EC 102 Fall 2010, Practice Midterm 2

EC 102 Fall 2010, Practice Midterm 2 - Econ 102...

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Econ 102 Introductory Macroeconomic Analysis Fall, 2010 Practice Midterm 2 1. Net capital outflow refers to the purchase of a. foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. b. foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. c. domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. d. domestic assets by foreign residents minus the purchase of foreign assets by domestic residents. 2. Which of the following would be U.S. foreign portfolio investment? a. Disney builds a new amusement park near Barcelona, Spain. b. A U.S. citizen buys stock in companies located in Asia. 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. 3. A country has a trade deficit. Its a. net capital outflow must be positive, and saving is larger than investment. b. net capital outflow must be positive and saving is smaller than investment. c. net capital outflow must be negative and saving is larger than investment. d. net capital outflow must be negative and saving is smaller than investment. 4. In an open economy, gross domestic product equals $1,950 billion, government expenditure equals $280 billion, investment equals $500, and net capital outflow equals $280 billion. What is consumption expenditure? a. $280 billion b. $780 billion c. $890 billion d. $1,170 billion 5. If Argentina's domestic investment exceeds national saving, then Argentina has a. positive net capital outflows and negative net exports. b. positive net capital outflows and positive net exports. c. negative net capital outflows and negative net exports. d. negative net capital outflows and positive net exports. 6. The real exchange rate is the nominal exchange rate defined as units of foreign currency per dollar times a. U.S. prices minus foreign prices. b. prices in the United States divided by foreign prices. c. foreign prices divided by U.S. prices. d. None of the above is correct.
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7. A paperback book in the U.S. costs $6. In Chile it costs 4 pesos. If the nominal exchange rate is 1/2 peso per dollar, what is the real exchange rate? a.
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EC 102 Fall 2010, Practice Midterm 2 - Econ 102...

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