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Economics 101 Practice Test: Open-Economy Macroeconomics
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Open-economy macroeconomics is the study of an economy that interacts with other countries through various methods.  In an open economy, trading activity takes place between all countries. This means that it allows the buying and selling of goods and securities from neighboring countries.  Here are some things that an open economy can do: Trade in commodities and services, Purchase financial assets, Pick where to locate manufacturing plants, and Pick where to work.  An open economy interacts with other countries in two ways: It buys and sells goods and services in world product... Show more
Economics 101 Practice Test: Open-Economy Macroeconomics
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25 Questions

1. Peter, a Canadian citizen, sells several hundred cases of smoked salmon to a restaurant chain in the United States. By itself this sale
2. Which of the following is incorrect?
3. A depreciation of the U.S. real exchange rate induces U.S. consumers to buy
4. If the exchange rate changes from 30 Thai bhat per dollar to 45 Thai bhat per dollar, the dollar has
5. A U.S. firm opens a factory that produces camping equipment in Albania, by itself
6. Which of the following is correct?
7. Which of the following would be inconsistent with purchasing-power parity?
8. Which of the following equations is correct?
9. A Swiss firm opens a watch factory in the United States.
10. The exchange rate is about 200 Kazakhstan tenge per dollar. According to purchasing power parity this exchange rate would rise if the price level in
11. On behalf of your firm, you make frequent trips to Liberia. You notice that you always have to pay fewer dollars to get the local currency to have your hair styled than you have to pay for similar styling in the United States. This is
12. If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, the real exchange rate is defined as
13. Who is worse-off when countries trade?
14. If exchange rates are given in terms of how much foreign currency a dollar buys and how many foreign goods U.S. goods buy, then if the Fed increased the U.S. money supply other things the same, purchasing-power parity implies
15. Paul, a U.S. citizen, opens a textbook company in Brazil. His expenditures
16. If the U.S. real exchange rate appreciates relative to the French franc, U.S. exports to France
17. In 1999 Morocco exported $5.9 billion of goods and services and imported $8.4 billion. Morocco had a trade balance of about
18. Suppose the dollar depreciates relative to the British pound. We know that:
19. Suppose the nominal exchange rate is 100, the domestic price index is 50, and the foreign price index is 10. The real exchange rate is:
20. If a country has business opportunities that are relatively attractive compared to other countries, we would expect it to have
21. The difference between savings in an open and closed economy equals
22. After 1980, U.S. Net Foreign Investment fell dramatically, but the U.S. economy did not experience a similar fall in domestic investment. Hence, saving in the United States must
23. In which of the following situations must national saving rise?
24. Which of the following is a true statement?
25. International trade is of major importance for understanding

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