Quiz 12

Question 1 (1.0 points)
Suppose there is a real depreciation. This real depreciation is more likely to cause an increase in net exports when:
  1. foreign output is relatively high.
  2. imports are not at all sensitive to price changes.
  3. domestic output is relatively low.
  4. exports are very sensitive to price changes.
  5. the Marshall-Lerner condition does not hold.
Question 2 (1.0 points)
The goods market in an open economy is in equilibrium when:
  1. Y equals the domestic demand for goods.
  2. domestic output (Y) equals the demand for domestic goods.
  3. when demand for domestic goods equals the domestic demand for goods.
  4. net exports equals 0.
  5. Y equals the domestic demand for domestic goods.
Question 3 (1.0 points)
Assume a country is open. Given this information, which of the following must occur?
  1. S = I
  2. Demand for domestic goods will be equal to the domestic demand for goods.
  3. Demand for domestic goods will be greater than the domestic demand for goods.
  4. Demand for domestic goods will be less than the domestic demand for goods.
  5. NX = S + T - G - I
Question 4 (1.0 points)
Suppose net exports are positive (NX > 0) for a country. Given this information, we know that:
  1. demand for domestic goods will be greater than the domestic demand for goods.
  2. demand for domestic goods will be equal to the domestic demand for goods.
  3. a budget surplus exists.
  4. demand for domestic goods will be less than the domestic demand for goods.
Question 5 (1.0 points)
Which of the following conditions would most likely cause the Marshall-Lerner condition not to hold?
  1. The marginal propensity to consume is very small.
  2. The budget deficit is very large.
  3. Imports and exports are not very price-sensitive.
  4. The marginal propensity to consume is very large.
  5. Imports and exports are very price-sensitive.
Question 6 (1.0 points)
Suppose policy makers want to increase Y and increase NX. Which of the following policies would most likely achieve this?
  1. an increase in government spending and a reduction in the real exchange rate
  2. an increase in government spending
  3. a reduction in the real exchange rate
  4. a real depreciation
Question 7 (1.0 points)
Assume the Marshall-Lerner condition is satisfied. Which of the following will cause a reduction in net exports?
  1. an increase in foreign output
  2. a decrease in government spending
  3. a real appreciation
  4. a decrease in investment
  5. all of the above
Question 8 (1.0 points)
Assume a country is closed. Given this information, which of the following must occur?
  1. Demand for domestic goods will be greater than the domestic demand for goods.
  2. Demand for domestic goods will be less than the domestic demand for goods.
  3. Demand for domestic goods will be equal to the domestic demand for goods.
  4. S = I
  5. A budget surplus exists.
Question 9 (1.0 points)
Suppose there is a reduction in foreign output (Y * ). This reduction in Y * will cause which of the following in the domestic country?
  1. a reduction in consumption
  2. a reduction in net exports
  3. a reduction in output
  4. all of the above
  5. none of the above
Question 10 (1.0 points)
Which of the following would cause a reduction in exports?
  1. an increase in foreign output
  2. a reduction in the real exchange rate
  3. an increase in domestic output
  4. all of the above
  5. none of the above
Question 11 (1.0 points)
Suppose there is a reduction in foreign output (Y * ). This reduction in Y * will cause which of the following to occur?
  1. The domestic country's output increases.
  2. The domestic country's trade balance improves.
  3. The domestic country's consumption decreases.
  4. all of the above
  5. none of the above
Question 12 (1.0 points)
We will generally observe that the less open an economy:
  1. the smaller the effect of fiscal policy on output and the larger the effect of fiscal policy on the trade position.
  2. the smaller the effect of fiscal policy on output and the smaller the effect of fiscal policy on the trade position.
  3. the larger the effect of fiscal policy on output and the larger the effect of fiscal policy on the trade position.
  4. the larger the effect of fiscal policy on output and the smaller the effect of fiscal policy on the trade position.
Question 13 (1.0 points)
An increase in private saving (S) can be reflected in:
  1. an increase in net exports.
  2. a reduction in investment.
  3. a reduction in the budget deficit.
  4. all of the above
Question 14 (1.0 points)
A reduction in which of the following variables will cause a reduction in domestic demand?
  1. the nominal exchange rate
  2. foreign income
  3. the real exchange rate
  4. domestic income
Question 15 (1.0 points)
The expression, eQ, represents the value of imports in terms of:
  1. foreign goods.
  2. exports.
  3. foreign currency.
  4. domestic currency.
  5. domestic goods.
Question 16 (1.0 points)
The demand for domestic goods will be equal to the domestic demand for goods when:
  1. X = eQ.
  2. G - T = 0.
  3. S = I.
  4. X = 0.
  5. eQ = 0.
Question 17 (1.0 points)
Which of the following would cause an increase in the quantity of imports?
  1. a real depreciation
  2. an increase in foreign output
  3. an increase in domestic output
  4. all of the above
  5. none of the above
Question 18 (1.0 points)
Assume the Marshall-Lerner condition holds. Which of the following would occur as a result of a real depreciation?
  1. a reduction in the quantity of imports
  2. an improvement of the trade balance
  3. an increase in domestic output
  4. all of the above
  5. none of the above
Question 19 (1.0 points)
An open economy with a high saving rate (private and public) must have:
  1. low investment only.
  2. high investment only.
  3. a trade surplus only.
  4. high investment or a trade surplus.
  5. low investment or a trade surplus.
Question 20 (1.0 points)
A real appreciation will initially cause an increase in output when which of the following holds?
  1. Net exports are initially negative.
  2. Net exports are initially positive.
  3. the J-Curve effect
  4. Net exports are initially zero.
  5. the Marshall-Lerner condition
Question 21 (1.0 points)
A reduction in the marginal propensity to import will cause:
  1. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on domestic output.
  2. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on domestic output.
  3. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on domestic output.
  4. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on domestic output.
Question 22 (1.0 points)
Policy coordination is difficult because each country:
  1. prefers to be the one to increase demand.
  2. prefers to be the one to increase taxes.
  3. prefers that other countries increase taxes.
  4. prefers to be the one to appreciate its currency.
  5. prefers that other countries increase their demand.
Question 23 (1.0 points)
The evidence suggests that in rich countries, a depreciation:
  1. eventually improves the trade balance.
  2. has no effect on the trade balance.
  3. first improves, but then worsens the trade balance.
  4. immediately improves the trade balance.
  5. none of the above
Question 24 (1.0 points)
In a large country, the effect of a given change in government spending:
  1. on output is small and the effect on the trade balance is large.
  2. on output is small and the effect on the trade balance is small.
  3. on output is large and the effect on the trade balance is small.
  4. on output is large and the effect on the trade balance is large.
Question 25 (1.0 points)
An increase in the marginal propensity to import will cause:
  1. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on domestic output.
  2. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on domestic output.
  3. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on domestic output.
  4. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on domestic output.
Citation: admin. (2009, January 27). Quiz 12. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/macroeconomics-for-managers/quiz12.htm.
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