🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books

Class 12 Economics (Macro Economics) Chapter 6 Open Economy Macroeconomics Quiz 1 (25 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. Brad, a U.S. resident, builds and operates a boxing gym in Thailand. The purchase represents

Correct Answer: C) Investment for Brad and U.S. foreign direct investment.

2. Dollarization by a foreign country is another form of:

Correct Answer: C) Fixing an exchange rate.

3. 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

Correct Answer: A) E(P/P*).

4. The value of Peru's exports minus the value of Peru's imports is called

Correct Answer: C) Peru's net exports.

5. What is the significance of the intersection of the EE and YY curves?

Correct Answer: D) It indicates simultaneous internal and external balance.

6. An open economy's GDP is always given by

Correct Answer: D) Y = C + I + G + NX.

7. Which of the following statements is true about a country with a trade deficit?

Correct Answer: B) Net exports are negative.

8. What is the main purpose of direct controls in an economy?

Correct Answer: B) To regulate trade and capital flows.

9. What is the primary focus of the BP curve?

Correct Answer: A) Equilibrium in the balance of payments.

10. If a country has a trade deficit

Correct Answer: C) It has negative net exports and positive net capital outflow.

11. The nominal exchange rate is the

Correct Answer: C) Rate at which a person can trade the currency of one country for another.

12. Suppose the real exchange rate is 1/2 gallon of Canadian gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $ 5.00 U.S., and a gallon of Canadian gas costs 8 Canadian dollars. What is the nominal exchange rate?

Correct Answer: B) 1.25 Canadian dollars per U.S. dollar.

13. Other things the same, if a country has a trade deficit and saving rises,

Correct Answer: B) Net capital outflow rises, so the trade deficit decreases.

14. Which of the following people or firms would be pleased by a depreciation of the dollar?

Correct Answer: B) An Italian importer of U.S. steel.

15. If the United States saves $ 1, 000 billion and U.S. net capital outflow is-$ 200 billion, U.S.domestic investment is

Correct Answer: B) $ 1, 200 billion.

16. If Germany purchased more goods and services abroad than it sold abroad last year, then it had

Correct Answer: D) Negative net exports which is a trade deficit.

17. Paul, a U.S. citizen, opens a textbook company in Brazil. His expenditures

Correct Answer: C) Increase U.S. net foreign investment, but decrease Brazilian net foreign investment.

18. During some year a country had exports of $ 30 billion, imports of $ 40 billion, and domestic investment of $ 60 billion. What was its saving during the year?

Correct Answer: D) -$ 10 billion.

19. In the Mundell-Fleming model, all of the following are true EXCEPT:

Correct Answer: A) The intersection of the IS and LM curves determine the equilibrium exchange rate.

20. What does the term 'expenditure-switching policies' refer to?

Correct Answer: C) Policies that alter the exchange rate.

21. The real exchange rate is the nominal exchange rate, defined as foreign currency per dollar, times

Correct Answer: B) Prices in the United States divided by foreign prices.

22. Assuming imperfect capital mobility and a fixed exchange rate, then an expansionary monetary policy

Correct Answer: B) Results in a balance of payments deficit with a potential conflict between domestic goals and external balance.

23. Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to 25 Thai bhat per dollar, then the dollar has

Correct Answer: A) Appreciated and so buys more Thai goods.

24. A Mexican firm exchanges Pesos for U.S. dollars and then uses these dollars to purchase corn from the U.S. This transaction

Correct Answer: A) Increases Mexican net capital outflow, and increases U.S. net exports.

25. Net capital outflow measures

Correct Answer: B) The imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners.

🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books