When a nation’s currency appreciates, which is the most likely result?

Its exports will decrease and its imports will increase.

Nations specialize when they

make some goods & services more efficiently than others.

If China has a 2% interest rate the U.S. has 4% interest rate then:

capital inflows to the US decrease interest rates

Tariffs & quotas share many of the same effects. Which of the following statements is false?

Tariffs and quotas both collect revenue for the government

What could cause the shift in the dollar market?

an increase in U.S .interest rates

An open economy is an economy:

which trades goods and services with other countries.

Comparative advantage is the ability of a country to

produce goods at less opportunity cost than another country.

U.S. exports $100 B and imports $150 B and no other net income or transfers occur

the balance on the financial account is $50 billion.

What makes outward shift of the PPC and the Long Run Aggregate Supply Curve similar?

they both show an increase in Real GDP

current account & trade deficit

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AP MACRO Open Economy w/ Growth

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Questions 27

Answers

1
Which of these is not recorded in the current account of the BOP?
transfers overseas
income from overseas assets
sale of goods and services
sale of stocks and bonds
2
A country that imports more than it exports has a
trade surplus.
balance of trade.
trade deficit.
export quota
3
A Japanese investor buys stock in GM, which of the balance of payments accounts is affected?
foreign exchange account
financial account
current account
reserve account
4
When a nation’s currency appreciates, which is the most likely result?
Its exports will increase and its imports will decrease
Its exports will decrease and its imports will increase.
Its exports and imports will decrease
Its exports and imports will increase.
5
A tariff is a tax on
any form of international trade.
imported goods.
exported goods.
raw materials.
6
If the growth rate is 10% how long will it take Real GDP to double?
14 years
35 years
10 years
7 years
7
Which of the following affects the demand for foreign exchange ?
Changes in Tastes
All of the Above
Changes in Interest Rates
Changes in Income
8
Nations specialize when they
export more than they import.
have few natural resources.
make some goods & services more efficiently than others.
import more than they export.
9
If a country has a current account deficit, it must have a:
balance of payment surplus.
financial account deficit.
financial account surplus.
balance of payments deficit.
10
If China has a 2% interest rate the U.S. has 4% interest rate then:
capital inflows to the US decrease interest rates
there is no change in capital outflows and inflows
capital outflows from US increase increasing interest rates
the U.S. develops a trade surplus
11
In order to be a point Y what would have to happen in the economy?
an improvement in productivity
an increase in unemployment
an increase in price level
a decrease in income
12
What is the best measure of a nation's standard of living?
population growth
savings
real GDP per capita
national income
13
Expansionary monetary policy in the US causes U.S. interest rates to __ & the dollar to ___.
increase; appreciate
increase; depreciate
decrease; depreciate
decrease; appreciate
14
Who has an absolute advantage in cloth and wine?
Portugal cloth & wine
Cloth Portugal, Wine England
England Cloth & Wine
Cloth England, Wine Portugal
15
What is the opportunity cost for Country A to produce 1 Bike?
1 car
4 cars
1/2 car
1/4 car
16
Tariffs & quotas share many of the same effects. Which of the following statements is false?
Lower consumer surpluses hurt consumers.
Tariffs and quotas both collect revenue for the government
Resources are reallocated toward inefficient producers.
Artificially high prices hurt consumers.
17
What could cause the shift in the dollar market?
a decrease in Japanese incomes
Americans like Japanese electronics
an increase in U.S. price levels
an increase in U.S .interest rates
18
An open economy is an economy:
which does not impose taxes on its citizens.
which does not regulate its industries.
where freedom of speech and religion can be practiced freely
which trades goods and services with other countries.
19
Comparative advantage is the ability of a country to
borrow more money from othercountries.
produce everything its people need and want.
produce goods at less opportunity cost than another country.
have more physical capital than another.
20
If a country runs a deficit on its BOP on goods & services, to pay for its imports, it must:
raise taxes.
print new money.
lend money to foreigners.
sell assets to foreigners.
21
Technological progress leads to
a loss of interest in human capital
an increase in efficiency
a decrease in efficiency
lower savings rates.
22
If China's central bank purchased $10B in U.S. Treasury bonds the transaction would be noted in
the Reserve Account
the Financial account
the Current account
the Foreign Account
23
U.S. exports $100 B and imports $150 B and no other net income or transfers occur
the balance on the financial account is $50 billion.
the balance on the financial account is $250 billion.
the balance on the financial account is zero.
the balance on the financial account is –$250 billion.
24
What makes outward shift of the PPC and the Long Run Aggregate Supply Curve similar?
they both show an increase in price level
they both show an increase in the NRU
they both show an increase in interest rates
they both show an increase in Real GDP
25
If a U.S. firm buys steel from India the sale will be noted in the __ as a payment __.
financial account, from foreigners
current account, from foreigners
financial account, to foreigners
current account, to foreigners
26
What could most likely cause this shift?
an increase in investment
an increase in consumption
an increase in net exports
an increase in government spending
27
This country has:
financial account surplus and trade surplus
financial and current account surplus
current account & trade deficit
current account & trade surplus

AP MACRO Open Economy w/ Growth Flashcards | StudBud