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curve __________________.
a.
rises; rightward
b.
rises; leftward
c.
falls; rightward
d.
falls; leftward
74. As the dollar depreciates, the foreign price of United States goods _________________, ultimately shifting the United
States AD curve _____________.
a.
rises; rightward
b.
rises; leftward
c.
falls; rightward
d.
falls; leftward
75. Suppose the price level in Germany rises, ceteris paribus. This ________________ United States net exports,
ultimately shifting the United States AD curve ____________________.
a.
stimulates; rightward
b.
stimulates; leftward
c.
depresses; rightward
d.
depresses; leftward.
76. Suppose the price level in Germany falls, ceteris paribus. This _________________ United States net exports,
ultimately shifting the United States AD curve __________________.
a.
stimulates; rightward
b.
stimulates; leftward
c.
depresses; rightward
d.
depresses; leftward
77. When the United States is moving downward along the J-curve, its trade balance is ______________ as an immediate
after-effect of a____________________ of the dollar.
a.
improving; depreciation
b.
improving; appreciation
c.
worsening; depreciation
d.
worsening; appreciation
78. In the short run following a depreciation of the dollar, the United States may move downward along the J-curve since
it is likely that the United States
a.
spends more dollars on imports.
b.
spends fewer dollars on imports.
c.
sells an increased dollar amount of exports.
d.
sells a reduced dollar amount of exports.
79. Suppose we import only one good from Germany: cars. Initially, the exchange rate is $0.60 per euro. We import
150,000 cars annually, priced at 70,000 euros each. Then the euro rises to $0.625. Assuming the dollar value of our
exports to Germany remains constant, we will stop moving down the J-curve and “turn the corner” to move upward along
it once we import ______________ German cars per year.
a.
fewer than 150,000
b.
fewer than 144,000
c.
fewer than 93,750
d.
more than 150,000
e.
more than 156,250
80. Suppose United States net exports are -$50 billion. Then the dollar depreciates. In the short run, the United States
may move downward along the J-curve, with net exports _________ and the AD curve shifting to the _______________.
a.
coming closer to zero; left
b.
coming closer to zero; right
c.
moving further from zero; left
d.
moving further from zero; right
81. Can a change in the Japanese price level cause the United States to move downward along its J-curve?
a.
Yes, if the Japanese price level falls and the United States does not buy more Japanese goods.
b.
Yes, if the Japanese price level falls and the United States buys more Japanese goods.
c.
Yes, if the Japanese price level rises and the United States does not buy significantly fewer Japanese goods.
d.
No, a change in relative price levels cannot initiate the J-curve phenomenon.
82. When the United States moves upward along the J-curve, it is because a depreciation of the dollar is having the
_____________ effect of _____________ the number of dollars spent on imports.
a.
long-run; increasing
b.
long-run; reducing
c.
short-run; increasing
d.
short-run; reducing
83. A fall in the price of foreign inputs leads to a
a.
rightward shift of the AD curve.
b.
leftward shift of the AD curve.
c.
rightward shift of the SRAS curve.
d.
leftward shift of the SRAS curve.
84. A rise in the price of foreign inputs leads to a
a.
rightward shift of the AD curve.
b.
leftward shift of the AD curve.
c.
rightward shift of the SRAS curve.
d.
leftward shift of the SRAS curve.
85. Suppose the supply of Malaysian rubber increases. If U.S. producers purchase this rubber as an input, in the United
States, this would cause a
a.
rightward shift of the AD curve.
b.
leftward shift of the AD curve.
c.
rightward shift of the SRAS curve.
d.
leftward shift of the SRAS curve.
86. Suppose the supply of Malaysian rubber decreases. If U.S. producers purchase this rubber as an input, in the United
States, this would cause a
a.
rightward shift of the AD curve.
b.
leftward shift of the AD curve.
c.
rightward shift of the SRAS curve.
d.
leftward shift of the SRAS curve.
87. The United States SRAS curve may shift to the left if we ____________________ Malaysia and the dollar
________________ against the Malaysian ringgit.
a.
buy raw materials from; appreciates
b.
buy raw materials from; depreciates
c.
sell finished goods to; appreciates
d.
sell finished goods to; depreciates
88. The United States SRAS curve may shift to the right if we ____________________ Malaysia and the dollar
________________ against the Malaysian ringgit.
a.
buy raw materials from; appreciates
b.
buy raw materials from; depreciates
c.
sell finished goods to; appreciates
d.
sell finished goods to; depreciates
89. Dollar depreciation raises United States Real GDP when the __________ shift of the AD curve exceeds the
_________________ shift of the SRAS curve.
a.
rightward; rightward
b.
rightward; leftward
c.
leftward; rightward
d.
leftward; leftward
90. A depreciation of the U.S. dollar in the foreign exchange market lowers U.S. Real GDP when the _____________
shift of the SRAS curve exceeds the __________ shift of the AD curve.
a.
rightward; rightward
b.
rightward; leftward
c.
leftward; rightward
d.
leftward; leftward
91. An appreciation of the dollar in the foreign exchange market raises United States Real GDP when the _____________
shift of the SRAS curve exceeds the __________ shift of the AD curve.
a.
rightward; rightward
b.
rightward; leftward
c.
leftward; rightward
d.
leftward; leftward
92. A simultaneous rightward shift in SRAS and leftward shift in AD may come from the dollar _______________ in the
aftermath of a ____________________ in United States real interest rates.
a.
depreciating; rise
b.
depreciating; fall
c.
appreciating; rise
d.
appreciating; fall
93. A simultaneous leftward shift in SRAS and rightward shift in AD may come from the dollar _______________ in the
aftermath of a ____________________ in United States real interest rates.
a.
depreciating; rise
b.
depreciating; fall
c.
appreciating; rise
d.
appreciating; fall
94. Suppose Japanese real interest rates fall. Typically, we should expect a ____________ shift of the U.S. AD curve
with a ___________________ shift in United States real interest rates.
a.
rightward; larger
b.
rightward; smaller
c.
leftward; larger
d.
leftward; smaller
95. If United States real interest rates rise, international repercussions put ____________ pressure on the price level and
_______________ pressure on Real GDP in the United States.
a.
upward; upward
b.
upward; downward
c.
downward; upward
d.
downward; downward
96. If U.S. real interest rates fall, international repercussions put _________________ pressure on the price level and
__________________ pressure on Real GDP in the United States.
a.
upward; upward
b.
upward; downward
c.
downward; upward
d.
downward; downward
97. An increase in U.S. real interest rates causes the dollar to _________________, which tends to __________________
U.S. Real GDP.
a.
appreciate; raise
b.
appreciate; lower
c.
depreciate; raise
d.
depreciate; lower
98. A decrease in U.S. real interest rates causes the dollar to _________________, which tends to __________________
U.S. Real GDP.
a.
appreciate; raise
b.
appreciate; lower
c.
depreciate; raise
d.
depreciate; lower
99. A decrease in Japanese real interest rates causes the dollar to _____________ which tends to _______________ U.S.
Real GDP.
a.
appreciate; raise
b.
appreciate; lower
c.
depreciate; raise
d.
depreciate; lower
100. Which of the following is not a result of a higher federal budget deficit?
a.
a higher real interest rate
b.
a depreciation of the currency
c.
a fall in exports
d.
a fall in the price of foreign inputs
101. Which of the following is not a result of a higher federal budget deficit?
a.
a higher real interest rate
b.
an appreciation of the currency
c.
a rise in exports
d.
a fall in the price of foreign inputs
102. Which of the following is not a result of a reduction in the federal budget deficit?
a.
a higher real interest rate
b.
a depreciation of the currency
c.
a rise in exports
d.
a rise in the price of foreign inputs
103. Which of the following is not a result of a reduction in the federal budget deficit?
a.
a lower real interest rate
b.
an appreciation of the currency
c.
a rise in exports
d.
a fall in the price of foreign inputs
104. With an increase in the budget deficit, the open-economy outcome compared to the closed-economy outcome
features a ___________ in Real GDP.
a.
larger increase
b.
smaller increase
c.
larger decrease
d.
smaller decrease
105. With a decrease in the budget deficit, the open-economy outcome compared to the closed-economy outcome features
a ___________ in Real GDP.
a.
larger increase
b.
smaller increase
c.
larger decrease
d.
smaller decrease
106. As a result of contractionary monetary policy, the open-economy outcome, compared to the closed-economy
outcome, features a ___________ fall in Real GDP and a ____________ fall in the price level.
a.
larger; larger
b.
larger; smaller
c.
smaller; larger
d.
smaller; smaller
107. International feedback effects ________________ the impact on the unemployment rate of __________________
monetary policy.
a.
dampen; only expansionary
b.
dampen; expansionary and contractionary
c.
amplify; only contractionary
d.
amplify; contractionary and expansionary
108. Suppose the dollar depreciates in the foreign exchange markets. What is the impact on U.S. Real GDP?
a.
It must rise because dollar depreciation shifts the U.S. AD curve rightward.
b.
It must fall because dollar depreciation shifts the U.S. SRAS curve leftward.
c.
It remains constant since dollar depreciation does not shift either the U.S. AD curve or the U.S. SRAS curve.
d.
It may rise, fall, or remain constant depending upon whether the U.S. AD curve shifts rightward by more, less,
or an amount equal to the leftward shift of the U.S. SRAS curve.
109. Suppose the dollar appreciates in the foreign exchange markets. What is the impact on U.S. Real GDP?
a.
It must rise because dollar appreciation shifts the U.S. AD curve leftward.
b.
It must fall because dollar appreciation shifts the U.S. SRAS curve rightward.
c.
It must remain constant since dollar appreciation does not affect either the U.S. AD curve or the U.S. SRAS
curve.
d.
It may rise, fall, or remain constant depending on whether the U.S. AD curve shifts leftward by more, less, or
an amount equal to the rightward shift of the U.S. SRAS curve.
110. If the United States buys inputs from France and the dollar appreciates relative to the euro, then Americans will have
to pay ________________ for foreign inputs, and the U.S. SRAS curve will shift __________________.
a.
less; rightward
b.
less; leftward
c.
more; rightward
d.
more; leftward
111. If the dollar depreciates, the U.S. AD curve shifts _______________, the U.S. SRAS curve shifts
__________________, and the price level will _________________________.
a.
rightward; leftward; increase
b.
rightward; leftward; decrease
c.
leftward; rightward; increase
d.
leftward; rightward; decrease
112. If the dollar appreciates and the U.S. AD curve shifts leftward by an amount greater than the U.S. SRAS curve shifts
rightward, then Real GDP will _____________________ and the price level will _____________________.
a.
decrease; decrease
b.
decrease; increase
c.
increase; decrease
d.
increase; increase
113. If the dollar appreciates and the U.S. AD curve shifts _______________ by an amount less than the U.S. SRAS
curve shifts __________________, then Real GDP will _________________________.
a.
rightward; leftward; increase
b.
rightward; leftward; decrease
c.
leftward; rightward; increase
d.
leftward; rightward; decrease
114. Higher real interest rates in the United States (relative to foreign real interest rates) will lead to a(n)
_____________________ of the dollar, a ____________ shift of the U.S. AD curve and a _________________ shift of
the U.S. SRAS curve.
a.
appreciation; rightward; leftward
b.
appreciation; leftward; rightward
c.
depreciation ; rightward; leftward
d.
depreciation; leftward; rightward
e.
appreciation; rightward; rightward
115. Lower real interest rates in the United States (relative to foreign real interest rates) will lead to a(n)
________________ of the dollar and a ______________ shift of the U.S. SRAS curve.
a.
appreciation; rightward
b.
appreciation; leftward
c.
depreciation; rightward
d.
depreciation; leftward
116. Many economists argue that higher real interest rates in the United States (relative to foreign real interest rates) will
lead to a(n) ________________ of the dollar and subsequent shifts in the U.S. AD curve and SRAS curve such that Real
GDP will ___________________.
a.
depreciation; increase
b.
depreciation; decrease
c.
appreciation; increase
d.
appreciation; decrease
117. In a two-country world, the depreciation of the domestic currency shifts
a.
the AD curve rightward and the SRAS curve leftward.
b.
the AD curve leftward and the SRAS curve rightward.
c.
both the AD curve and the SRAS curve rightward.
d.
both the AD curve and the SRAS curve leftward.
e.
the AD curve rightward and does not affect the SRAS curve.
118. In a two-country world, the appreciation of the domestic currency shifts
a.
the AD curve rightward and the SRAS curve leftward.
b.
the AD curve leftward and the SRAS curve rightward.
c.
both the AD curve and the SRAS curve rightward.
d.
both the AD curve and the SRAS curve leftward.
e.
the AD curve rightward and does not affect the SRAS curve.
119. In a two-country world, an increase in the real interest rate in the domestic economy (relative to the real interest rate
in the foreign economy) shifts
a.
the domestic AD curve leftward and the domestic SRAS curve rightward.
b.
the domestic AD curve rightward and the domestic SRAS curve leftward.
c.
both the domestic AD curve and the domestic SRAS curve rightward.
d.
both the domestic AD curve and the domestic SRAS curve leftward.
e.
the domestic AD curve leftward and does not affect the domestic SRAS curve.
120. In a two-country world, many economists argue that an increase in the real interest rate in the domestic economy
(relative to the real interest rate in the foreign economy)
a.
tends to decrease domestic Real GDP.
b.
tends to increase domestic Real GDP.
c.
tends to have no impact on domestic Real GDP.
d.
has an indeterminable impact on domestic Real GDP given the above information.
121. Expansionary fiscal policy
a.
raises Real GDP more in an open economy than in a closed economy.
b.
raises Real GDP more in a closed economy than in an open economy.
c.
raises Real GDP equally in an open economy and in a closed economy.
d.
does not affect Real GD”P in an open economy.
122. Which of the following will lead to a leftward shift in the U.S. SRAS curve?
a.
a decrease in foreign input prices
b.
an appreciation of the dollar
c.
a depreciation of the dollar
d.
a and b
e.
none of the above
123. Which of the following will lead to a rightward shift in the U.S. SRAS curve?
a.
an increase in foreign input prices
b.
an appreciation of the dollar
c.
a depreciation of the dollar
d.
a and b
e.
none of the above
124. Assuming that the increase in the value of the dollar in the foreign exchange market has a greater impact on
aggregate demand than on aggregate supply, an increase in the United States budget deficit will raise Real GDP
a.
more in an open economy than in a closed economy.
b.
more in a closed economy than in an open economy.
c.
to the same level irrespective of whether it is a closed or an open economy.
d.
none of the above (i.e. Real GDP will decrease)
125. Expansionary monetary policy _______________ Real GDP ______________ in an open economy than in a closed
economy.
a.
raises; more
b.
raises; less
c.
lowers; more
d.
lowers; less
126. Contractionary fiscal policy _______________ Real GDP ______________ in an open economy than in a closed
economy.
a.
raises; more
b.
raises; less
c.
lowers; more
d.
lowers; less
127. An expansionary monetary policy causes interest rates to _____________________, and eventually United States net
exports ____________ causing the AD curve to shift to the ___________________.
a.
fall; rise; right
b.
fall; fall; left
c.
rise; rise; right
d.
rise; fall; left
e.
rise; rise; left
128. Which of the following is a general rule of business etiquette in the given city?
a.
Beijing, China: If someone offers you his or her business car, accept it with both hands, read it immediately,
and then present your business card to the person.
b.
Hong Kong, China: It is considered impolite to run out of business cards.
c.
Sydney, Australia: It is important to know about the latest sports matches.
d.
Berlin, Germany: When out with German business associates, try not to talk about sports.
e.
All of the above are examples of proper business etiquette around the world.
129. According to the KOF Swiss Economic Institute’s globalization indices for the world, globalization
a.
has been on a downward trend.
b.
has been constant since 1970.
c.
was on an upward trend in the 1970s and 1980s, but has more recently been on a downward trend.
d.
has been on an upward trend.
130. Two of the variables used to construct the KOF Swiss Economic Institute’s economic globalization index are
_______________ as a percentage of GDP, and tariff rates (the ______________ the tariff rate, the _____________
degree of economic globalization).
a.
public debt; higher; lower
b.
trade; higher; lower
c.
trade; higher; higher
d.
budget deficits; lower; higher
131. Starting with an exchange rate of $1 = ¥110, and a price tag of ¥5,000 for a Japanese good, what happens to the
dollar price of the good if the yen depreciates by 4 percent?
a.
the dollar price of the good rises from $45.45 to $47.72
b.
the dollar price of the good falls from $45.45 to $43.64
c.
the dollar price of the good falls from $550,000 to $522,500
d.
the dollar price of the good rises from $550,000 to $577,500
e.
the dollar price of the good rises falls from $450 to $427.50
132. Starting with an exchange rate of $1 = ¥110, and a price tag of ¥30,000 for a Japanese good, what happens to the
dollar price of the good if the yen appreciates by 6 percent?
a.
the dollar price of the good rises from $272.73 to $289.09
b.
the dollar price of the good falls from $272.73 to $256.37
c.
the dollar price of the good rises from $330,000 to $349,800
d.
the dollar price of the good falls from $330,000 to $310,200
e.
the dollar price of the good rises falls from $2,700 to $2,560
133. Describe three factors that have led to the recent push toward globalization.
134. List and describe two costs and two benefits of globalization as discussed in the textbook. Why does it tend to be
more difficult to see the benefits of globalization as compared to the costs of globalization?
135. Describe at least three forces in the world which could change to push the world in the direction of antiglobalization.
136. When real interest rates in the United States rise relative to real interest rates in Japan, what is the impact on the U.S.
price level? Explain your answer using AD-SRAS analysis.
137. Describe the impact of contractionary fiscal policy (such as a decrease in government spending) upon Real GDP in
both a closed economy and an open economy. In which type of economy would the change in Real GDP be greater?
