Additional Exercise 5
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Additional Exercise 5

Course Number: ECONOMICS 201, Fall 2011

College/University: Ohio State

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Additional Exercise 5 (Ch. 16 - 18) 1.Which of the following lists is included in what economists call money? a. Cash* b. cash and stocks and bonds c. cash and stocks and bonds and real estate d. cash and stocks and bonds and real estate and all other assets 2.You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money? a. medium of exchange* b. unit of...

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Exercise Additional 5 (Ch. 16 - 18) 1.Which of the following lists is included in what economists call money? a. Cash* b. cash and stocks and bonds c. cash and stocks and bonds and real estate d. cash and stocks and bonds and real estate and all other assets 2.You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money? a. medium of exchange* b. unit of account c. store of value d. liquidity 3.Paper dollars a. are commodity money and gold coins are fiat money. b. are fiat money and gold coins are commodity money.* c. and gold coins are both commodity monies. d. and gold coins are both fiat monies. 4.Which of the following is not included in M1? a. a $5 bill in your wallet b. $100 in your checking account c. $500 in your savings account* d. All of the above are included in M1. 5.Given the following information, what are the values of M1 and M2? S m a ll ti m e d e p o s it s D $650 billion $300 billion e m a n d d e p o s it s a n d o t h e r c h e c k a b l e d e p o s it s S a v i n g s d e p $750 billion o s it s M o n e y m a r k e t m u t u a l f u n d s T r a v e l e r' s c h e c k s L a r g e $600 billion $25 billion $600 billion ti m e d e p o s it s C u r r e n c y M i s c e ll a n e o u s c a t e g o r i e s i n M 2 a M1 = $400 billion, M2 = $2,475 billion. . $100 billion $25 billion b . c . d . M1 = $125 billion, M2 = $3,025 billion. M1 = $425 billion, M2 = $2, 450 billion.* M1 = $425 billion, M2 = $1,875 billion. 6.At the Federal Reserve, a. the nations monetary and fiscal policies are made by the Federal Open Market Committee, which meets about every six weeks. b. the nations monetary and fiscal policies are made by the Federal Open Market Committee, which meets twice a year. c. the nations monetary policy is made by the Federal Open Market Committee, which meets about every six weeks.* d. the nations monetary policy is made by the Federal Open Market Committee, which meets twice a year. 7.A bank loans Kellie's Print Shop $350,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is a. an asset for the bank and a liability for Kellie's Print Shop. The loan increases the money supply.* b. an asset for the bank and a liability for Kellie's Print Shop. The loan does not increase the money supply. c. a liability for the bank and an asset for Kellie's Print Shop. The loan increases the money supply. d. a liability for the bank and an asset for Kellie's Print Shop. The loan does not increase the money supply. 8.The manager of the bank where you work tells you that your bank has $5 million in excess reserves. She also tells you that the bank has $300 million in deposits and $255 million dollars in loans. Given this information you find that the reserve requirement must be a. 50/255. b. 40/255. c. 50/300. d. 40/300.* 9.Suppose the Federal Reserve increases bank reserves and banks lend out some of these reserves, but at some point banks still have $5 million more they wish to lend out. If the reserve requirement is 10 percent, how much more money can banks create if they lend out the remaining amount? a. $55 million b. $50 million* c. $45 million d. $40 million 10.If the Fed sells government bonds to the public, then reserves a. increase and the money supply increases. b. increase and the money supply decreases. c. decrease and the money supply increases. d. decrease and the money supply decreases.* 11.If the money multiplier is 2 and the Fed buys $50,000 worth of bonds, what happens to the money supply? a. it increases by $100,000* b. it increases by $150,000 c. it decreases by $100,000 d. it decreases by $150,000 12.When the Fed decreases the discount rate, banks will a. borrow more from the Fed and lend more to the public. The money supply increases.* b. borrow more from the Fed and lend less to the public. The money supply decreases. c. borrow less from the Fed and lend more to the public. The money supply increases. d. borrow less from the Fed and lend less to the public. The money supply decreases. 13.A problem that the Fed faces when it attempts to control the money supply is that a. since the U.S. has a fractional-reserve banking system, the amount of money in the economy depends in part on the behavior of depositors and bankers.* b. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools. c. while the Fed has the ability to change the money supply by a large amount, it does not have the ability to change it by a small amount. d. federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks. 14.If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold a. fewer reserves, so the reserve ratio will fall. b. fewer reserves, so the reserve ratio will rise. c. more reserves, so the reserve ratio will fall. d. more reserves, so the reserve ratio will rise.* 15.The banking system currently has $100 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed lowers the reserve requirement to 8 percent and at the same time buys $10 billion worth of bonds, then by how much does the money supply change? a. It rises by $225 billion. b. It rises by $375 billion.* c. It rises by $675 billion. d. None of the above is correct. AABCC CADBD AAADB Problems and Applications (pp. 345-346) 5. a. Assets Reserves Loans Happy Bank Liabilities $100 Deposits $900 Bank Capital $800 $200 b. The leverage ratio = $1,000/$200 = 5. c. Assets Reserves Loans Happy Bank Liabilities $100 Deposits $810 Bank Capital $800 $110 Assets decline by 0.9%. Bank capital declines by 4.5%. Bank capital is smaller than assets. 6. With a required reserve ratio of 10%, the money multiplier could be as high as 1/0.10 = 10, if banks hold no excess reserves and people do not keep some additional currency. So the maximum increase in the money supply from a $10 million open-market purchase is $100 million. The smallest possible increase is $10 million if all of the money is held by banks as excess reserves. 7. The money supply will expand more if the Fed buys $2,000 worth of bonds. Both deposits will lead to monetary expansion, but the Feds deposit is new money. The $2,000 from the cookie jar is already part of the money supply. 9. a. With a required reserve ratio of 10% and no excess reserves, the money multiplier is 1/0.10 = 10. If the Fed sells $1 million of bonds, reserves will decline by $1 million and the money supply will contract by 10 $1 million = $10 million. b. Banks might wish to hold excess reserves if they need to hold the reserves for their dayto-day operations, such as paying other banks for customers' transactions, making change, cashing paychecks, and so on. If banks increase excess reserves such that there is no overall change in the total reserve ratio, then the money multiplier does not change and there is no effect on the money supply. 10. a. With banks holding only required reserves of 10%, the money multiplier is 1/0.10 = 10. Because reserves are $100 billion, the money supply is 10 $100 billion = $1,000 billion. b. If the required reserve ratio is raised to 20%, the money multiplier declines to 1/0.20 = 5. With reserves of $100 billion, the money supply would decline to $500 billion, a decline of $500 billion. Reserves would be unchanged. 11. a. To expand the money supply, the Fed should buy bonds. b. With a reserve requirement of 20%, the money multiplier is 1/0.20 = 5. Therefore to expand the money supply by $40 million, the Fed should buy $40 million/5 = $8 million worth of bonds. 12. a. If people hold all money as currency, the quantity of money is $2,000. b. If people hold all money as demand deposits at banks with 100% reserves, the quantity of money is $2,000. c. If people have $1,000 in currency and $1,000 in demand deposits, the quantity of money is $2,000. d. If banks have a reserve ratio of 10%, the money multiplier is 1/0.10 = 10. So if people hold all money as demand deposits, the quantity of money is 10 $2,000 = $20,000. e. If people hold equal amounts of currency (C) and demand deposits (D) and the money multiplier for reserves is 10, then two equations must be satisfied: (1) C = D, so that people have equal amounts of currency and demand deposits; and (2) 10 ($2,000 C) = D, so that the money multiplier (10) times the number of dollar bills that are not being held by people ($2,000 C) equals the amount of demand deposits (D). Using the first equation in the second gives 10 ($2,000 D) = D, or $20,000 10D = D, or $20,000 = 11 D, so D = $1,818.18. Then C = $1,818.18. The quantity of money is C + D = $3,636.36. ,Chapter 17 1.Which of the following is correct? a. A period of hyperinflation is a period of extraordinarily low inflation. b. A period of deflation is any period during which the inflation rate is decreasing. c. During the 1990s, U.S. inflation averaged about 2 percent per year.* d. All of the above are correct. 2.To explain the long-run determinants of the price level and the inflation rate, most economists today rely on the a. quantity theory of money.* b. price-index theory of money. c. theory of hyperinflation. d. disequilibrium theory of money and inflation. 3.The value of money falls as the price level a. rises, because the number of dollars needed to buy a representative basket of goods rises.* b. rises, because the number of dollars needed to buy a representative basket of goods falls. c. falls, because the number of dollars needed to buy a representative basket of goods rises. d. falls, because the number of dollars needed to buy a representative basket of goods falls. 4.Money demand depends on a. the price level and the interest rate.* b. the price level but not the interest rate. c. the interest rate but not the price level. d. neither the price level nor the interest rate. Figure 17-1. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. MS1 MS2 0.5 0.33 MD 10,000 15,000 5.Refer to Figure 17-1. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is a. 0.5 and the equilibrium value of money is 2. b. 2 and the equilibrium value of money is 0.5.* c. 0.5 and the equilibrium value of money cannot be determined from the graph. d. 2 and the equilibrium value of money cannot be determined from the graph. 6.Refer to Figure 17-1. If the relevant money-supply curve is the one labeled MS2, then a. when the money market is in equilibrium, one dollar purchases about one-third of a basket of goods and services.* b. when the money market is in equilibrium, one unit of goods and services sells for 33 cents. c. there is an excess demand for money if the value of money in terms of goods and services is 0.5. d. All of the above are correct. 7.Refer to Figure 17-1. Suppose the relevant money-supply curve is the one labeled MS2; also suppose the economys real GDP is 45,000 for the year. If the money market is in equilibrium, then the velocity of money is approximately a. 4.5 b. 6.0 c. 9.0* d. 12.0 8.Refer to Figure 17-1. At the end of 2009 the relevant money-supply curve was the one labeled MS1. At the end of 2010 the relevant money-supply curve was the one labeled MS2. Assuming the economy is always in equilibrium, what was the economys approximate inflation rate for 2010? a. -33 percent b. 17 percent c. 50 percent* d. 67 percent 9.Suppose ice cream cones costs $3. Molly holds $60. What is the real value of the money she holds? a. $60. If the price of ice cream cones rises, to maintain the real value of her money holdings she need to hold more dollars. b. $60. If the price of ice cream cones rises, to maintain the real value of her money holdings she need to hold fewer dollars. c. 20 ice cream cones. If the price of ice cream cones rises, to maintain the real value of her money holdings she needs to hold more dollars.* d. 20 ice cream cones. If the price of ice cream cones rises, to maintain the real value of her money holdings she needs to hold fewer dollars. 10.According to the classical dichotomy, which of the following is influenced by monetary factors? a. real GDP b. unemployment c. nominal interest rates* d. All of the above are correct. 11.If velocity = 5, the price level = 1.5, and the real value of output is 2,500, then the quantity of money is a. 333.33. b. 750.00.* c. 1,050.00. d. 8,333.33. 12.According to the quantity equation, the price level would change less than proportionately with a rise in the money supply if there were also a. either a rise in output or a rise in velocity. b. either a rise in output or a fall in velocity.* c. either a fall in output or a rise in velocity. d. either a fall in output or a fall in velocity. 13.The inflation tax falls mostly heavily on a. those who hold a lot of currency and accounts for a large share of U.S. government revenue. b. those who hold a lot of currency but accounts for a small share of U.S. government revenue.* c. those who hold little currency and accounts for a large share of U.S. government revenue. d. those who hold little currency but accounts for a small share of U.S. government revenue. 14.If a bank posts a nominal interest rate of 11 percent, and inflation is expected to be 4 percent, then a. the expected real interest rate is 11 percent. b. the expected real interest rate is 7 percent.* c. the expected real interest rate is 4 percent. d. the expected real interest rate is 15 percent. 15.Katarina puts money into an account. One year later she sees that she has 6 percent more dollars and that her money will buy 2 percent more goods. a. The nominal interest rate was 8 percent and the inflation rate was 6 percent. b. The nominal interest rate was 6 percent and the inflation rate was 4 percent.* c. The nominal interest rate was 4 percent and the inflation rate was 2 percent. d. None of the above is correct. 16.You put money into an account and earn a real interest rate of 4 percent. Inflation is 2 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest? a. 1.2 percent b. 2.8 percent* c. 4.8 percent d. None of the above is correct. CAAAB ACCCC BBBBBB Problems and Application (pp. 371) 3. With constant velocity, reducing the inflation rate to zero would require the money growth rate to equal the growth rate of output, according to the quantity theory of money ( M V = P Y ). 4. If a country's inflation rate increases sharply, the inflation tax on holders of money increases significantly. Wealth in savings accounts is not subject to a change in the inflation tax because the nominal interest rate will increase with the rise in inflation. But holders of savings accounts are hurt by the increase in the inflation rate because they are taxed on their nominal interest income, so their real returns are lower. 5. Hyperinflations usually arise when governments try to finance much of their expenditures by printing money. This is unlikely to occur if the central bank (which is responsible for controlling the level of the money supply) is independent of the government. 6. a. When the price of both goods doubles in a year, inflation is 100%. Lets set the market basket equal to one unit of each good. The cost of the market basket is initially $4 and becomes $8 in the second year. Thus, the rate of inflation is ($8 $4)/$4 100% = 100%. Because the prices of all goods rise by 100%, the farmers get a 100% increase in their incomes to go along with the 100% increase in prices, so neither is affected by the change in prices. b. If the price of beans rises to $2 and the price of rice rises to $4, then the cost of the market basket in the second year is $6. This means that the inflation rate is ($6 $4) / $4 100% = 50%. Bob is better off because his dollar revenues doubled (increased 100%) while inflation was only 50%. Rita is worse off because inflation was 50% percent, so the prices of the goods she buys rose faster than the price of the goods (rice) she sells, which rose only 33%. c. If the price of beans rises to $2 and the price of rice falls to $1.50, then the cost of the market basket in the second year is $3.50. This means that the inflation rate is ($3.5 $4) / $4 100% = -12.5%. Bob is better off because his dollar revenues doubled (increased 100%) while prices overall fell 12.5%. Rita is worse off because inflation was -12.5%, so the prices of the goods she buys didn't fall as fast as the price of the goods (rice) she sells, which fell 50%. d. The relative of price rice and beans matters more to Bob and Rita than the overall inflation rate. If the price of the good that a person produces rises more than inflation, he or she will be better off. If the price of the good a person produces rises less than inflation, he or she will be worse off. 7. The following table shows the relevant calculations: (a) (1) Nominal interest rate 10.0 (2) Inflation rate 5.0 (3) Before-tax real interest rate 5.0 (4) Reduction in nominal interest rate due to 40% 4.0 tax (5) After-tax nominal interest rate 6.0 (6) After-tax real interest rate 1.0 (b) 6.0 2.0 4.0 2.4 (c) 4.0 1.0 3.0 1.6 3.6 1.6 2.4 1.4 Row (3) is row (1) minus row (2). Row (4) is 0.40 row (1). Row (5) is (1 .40) row (1), which equals row (1) minus row (4). Row (6) is row (5) minus row (2). Note that even though part (a) has the highest before-tax real interest rate, it has the lowest after-tax real interest rate. Note also that the after-tax real interest rate is much lower than the before-tax real interest rate. 8. The shoeleather costs of going to the bank include the value of your time, gas for your car that is used as you drive to the bank, and the inconvenience of not having more money on hand. These costs could be measured by valuing your time at your wage rate and valuing the gas for your car at its cost. Valuing the inconvenience of being short of cash is harder to measure, but might depend on the value of the shopping opportunities you give up by not having enough money to buy things you want. Your college president differs from you mainly in having a higher wage, thus having a higher cost of time. 9. The functions of money are to serve as a medium of exchange, a unit of account, and a store of value. Inflation mainly affects the ability of money to serve as a store of value, because inflation erodes money's purchasing power, making it less attractive as a store of value. Money also is not as useful as a unit of account when there is inflation, because stores have to change prices more often and because people are confused and inconvenienced by the changes in the value of money. In some countries with hyperinflation, stores post prices in terms of a more stable currency, such as the U.S. dollar, even when the local currency is still used as the medium of exchange. Sometimes countries even stop using their local currency altogether and use a foreign currency as the medium of exchange as well. 10. a. Unexpectedly high inflation helps the government by providing higher tax revenue and reducing the real value of outstanding government debt. b. Unexpectedly high inflation helps a homeowner with a fixed-rate mortgage because he pays a fixed nominal interest rate that was based on expected inflation, and thus pays a lower real interest rate than was expected. c. Unexpectedly high inflation hurts a union worker in the second year of a labor contract because the contract probably based the worker's nominal wage on the expected inflation rate. As a result, the worker receives a lower-than-expected real wage. d. Unexpectedly high inflation hurts a college that has invested some of its endowment in government bonds because the higher inflation rate means the college is receiving a lower real interest rate than it had planned. (This assumes that the college did not purchase indexed Treasury bonds.) 12. a. The statement that "Inflation hurts borrowers and helps lenders, because borrowers must pay a higher rate of interest," is false. Higher expected inflation means borrowers pay a higher nominal rate of interest, but it is the same real rate of interest, so borrowers are not worse off and lenders are not better off. Higher unexpected inflation, on the other hand, makes borrowers better off and lenders worse off. b. The statement, "If prices change in a way that leaves the overall price level unchanged, then no one is made better or worse off," is false. Changes in relative prices can make some people better off and others worse off, even though the overall price level does not change. See problem 7 for an illustration of this. c. The statement, "Inflation does not reduce the purchasing power of most workers," is true. Most workers' incomes keep up with inflation reasonably well. Chapter 18 1.Oceania buys $40 of wine from Escudia and Escudia buys $100 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? a. $140 and $140 b. $100 and $40 c. $60 and -$60 d. None of the above is correct. 2.If domestic residents of France purchase 1.2 trillion euros of foreign assets and foreigners purchase 1.5 trillion euros of French assets, then Frances net capital outflow is a. -.3 trillion euros, so it must have a trade deficit.* b. -.3 trillion euros, so it must have a trade surplus. c. .3 trillion euros, so it must have a trade deficit. d. .3 trillion euros, so it must have a trade surplus. 3.Which of the following is an example of U.S. foreign direct investment? a. A Greek company opens a cheese factory in the U.S. b. A German mutual fund buys stock issued by a U.S. corporation. c. A U.S. beverage company opens a bottling plant in Russia.* d. A U.S. bank buys bonds issued by an Argentinean company. 4.Which of the following is an example of U.S. foreign portfolio investment? a. Disney builds a new amusement park near Barcelona, Spain. b. A U.S. citizen buys bonds issued by the British government* c. A Dutch hotel chain opens a new hotel in the United States. d. A citizen of Singapore buys a bond issued by a U.S. corporation. 5.Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austrias net capital outflow? a. Carls b. Carlys c. both Carls and Carlys* d. neither Carls nor Carlys 6. U.S. exports are $400 billion, U.S. imports are $900 billion. Which of the following are consistent with the level of net exports? a. The U.S has a trade surplus. The U.S. purchases $800 of foreign assets and foreign countries purchase $300 of U.S. assets. b. The U.S. has a trade surplus. The U.S. purchases $300 of foreign assets and foreign countries purchase $800 of U.S. assets. c. The U.S has a trade deficit. The U.S. purchases $800 of foreign assets and foreign countries purchase $300 of U.S. assets. d. The U.S. has a trade deficit. The U.S. purchases $300 of foreign assets and foreign countries purchase $800 of U.S. asset.* 7.If a country has a trade deficit then a. S > I and Y > C + I + G. b. S > I and Y < C + I + G. c. S < I and Y > C + I + G. d. S < I and Y < C + I + G.* 8.Ann, a U.S. citizen, uses some previously obtained euros to purchase a bond issued by a Spanish company. This transaction a. increases U.S. net capital outflow by more than the value of the bond. b. increases U.S. net capital outflow by the value of the bond. c. does not change U.S. net capital outflow.* d. decreases U.S. net capital outflow. 9.During some year a country had exports of $30 billion, imports of $40 billion, and domestic investment of $60 billion. What was its saving during the year? a. $70 billion b. $50 billion* c. $10 billion d. -$10 billion 10.Other things the same, if the dollar appreciates relative to the Japanese yen, then a. the exchange rate falls. It will cost fewer yen to travel in the U.S. b. the exchange rate falls. It will cost more yen to travel in the U.S. c. the exchange rate rises. It will cost fewer yen to travel in the U.S. d. the exchange rate rises. It will cost more yen to travel in the U.S.* 11.If a dollar currently purchases 12.5 pesos and someone forecasts that in a year it will be 14 pesos, then the forecast is given in a. real terms and implies the dollar will appreciate. b. real terms and implies the dollar will depreciate. c. nominal terms and implies the dollar will appreciate.* d. nominal terms and implies the dollar will depreciate. 12.If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $2 in the U.S. and 6 pesos in Argentina what is the real exchange rate? a. 3 b. 4/3* c. 3/4 d. 1/3 13.In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian dollars. If the exchange rate is .8 euros per Australian dollar, what is the real exchange rate? a. 4/2.4 pints of Irish beer per pint of Australian beer b. 3/3.2 pint of Irish beer per pint of Australian beer c. 3.2/3 pints of Irish beer per pint of Australian beer* d. 2.4/4 pints of Irish beer per pint of Australian beer 14.When the yen gets "stronger" relative to the dollar, a. the U.S. trade deficit with Japan will rise. b. the U.S. trade deficit with Japan will fall.* c. the U.S. trade deficit with Japan will be unchanged. d. None of the above necessarily happens. 15.If purchasing-power parity holds, a dollar will buy a. one unit of each foreign currency. b. foreign currency equal to the U.S. price level divided by the foreign countrys price level. c. enough foreign currency to buy as many goods as it does in the United States.* d. None of the above is implied by purchasing-power parity. 16.If a dollar buys more potatoes in the U.S. than in France, then a. the real exchange rate is greater than 1; a profit might be made by buying potatoes in the U.S. and selling them in France. b. the real exchange rate is greater than 1; a profit might be made by buying potatoes in France. and selling them in the U.S. c. the real exchange rate is less than 1; a profit might be made by buying potatoes in the U.S. and selling them in France.* d. the real exchange rate is less than 1; a profit might be made by buying potatoes in France and selling them in the U.S. 17.A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is a. 1.106. If purchasing power partiy held the nominal exchange rate would be higher. b. 1.106. If purchasing power parity held the nominal exchange rate would be lower. c. .904. If purchasing power partiy held the nominal exchange rate would be higher.* d. .904. If purchasing power parity held the nominal exchange rate would be lower. 18.If the U.S. price level is increasing by 3 percent annually and the Swiss price level is increasing by 2 percent annually, by about what percent would the price of a dollar in terms of Swiss francs need to change according to purchasing power parity? a. decrease by 5 percent b. decrease by 1 percent* c. increase by 5 percent d. increase by 1 percent CACBC DDCBD CBCBC CCB Problems and Application (pp. 395-397) 1. a. When an American art professor spends the summer touring museums in Europe, he spends money buying foreign goods and services, so U.S. exports are unchanged, imports increase, and net exports decrease. b. When students in Paris flock to see the latest movie from Hollywood, foreigners are buying a U.S. good, so U.S. exports rise, imports are unchanged, and net exports increase. c. When your uncle buys a new Volvo, an American is buying a foreign good, so U.S. exports are unchanged, imports rise, and net exports decline. d. When the student bookstore at Oxford University sells a pair of Levi's 501 jeans, foreigners are buying U.S. goods, so U.S. exports increase, imports are unchanged, and net exports increase. e. When a Canadian citizen shops in northern Vermont to avoid Canadian sales taxes, a foreigner is buying U.S. goods, so U.S. exports increase, imports are unchanged, and net exports increase. 2. a. When an American buys a Sony TV, there is a decrease in net exports. b. When an American buys a share of Sony stock, there is an increase in net capital outflow. c. When the Sony pension fund buys a U.S. Treasury bond, there is a decrease in net capital outflow. d. When a worker at Sony buys some Georgia peaches from an American farmer, there is an increase in net exports. 3. Foreign direct investment requires actively managing an investment, for example, by opening a retail store in a foreign country. Foreign portfolio investment is passive, for example, buying corporate stock in a retail chain in a foreign country. As a result, a corporation is more likely to engage in foreign direct investment, while an individual investor is more likely to engage in foreign portfolio investment. 5. a. The newspaper shows nominal exchange rates, because it shows the number of units of one currency that can be exchanged for another currency. b. Many answers are possible. In October 2010, the nominal exchange rate between the U.S. dollar and the Canadian dollar was 1 U.S. dollar = 1.0133 Canadian dollars. The nominal exchange rate between the U.S. dollar and the Japanese yen was 1 U.S. dollar = 82 yen. Therefore, the exchange rate between the Canadian dollar and the Japanese yen should be 1.0133 Canadian dollars = 82 yen. This implies that 1 Canadian dollar = 82/1.10133 yen = 80.92 yen. c. If U.S. inflation exceeds Japanese inflation over the next year, you would expect the dollar to depreciate relative to the Japanese yen because a dollar would decline in value (in terms of the goods and services it can buy) more than the yen would. 6. a. Dutch pension funds holding U.S. government bonds would be happy if the U.S. dollar appreciated. They would then get more Dutch guilders for each dollar they earned on their U.S. investment. In general, if you have an investment in a foreign country, you are better off if that country's currency appreciates. b. U.S. manufacturing industries would be unhappy if the U.S. dollar appreciated because their prices would be higher in terms of foreign currencies, which will reduce their sales. c. Australian tourists planning a trip to the United States would be unhappy if the U.S. dollar appreciated because they would get fewer U.S. dollars for each Australian dollar, so their vacation will be more expensive. d. An American firm trying to purchase property overseas would be happy if the U.S. dollar appreciated because it would get more units of the foreign currency and could thus buy more property. 7. All the parts of this question can be answered by keeping in mind the definition of the real exchange rate. The real exchange rate equals the nominal exchange rate times the domestic price level divided by the foreign price level. a. If the U.S. nominal exchange rate is unchanged, but prices rise faster in the United States than abroad, the real exchange rate rises. b. If the U.S. nominal exchange rate is unchanged, but prices rise faster abroad than in the United States, the real exchange rate declines. c. If the U.S. nominal exchange rate declines and prices are unchanged in the United States and abroad, the real exchange rate declines. d. If the U.S. nominal exchange rate declines and prices rise faster abroad than in the United States, the real exchange rate declines. 8. If purchasing-power parity holds, then 12 pesos per soda divided by $0.75 per soda equals the exchange rate of 16 pesos per dollar. If prices in Mexico doubled, the exchange rate will double to 32 pesos per dollar. 9. a. To make a profit, you would want to buy rice where it is cheap and sell it where it is expensive. Because American rice costs 100 dollars per bushel, and the exchange rate is 80 yen per dollar, American rice costs 100 80 equals 8,000 yen per bushel. So American rice at 8,000 yen per bushel is cheaper than Japanese rice at 16,000 yen per bushel. So you could take 8,000 yen, exchange them for 100 dollars, buy a bushel of American rice, then sell it in Japan for 16,000 yen, making a profit of 8,000 yen. As people did this, the demand for American rice would rise, increasing the price in America, and the supply of Japanese rice would rise, reducing the price in Japan. The process would continue until the prices in the two countries were the same. b. If rice were the only commodity in the world, the real exchange rate between the United States and Japan would start out too low, then rise as people bought rice in America and sold it in Japan, until the real exchange became one in long-run equilibrium. 11. a. The exchange rate is 1 Ecterian dollar is equal to 3 Wiknamian pesos. b. In Ecteria, the price of Spam would double. The price level will quadruple in Wiknam. The exchange rate between the two countries currencies would double because of the differences in inflation rates. c. Wiknam will have a higher nominal interest rate because of the Fisher effect. d. The get-rich scheme would only work if there were a difference in real interest rates, not nominal interest rates. The nominal exchange rate between the two countries will adjust for the effects of inflation.

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Ohio State - ECONOMICS - 201
Additional Exercise 6 (Ch. 20 - 21)1.Which of the following is correct?a. Short run fluctuations in economic activity happen only in developing countries.b. During economic contractions most firms experience rising sales.c. Recessions come at regular
Ohio State - ECONOMICS - 201
Additional Exercise 7 (Chapter 22)1.In the long run,a. the natural rate of unemployment depends primarily on the level of aggregatedemand.b. inflation depends primarily upon the money supply growth rate.c. there is a tradeoff between the inflation ra
Ohio State - ECONOMICS - 201
1International EconomicsThird Term, 2005Midterm Exam (with answers)Name:Student ID:WRITE YOUR NAME AND STUDENT ID FIRST. All answers must be written in English.Any answers written in other language will not be graded even if they are correct. Feel
Ohio State - ECONOMICS - 201
18OPEN-ECONOMYMACROECONOMICS: BASICCONCEPTSWHATS NEW IN THE FIFTH EDITION:There are two new In the News features: Breaking Up the Chain of Production and How a Weak DollarBoosts Exports.LEARNING OBJECTIVES:By the end of this chapter, students
Ohio State - ECONOMICS - 201
Econ 102Winter 2007Alan DeardorffHomework #5 SolutionsHomework 5:The Monetary System and InflationSolutions1. Be sure to read your copy of the Wall Street Journal every weekday, lookingespecially for items related to the material in this course. F
Ohio State - ECONOMICS - 201
AU2011 Econ201-7145 Final ExamName _12/06/2011Signature _Multiple ChoiceIdentify the choice that best completes the statement or answers the question._1. The adage, &quot;There is no such thing as a free lunch,&quot; meansa. even people on welfare have to p
Ohio State - ECONOMICS - 201
Several Cases of GDP CalculationGDP ExcludesIllegal GoodsA professional gambler moves from a statewhere gambling is illegal to a state wheregambling is legal. Most of his income was,and continues to be, from gambling. Hismovea. raises GDP.b. decr
Ohio State - ECONOMICS - 201
AU2011 Econ 201, HW1Due date: 10/13/2011Please bring your homework to the lecture on the due date and submit it to the instructor at the end ofthe class. All the homework must be handwritten or machine printed. Late submission, unless excused,will res
Ohio State - ECONOMICS - 201
AU2011 Econ 201, HW2Due date: 10/27/2011Please bring your homework to the lecture on the due date and submit it to the instructor at the end ofthe class. All the homework must be handwritten or machine printed. Late submission, unless excused,will res
Ohio State - ECONOMICS - 201
AU2011 Econ 201, HW3Due date: 11/15/2011Please bring your homework to the lecture on the due date and submit it to the instructor at the end of theclass. All the homework must be handwritten or machine printed. Late submission, unless excused, willres
Ohio State - ECONOMICS - 201
AU2011 Econ 201, HW4Due date: 12/1/2011Please bring your homework to the lecture on the due date and submit it to the instructor at the end of theclass. All the homework must be handwritten or machine printed. Late submission, unless excused, willresu
Ohio State - ECONOMICS - 201
Econ2017145,AU2011,TheOhioStateUnivANSWERFORECON201HOMEWORK2Chapter10(pp.214)4.a.CalculatingnominalGDP:2010:($1perqt.ofmilk 100qts.milk)+($2perqt.ofhoney 50qts.honey)=$2002011:($1perqt.ofmilk 200qts.milk)+($2perqt.ofhoney 100qts.honey)=$4002012:($2
Ohio State - ECONOMICS - 201
Chapter 13 (pp. 278-279)5.Private saving is equal to (Y C T) = 10,000 6,000 1,500 = 2,500.Public saving is equal to (T G) = 1,500 1,700 = -200.National saving is equal to (Y C G) = 10,000 6,000 1,700 = 2,300.Investment is equal to saving = 2,300.The
Ohio State - ECONOMICS - 201
Chapter 18 (pp. 396)4.a. When an American cellular phone company establishes an office in the Czech Republic, U.S.net capital outflow increases, because the U.S. company makes a direct investment in capital inthe foreign country.b. When Harrod's of L
Ohio State - ECONOMICS - 201
AU2011 Econ201-7145 Midterm 1Name _10/18/2011Signature _Multiple ChoiceIdentify the choice that best completes the statement or answers the question._1. Sophia is planning her activities for a hot summer day. She would like to go to the local swimm
Ohio State - ECONOMICS - 201
AU2011 Econ201-7145 Midterm 2Name _11/15/2011Signature _Multiple ChoiceIdentify the choice that best completes the statement or answers the question._1. The level of real GDP persona. differs widely across countries, but the growth rate of real GD
Ohio State - ECONOMICS - 201
Ohio State - EEOB - 232
Exam 1 (Version = Key) EEOB 232 on 3 April 20121. Correct statements about free radicals within a human are that they are oxidizing agents, we take vitaminslike A to help eliminate them, they do not exist only from an external source(s), and they damage
Ohio State - EEOB - 232
Exam 2 (Version = Key) EEOB 232 on 10 April 2012Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Correc
Ohio State - EEOB - 232
Exam 3 (Version = Key) EEOB 232 on 17 April 20121. During an action potential, depolarization is an example of positive feedback and repolarization is anexample of negative feedback.3. Correct statements about the cerebral cortex are that it is primari
Ohio State - EEOB - 232
Exam 4 (Version = Key) EEOB 232 on 24 April 20121. Looking at a slide of a skeletal muscle fiber, you notice net-like structures that run parallel to the axis of the fiber (i.e.,with the axis not across it). These structures are the sarcoplasmic reticul
Ohio State - EEOB - 232
Exam 5 (Version = Key) EEOB 232 on 1 May 20121. Because steroids are hydrophobic they require assistance to move through the plasma to reach their effectors.3. For relaxation to occur in skeletal muscle, an ion must be removed from the cytosol and retur
Ohio State - EEOB - 232
Exam 6 (Version = Key) EEOB 232 on 8 May 20121. The correct ordered immediately adjacent parts for the action potential flow through the heart is centraland autonomic via sympathetic or parasympathetic nervous system sinoatrial node atrial tissue atrio
Ohio State - EEOB - 232
Exam 7 (Version = Key) EEOB 232 on 15 May 20121. Correct statements about the tidal volume are that it increases with activity level, it is never greater thanvital capacity, training can increase its maximum value, and it is not the sum of the reserve v
Ohio State - EEOB - 232
Exam 8 (Version = Key) EEOB 232 on 22 May 20121. The current CPR procedure of chest compressions before rescue breathing has the victims ischemichypoxia relieved before the hypoxic hypoxia.3. Correct statements about hemoglobins role in gas transport a
Ohio State - EEOB - 232
Exam 9 (Version = Key) EEOB 232 on 30 May 20121. An increase in gastric distension and gastrin will result in an increase in contractions in the stomach, whileduodenal distension with decrease them.3. In the digestive system, intrinsic factor is necess
Ohio State - EEOB - 232
Midterm (Version = Key) EEOB 232 on 1 May 20121. Exam 1 #133. Exam 3 #395. Exam 2 #377. Exam 2 #219. On a recent trip to Graeters, you decided to finally try a scoop of the sugar-free ice cream. Since itstill tasted sweet, you knew that it contained
Ohio State - EEOB - 232
Endocrine Names and PathsCorticotropin-releasing hormone (CRH) adrenocortictropic hormone (ACTH) adrenal cortex cortisolThyrotropin-releasing hormone (TRH) thyroid stimulating hormone (TSH) thyroid T3 (triiodothyronine) and T4 (thyroxine)Growth h
Ohio State - EEOB - 232
Exam 1 (Version = JAN) EEOB 232 on 7 October 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.NOTE: Th
Ohio State - EEOB - 232
Exam 2 (Version = JAN) EEOB 232 on 14 October 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. The
Ohio State - EEOB - 232
Exam 3 (Version = JAN) EEOB 232 on 21 October 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. In w
Ohio State - EEOB - 232
Exam 4 (Version = JAN) EEOB 232 on 28 October 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Whic
Ohio State - EEOB - 232
Exam 5 (Version = JAN) EEOB 232 on 4 November 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Whic
Ohio State - EEOB - 232
Exam 6 (Version = JAN) EEOB 232 on 12 November 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Whi
Ohio State - EEOB - 232
Exam 7 (Version = JAN) EEOB 232 on 18 November 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.NOTE:
Ohio State - EEOB - 232
Exam 8 (Version = JAN) EEOB 232 on 25 November 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Whi
Ohio State - EEOB - 232
Exam 9 (Version = JAN) EEOB 232 on 2 December 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. Whic
Ohio State - EEOB - 232
Exam 10 (Version = JAN) EEOB 232 on 11 December 2008Name: _On the bubble sheet, using a number two pencil, completely fill in the circle corresponding to the best optionof the choices provided. Repeat your selection for the following even number.1. To
Ohio State - ANTHROP - 200
!&quot;#$%&amp;'(')&amp;*+($%+,&amp;,$'-$(&amp;-#$*./01234$5$/67$8$!&quot;#$%&amp;'()*+,#)-./&amp;0/#!1%&amp;0(.,2345647489..1:5;.&lt;=&gt;8:25.2?.?477;+?2&gt;3=@.:5@:&lt;:@4A7..!A88=@.B=CD=5.E=5=&gt;AC:258..(C&gt;=88=8.45:C;.2?.B2@;.)#/1'&quot;#.&amp;'1)%0#.1F=./=77.-0G.(C&gt;46C4&gt;=.A5@.&quot;=H7:6AC:25./=77.-:
Ohio State - ANTHROP - 200
Chapter 7: Primate Social Behavior Social Behavior Primates are social Social group Frequent communication and interaction Balance of cooperation and competition over the long term Strategies Enhance survival and reproductionAdvantagesProtection
Ohio State - ANTHROP - 200
Chapter 9: Primate Origins and Evolution Cenozoic Era (65 mya present) Age of mammals Divided into epochs Paleocene (65 mya) Eocene (55mya) Oligocene (34mya) Miocene (23mya) Pliocene (5 mya) Pleistocene (1.8 mya) Holocene (11,000 mya) Why Did P
Ohio State - ANTHROP - 200
Chapter 8: The Fossil Record Review: Paleoanthropology Interdisciplinary approach to the study of earlier hominids, including1. Chronology2. Physical structure3. Archaeological remains4. Habitats Highly multidisciplinary What do paleoanthropologi
Ohio State - ANTHROP - 200
Chapter 10: Early Hominids Terms: Hominid All bipedal hominoids back to the divergence from African GreatApes Hominoid Humans, human ancestors, apes Anthropoid - Humans, apes, and monkeys What is a Hominid? Living humans and our extinct ancestors
Ohio State - ANTHROP - 200
Chapter 11: Evolution of the Genus Homo(Homo habilis and Homo erectus) The Genus Homo Characterized by:1. Increased brain size2. Increased body size3. Less prognathic face4. Reliance on culture Homo habilis Handy man 2.5-1.8 mya Same times as a
Ohio State - ANTHROP - 200
Chapter 12: Continuation of the genus HomoLecture: Archaic Homo and Neandertals Transition to Modern Humans Anatomical characteristics of archaic Homo sapiens in comparison to anatomicallymodern humans1. Longer, lower skull2. Larger brow ridges3. L
Ohio State - ANTHROP - 200
Chapter 12: Continuation of the genus Homo:Lecture: Anatomically Modern Homo Sapiens and their Dispersal Modern Homo sapiens Cranial characteristics of AMH:1. High, vertical forehead2. Rounder skull3. Reduced midfacial prognathism4. Reduced facial
Ohio State - ANTHROP - 200
ANTH 200: Introduction to Physical AnthropologyInstructor: Marissa StewartAutumn 2011Midterm Exam 2 Study GuideThis is a list of terms, concepts, and questions that you should be familiar with for the secondexam. Questions will most likely consist of
Ohio State - ANTHROP - 200
ANTH 200: Introduction to Physical AnthropologyInstructor: Marissa StewartAutumn 2011Final Exam Study GuideThis is a list of terms, concepts, and questions that you should be familiar with for the finalexam. Questions will consist of multiple choice,
Ohio State - STATISTICS - 1350
!&quot;#$%&amp;'()*('!+,+*-.'/01230#4'5*'6#078219':#01';&lt;2';2=;7004'(&gt;?'!&quot;#$%&amp;'()#*'+,*(,-%&quot;#.'/0)*,'/0&quot;/'-)*/'/)'-&quot;#'%&amp;12'&quot;&amp;3'4)#5&amp;/&quot;6.'6,*()&amp;*,'()#*'%&amp;'7,&amp;,6&quot;#2'/,&amp;3'/)'&quot;/6&quot;-/'6,*()&amp;*,*'86)9'/0)*,':0)'0&quot;4,'*/6)&amp;7')(%&amp;%)&amp;*')&amp;'/0,'*5;&lt;,-/2'&quot;&amp;3'/0,6,8)6,'&quot;6,')8
Ohio State - STATISTICS - 1350
!&quot;#$%&amp;'%$()*)'+,$-./01.23$4%$52.6#0/7$82./$9:0$90;96.3$'&lt;'&amp;$From the histogram below we can see that the distribution is skewed to the right.15105012000000salaries( $)'%&lt;%&amp;$!&quot;#$%&amp;#'(&amp;#)&amp;!*#+#%,*-&amp;#./$#!0&amp;#,*'&amp;0&amp;%'&amp;1#,*#'(&amp;#!&quot;!#$#'!2#3!%&amp;#!*1#'
Ohio State - STATISTICS - 1350
!&quot;#$%&amp;'()*('!+,+*-.'/01230#4'5-'6#078219':#01';&lt;2';2=;7004'&gt;?@'A%932#9'3$88'BA#C!&quot;#&quot;$%&amp;'()%&quot;*+&quot;,-%&quot;&amp;,)./(,%&quot;*+&quot;0-1'.2&amp;3&quot;+.,4%'5.33&quot;/%&quot;6&amp;3.7&quot;.+&quot;.,&quot;.'&quot;)%3%6&amp;4,&quot;&amp;'&quot;&amp;&quot;)%0)%'%4,&amp;,.*4&quot;*+&quot;,-%&quot;7%8)%&quot;,*&quot;5-.2-&quot;&amp;&quot;0%)'*4&quot;.'&quot;0-1'.2&amp;331&quot;+.,!&quot;9.42%&quot;0-1'.2&amp;3&quot;+.,4%'&quot;-
Ohio State - STATISTICS - 1350
!&quot;#$%&quot;&amp;'()*+,-#$-.(/0(1&quot;23.+&quot;-*(!4$5.(/60768(9: &quot;#$%!&amp;'(!)*+&amp;(#,-$&amp;!.&amp;!-$/)!-./(!0$&amp;'!*$#(-+&amp;.$1)!2.-!0(!,$).&amp;.3(!04&amp;!&amp;'(!*$#(-+&amp;.$1!5$#!&amp;'(!2$%(1!-$/)!+!0.&amp;!)&amp;#$16(#!7%$#(!&amp;.6'&amp;-8!*-4)&amp;(#(9!+#$419!&amp;'(!-.1(+#!,+&amp;(#1:;!;: &lt;).16!=+&amp;+=()/!6.3()!#!&gt;!?;@
Ohio State - STATISTICS - 1350
Midterm One Monday, October 15th5:20 pm 6:15 pm CAMPBELL HALL RM 200 Bring: One sheet (front and back) of notes A calculatoryour cell phone, ipad, ipod, etc. do NOT count as calculators A photo ID Normal Distribution tables will be provided(a.k.
Ohio State - STATISTICS - 1350
Solutions to Peer Review for Exam 1Group AIn March of last year, the postmaster for a medium-sized city of 100,000 people wantedto plan for the expected crowds filing their tax returns at the last minute. To do this, shedecided to estimate the percent
Ohio State - STATISTICS - 1350
Ohio State - STATISTICS - 1350
Stat 135 Fall 2012Midterm Exam #1 (200 points)Name_Practice Version SolutionsTA _Instructions: On questions 13-17, you MUST show your work and explain to receive full credit.There is no need to show your work on questions # 1-10.True/False (circle
Ohio State - STATISTICS - 1350
STAT 135 Problem Solving #2Fri., Oct. 7, 12:30 PM1. The EPA collected fuel economy test results on 140 different 1999 model year cars that run onunleaded gas. (The data were downloaded from the EPA website at www.epa.gov. ) One variablecollected was t
Ohio State - STATISTICS - 1350
Problem Solving 3Shifting and ScalingNormalityQuestion 1Suppose the mean purchase at Amazon.com is $100 with a standard deviation of $10.a) If Amazon decided to automatically apply a $20 coupon to every purchase made,what would happen to the mean an
Ohio State - STATISTICS - 1350
Ohio State - STATISTICS - 1350
afecdbLinear or NonlinearPositive or NegativeStrong , Moderate, or WeakYes or Nor=.735Correlation does NOT imply causationCorrelation does NOT imply causationThis would be true if r=+.7128Gendera) The explanatory variable and response varia
Ohio State - BIOLOGY - 101
ToFacilitator:JustclickONCEonthedollaramounttogettheanswer,thengotothenextslideforthequestion,thenclickbacktogobacktothemainjeopardyscreen.Jeopardy!RespirationandDNAandRNACellCycleCancerPotpour r i100100100100100200200200200200300300