Question 1

The dollar is said to depreciate against the euro if

Accepted Answer

A)  the exchange rate falls.Other things the same,it will cost fewer euros to buy U.S.goods.
B)  the exchange rate falls.Other things the same,it will cost more euros to buy U.S.goods.
C)  the exchange rate rises.Other things the same,it will cost fewer euros to buy U.S.goods.
D)  the exchange rate rises.Other things the same,it will cost more euros to buy U.S.goods.E) A) and B)
F) B) and C)

Question 2

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

Accepted Answer

A)  the trade deficit rises and net capital outflow rises.
B)  the trade deficit rises and net capital outflow falls.
C)  the trade deficit falls and net capital outflows rise.
D)  the trade deficit falls and net capital outflows fall.E) None of the above
F) C) and D)

Question 3

The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3.Which of the following prices for a particular good are consistent with these exchange rates?

Accepted Answer

A)  $4 in the U.S.and 3 euros in Italy.
B)  $4 in the U.S.and 3.75 euros in Italy.
C)  $5 in the U.S.and 3 euros in Italy.
D)  $6 in the U.S.and 2.50 euros in Italy.E) A) and D)
F) None of the above

Question 4

If the exchange rate is 1.25 New Zealand dollars per U.S dollar,the price of apples is $2 a pound in the U.S.and 1 New Zealand dollar per pound in New Zealand,what is the real exchange rate?

Accepted Answer

A)  2.50
B)  2
C)  1.25
D)  .75E) C) and D)
F) A) and B)

Question 5

Goods that cost 1/5 of one dollar in the U.S.cost one kroner in Denmark,the real exchange rate would be computed as how many Danish goods per U.S.goods?

Accepted Answer

A)  five
B)  the amount of kroner that can be bought with twenty U.S.cents
C)  the amount of kroner that can be bought with 5 dollars
D)  None of the above is correct.E) B) and C)
F) A) and D)

Question 6

If the price of a sofa is $800 in the U.S.and 2400 pesos in Argentina,and the exchange rate is 4 pesos per dollar,what is the real exchange rate?

Accepted Answer

A)  3
B)  4/3
C)  3/4
D)  None of the above is correct.E) B) and C)
F) B) and D)

Question 7

Suppose the real exchange rate is 3/4 gallon of country A's gasoline per gallon of U.S.gasoline,a gallon of U.S.gasoline costs $3.00 U.S. ,and a gallon of gas in country A costs 6 units of their currency.What is the nominal exchange rate?

Accepted Answer

A)  3/8 of a unit of country A's currency per dollar.
B)  3/2 units of country A's currency per dollar.
C)  8/3 units of country A's currency per dollar.
D)  None of the above is correct.E) B) and D)
F) A) and B)

Question 8

Other things the same,if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar,then the dollar

Accepted Answer

A)  appreciates and buys more Chinese goods.
B)  appreciates and buys fewer Chinese goods.
C)  depreciates and buys more Chinese goods.
D)  depreciates and buys fewer Chinese goods.E) All of the above
F) A) and B)

Question 9

You are staying in London over the summer and you have a number of dollars with you.If the dollar appreciates relative to the British pound,then other things the same,

Accepted Answer

A)  the dollar would buy more pounds.The appreciation would discourage you from buying as many British goods and services.
B)  the dollar would buy more pounds.The appreciation would encourage you to buy more British goods and services.
C)  the dollar would buy fewer pounds.The appreciation would discourage you from buying as many British goods and services.
D)  the dollar would buy fewer pounds.The appreciation would encourage you to buy more British goods and services.E) B) and C)
F) A) and C)

Question 10

In the U.S.a digital camera costs $200.The same camera in London sells for 90 pounds.If the exchange rate were .50 pounds per dollar,then which of the following would be correct?

Accepted Answer

A)  The real exchange rate is greater than 1.A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
B)  The real exchange rate is greater than 1.A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera there.
C)  The real exchange rate is less than 1.A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
D)  The real exchange rate is less than 1.A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera.E) B) and C)
F) A) and B)

Question 11

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Accepted Answer

A)  P*/(Pe) .
B)  P/(P*e) .
C)  e(P*/P) .
D)  e(P/P*) ,E) B) and C)
F) All of the above

Question 12

Suppose that the nominal exchange rate is 80 yen per dollar,that the price of a basket of goods in the U.S.is $500 and the price of a basket of goods in Japan is 50,000 yen.Suppose that these values change to 100 yen per dollar,$600,and 70,000 yen.Then the real exchange rate would

Accepted Answer

A)  appreciate which by itself would make U.S.net exports fall.
B)  appreciate which by itself would make U.S.net exports rise.
C)  depreciate which by itself would make U.S.net exports fall.
D)  depreciate which by itself would make U.S.net exports rise.E) A) and B)
F) A) and C)

Question 13

Consider an identical basket of goods in both the U.S.and Taiwan.For a given nominal exchange rate,in which case is it certain that the U.S.real exchange rate with Taiwan falls?

Accepted Answer

A)  the price of the basket of goods rises in the U.S.and Taiwan.
B)  the price of the basket of goods rises in the U.S.and falls in Taiwan.
C)  the price of the basket of goods falls in the U.S.and rises in Taiwan.
D)  the price of the basket of goods falls in both the U.S.and Taiwan.E) B) and C)
F) B) and D)

Question 14

Other things the same,the real exchange rate between American and French goods would be lower if

Accepted Answer

A)  prices of French goods were higher,or the number of euros a dollar purchased was higher.
B)  prices of French goods were higher,or the number of euros a dollar purchased was lower.
C)  prices of French goods were lower,or the number of euros a dollar purchased was higher.
D)  prices of French goods were lower,or the number of euros a dollar purchased was lower.E) B) and D)
F) C) and D)

Question 15

The exchange rate is 1.5 Bosnian markas per U.S.dollar.The price of a refrigerator in Bosnia is 1,200 markas while in the U.S.it is $1,000.The real exchange rate is

Accepted Answer

A)  9/5
B)  5/4
C)  4/5
D)  None of the above are correct.E) B) and D)
F) C) and D)

Question 16

Suppose that the nominal exchange rate is .80 euro per dollar,that the price of a basket of goods in the U.S.is $500 and the price of a basket of goods in Germany is 400 Euro.Suppose that these values change to .90 euro per dollar,$600,and 600 euro.Then the real exchange rate would

Accepted Answer

A)  appreciate which by itself would make U.S.net exports fall.
B)  appreciate which by itself would make U.S.net exports rise.
C)  depreciate which by itself would make U.S.net exports fall.
D)  depreciate which by itself would make U.S.net exports rise.E) A) and C)
F) A) and B)

Question 17

If the U.S.real exchange rate appreciates,U.S.exports

Accepted Answer

A)  increase and U.S.imports decrease.
B)  decrease and U.S.imports increase.
C)  and U.S.imports both increase.
D)  and U.S.imports both decrease.E) B) and C)
F) A) and D)

Question 18

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Accepted Answer

A)  e(P*/P) .
B)  e(P/P*) .
C)  e + P*/P.
D)  e - P/P*.E) C) and D)
F) A) and B)

Question 19

Exchange rates are 100 yen per dollar,0.8 euro per dollar,and 12 pesos per dollar.A bottle of beer in New York costs 6 dollars,500 yen in Tokyo,6 euro in Munich,and 84 pesos in Cancun.Where is the most expensive and the cheapest beer,in that order?

Accepted Answer

A)  Cancun,New York
B)  Munich,Tokyo
C)  Tokyo,Munich
D)  New York,CancunE) A) and C)
F) None of the above

Question 20

The nominal exchange rate is the

Accepted Answer

A)  nominal interest rate in one country divided by the nominal interest rate in the other country.
B)  the ratio of a foreign country's interest rate to the domestic interest rate.
C)  rate at which a person can trade the currency of one country for another.
D)  the real exchange rate minus the inflation rate.E) B) and C)
F) All of the above

Exam 18: Open Economy Macroeconomics Basic Concepts: The Prices for International Transactions Real and Nominal Exchange Rates

Suppose that the nominal exchange rate is 80 yen per dollar,that the price of a basket of goods in the U.S.is $500 and the price of a basket of goods in Japan is 50,000 yen.Suppose that these values change to 100 yen per dollar,$600,and 70,000 yen.Then the real exchange rate would

Correct AnswerverifiedShow Answer

Exchange rates are 100 yen per dollar,0.8 euro per dollar,and 12 pesos per dollar.A bottle of beer in New York costs 6 dollars,500 yen in Tokyo,6 euro in Munich,and 84 pesos in Cancun.Where is the most expensive and the cheapest beer,in that order?

Correct AnswerverifiedShow Answer

If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same

Correct AnswerverifiedShow Answer

If the exchange rate is 1.25 New Zealand dollars per U.S dollar,the price of apples is $2 a pound in the U.S.and 1 New Zealand dollar per pound in New Zealand,what is the real exchange rate?

Correct AnswerverifiedShow Answer

The exchange rate is 1.5 Bosnian markas per U.S.dollar.The price of a refrigerator in Bosnia is 1,200 markas while in the U.S.it is $1,000.The real exchange rate is

Correct AnswerverifiedShow Answer

The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3.Which of the following prices for a particular good are consistent with these exchange rates?

Correct AnswerverifiedShow Answer

Consider an identical basket of goods in both the U.S.and Taiwan.For a given nominal exchange rate,in which case is it certain that the U.S.real exchange rate with Taiwan falls?

Correct AnswerverifiedShow Answer

The nominal exchange rate is the

Correct AnswerverifiedShow Answer

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Correct AnswerverifiedShow Answer

Other things the same,if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar,then the dollar

Correct AnswerverifiedShow Answer

Suppose that the nominal exchange rate is .80 euro per dollar,that the price of a basket of goods in the U.S.is $500 and the price of a basket of goods in Germany is 400 Euro.Suppose that these values change to .90 euro per dollar,$600,and 600 euro.Then the real exchange rate would

Correct AnswerverifiedShow Answer

If the U.S.real exchange rate appreciates,U.S.exports

Correct AnswerverifiedShow Answer

In the U.S.a digital camera costs $200.The same camera in London sells for 90 pounds.If the exchange rate were .50 pounds per dollar,then which of the following would be correct?

Correct AnswerverifiedShow Answer

If the price of a sofa is $800 in the U.S.and 2400 pesos in Argentina,and the exchange rate is 4 pesos per dollar,what is the real exchange rate?

Correct AnswerverifiedShow Answer

The dollar is said to depreciate against the euro if

Correct AnswerverifiedShow Answer

You are staying in London over the summer and you have a number of dollars with you.If the dollar appreciates relative to the British pound,then other things the same,

Correct AnswerverifiedShow Answer

If the nominal exchange rate e is foreign currency per dollar,the domestic price is P,and the foreign price is P*,then the real exchange rate is defined as

Correct AnswerverifiedShow Answer

Goods that cost 1/5 of one dollar in the U.S.cost one kroner in Denmark,the real exchange rate would be computed as how many Danish goods per U.S.goods?

Correct AnswerverifiedShow Answer

Other things the same,the real exchange rate between American and French goods would be lower if

Correct AnswerverifiedShow Answer

Suppose the real exchange rate is 3/4 gallon of country A's gasoline per gallon of U.S.gasoline,a gallon of U.S.gasoline costs $3.00 U.S. ,and a gallon of gas in country A costs 6 units of their currency.What is the nominal exchange rate?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified