct Answer
verified
The real exchange rate = $300 ...
View Answer

Correct Answer
verified
A. U.S. net exports ...
View Answer

Correct Answer
verified

Correct Answer
verified
A. 24 euros = $x times .80 eur...
View Answer

Correct Answer
verified
The real exchange rate 2/3 = $...
View Answer

Correct Answer
verified
Net exports and net capital outflow are ...
View Answer

Correct Answer
verified
There is a possibility for profit by buy...
View Answer

Correct Answer
verified
The real exchange rate = $400 ...
View Answer

Correct Answer
verified

Correct Answer
verified
People can make a profit by buying gold ...
View Answer

Correct Answer
verified
A. U.S. net exports ...
View Answer