Chapter 30 Preliminary Quiz
Open-Economy Macroeconomics

Multiple Choice Questions:

Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!

	1. Which of the following refers to goods and services produced abroad and consumed in the United States? a. imports b. exports c. net foreign investment d. net exports
	2. Which of the following refers to net saving or investment abroad and is approximately equal to the value of net exports? a. imports b. exports c. net foreign investment d. none of the above.
	3. Which of the following refers to the increase in the dollar value of imports that results from a dollar increase in GDP? a. marginal propensity to import b. open-economy multiplier c. an overvalued currency d. convergence criteria
	4. Which of the following is true about the open-economy multiplier? a. The open-economy multiplier is smaller than the multiplier in a closed economy. b. The open-economy multiplier is 1/(MPS+MPm). c. Both a and b. d. Neither a nor b.
	5. Country A is a small country. Country B is a large country. If Country A's currency is pegged to Country B's currency, a. Country B's interest rates will be determined by Country A's monetary policy. b. Country A's interest rates will be determined by Country B's monetary policy. c. Country B's monetary will have no effect on Country A. d. None of the above.
	6. Countries that have high saving and investment rates tend to have: a. high levels of inflation. b. high levels of per capita economic growth. c. both a and b. d. neither a nor b.
	7. In the full-employment closed economy, _______ government deficits _______ investment. a. higher; lower b. higher; increase c. lower; lower d. lower; increase
	8. We would expect that an increase in government spending would result in a(n) _______ in the exchange rates and a(n) _______ in net exports. a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease
	9. We would expect that an increase in investment demand would result in a(n) _______ in the exchange rates and a(n) _______ in net exports. a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease
	10. Which of the following is true about national competitiveness? a. Countries are inherently uncompetitive. b. Countries only become uncompetitive when they lose the absolute advantage in the production of their primary export. c. Countries only become uncompetitive when they have prices that are out of line with those of their trading partners as a result of an overvalued exchange rate. d. None of the above.
	11. Which of the following is not a finding of the McKinsey study? a. Economies of scale and manufacturing technologies played a large role in most industries. b. Workers' skill levels and education are of little importance in determining differences in productivity between Germany, Japan, and the United States. c. Large differences in productivity exist between firms in the same industry. d. None of the above.
	12. Which of the following events was the primary cause of the EMS crisis in 1989-1993? a. The formation of the euro zone. b. The reunification of Germany. c. The inclusion of the United States in EMU. d. None of the above.
	13. What do we call a group of regions that has high labor mobility or has common and synchronous aggregate supply or demand shocks? a. EMS b. a monetary union c. an optimal currency area d. none of the above