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Unformatted text preview: Chapter 13 Sample Questions 1. Another name given to Net Exports is: a. trade value. b. trade deficit. c. trade balance. d. balanced trade. 2. Net Exports are affected by which of the following? i. Tastes of consumers. iii. The incomes of consumers at home and abroad. ii. Prices of goods at home and abroad. iv. Government policies toward international trade. a. only i, ii, and iii b. only ii, iii, and iv c. only i, ii, and iv d. all four 3. Other things remaining equal, when domestic incomes rise, Net Exports: a. will decrease. b. will increase. c. will remain unaffected. d. might increase or decrease. 4. When Net Capital Outflow is positive, it means: a. imports are bigger than exports. b. domestic residents are spending more on foreign assets than foreigners are spending on domestic assets. c. foreigners are spending more on domestic assets than domestic residents are spending on foreign assets. d. none of the above. 5. Other things remaining equal, if real interest rates increase abroad, our: a. net exports will decrease. c. net capital outflow will decrease. b. net capital outflow will increase. d. none of the preceding. 6. Other things remaining equal, if there is political or economic turmoil in the U.S., we can expect our: a. net exports will decrease. c. net capital outflow will decrease. b. net capital outflow will increase. d. none of the preceding. 7. If the U.S. has a trade deficit, it means that: a. saving in the U.S. is less than investment. c. foreign incomes are greater than U.S. incomes. b. saving in the U.S. is grater than investment. d. foreign incomes are less than U.S. incomes. 8. If purchasing-power parity holds, and if prices in country A are the same as prices in country B, it means that the ________ exchange rate between these countries is equal to ________. a. real, zero b. real, one c. nominal, zero d. nominal, one 9. According to the Purchasing Power Parity Theory, if a dollar will buy more in the U.S. than abroad, traders will ________, which will cause the dollar to ________. a. buy abroad and sell in the U.S., depreciate c. buy in the U.S. and sell abroad, appreciate b. buy abroad and sell in the U.S., appreciate d. buy in the U.S. and sell abroad, depreciate 10. According to the Purchasing Power Parity Theory, the ________ exchange rate tends to become equal to ________....
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This note was uploaded on 09/29/2011 for the course ECO 2315 taught by Professor Bishop during the Fall '09 term at Texas State.
- Fall '09