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Economics, 3e, Global Edition (Acemoglu/Laibson/List) Chapter 29 Open Economy Macroeconomics 29.1 Exchange Rates 1) When Walmart sells toys imported from China, ________.
- the U.S. consumers pay in yuan, while the workers who produce the toys are paid in dollars
- the U.S. consumers pay in dollars, while the workers who produce the toys are paid in yuan
- the U.S. consumers pay in yuan, and the workers who produce the toys are also paid in yuan
- the U.S. consumers pay in dollars, and the workers who produce the toys are also paid in dollars
Answer: B
Difficulty: Medium
AACSB: Application of Knowledge
Topic: Nominal Exchange Rates
2) The ________ rate is the price of one country's currency in units of another country's currency.
- nominal exchange
- real exchange
- reverse repo
- discount rate
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
3) Which of the following equations correctly represents the nominal exchange rate?
- Nominal exchange rate = Units of foreign currency/1 unit of domestic currency
- Nominal exchange rate = Units of foreign currency/100 units of domestic currency
- Nominal exchange rate = 1 unit of domestic currency/100 units of foreign currency
- Nominal exchange rate = 100 units of domestic currency/1 unit of foreign currency
Answer: A
Difficulty: Medium
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
4) Everything else being equal, when the domestic currency appreciates against a foreign currency,
________.
- the nominal exchange rate goes up
- the nominal exchange rate goes down
- there is no change in the nominal exchange rate
- there is no change in the real exchange rate
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
1 .Test Bank for for Economics 3rd Global Edition By Daron Acemoglu, David Laibson, John List (All Chapters 1-29, Arranged Reverse 29-1) 1 / 4
5) Everything else being equal, when the domestic currency depreciates against a foreign currency,
________.
- the nominal exchange rate goes up
- the nominal exchange rate goes down
- there is no change in the nominal exchange rate
- there is no change in the real exchange rate
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
6) A decrease in the value of the domestic currency in terms of the foreign currency means that ________.
- the domestic currency has appreciated and the nominal exchange rate has risen
- the domestic currency has depreciated and the nominal exchange rate has fallen
- the domestic currency has appreciated and the nominal exchange rate has fallen
- the domestic currency has depreciated and the nominal exchange rate has risen
Answer: B
Difficulty: Medium
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
7) An increase in the value of the domestic currency in terms of the foreign currency means that ________.
- the domestic currency has appreciated and the nominal exchange rate has risen
- the domestic currency has depreciated and the nominal exchange rate has fallen
- the domestic currency has appreciated and the nominal exchange rate has fallen
- the domestic currency has depreciated and the nominal exchange rate has risen
Answer: A
Difficulty: Medium
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
8) A decrease in the value of the foreign currency in terms of the domestic currency means that ________.
- the domestic currency has appreciated and the nominal exchange rate has risen
- the domestic currency has depreciated and the nominal exchange rate has risen
- the foreign currency has appreciated and the nominal exchange rate has fallen
- the foreign currency has depreciated and the nominal exchange rate has risen
Answer: D
Difficulty: Hard
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
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9) An increase in the value of the foreign currency in terms of the domestic currency means that ________.
- the domestic currency has appreciated and the nominal exchange rate has fallen
- the domestic currency has depreciated and the nominal exchange rate has risen
- the foreign currency has appreciated and the nominal exchange rate has risen
- the foreign currency has appreciated and the nominal exchange rate has fallen
Answer: D
Difficulty: Hard
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
10) One dollar could be exchanged for 55 rupees in 2013 and for 60 rupees in 2014. This implies that the
________.
- dollar appreciated in 2014
- rupee appreciated in 2014
- nominal exchange rate did not change in 2014
- real exchange rate did not change in 2014
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
11) Assume that at the beginning of 2012, 1 dollar could be traded for 5 yuan. If in 2013, 1 dollar was being traded for 6 yuan, it can be concluded that ________.
- the dollar depreciated against the yuan and the yuan appreciated against the dollar in 2013
- the dollar appreciated against the yuan and the yuan depreciated against the dollar in 2013
- the nominal exchange rate did not change in 2013
- the real exchange rate changed in 2013, assuming PPP holds
Answer: B
Difficulty: Medium
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
12) Assuming that 1 dollar trades for 50 rupees, what is the dollar cost of 750 rupees?
- $5
B) $15
C) $50
D) $75
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
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13) If 60 pesos can be exchanged for $5 in the foreign exchange market, which of the following represents the nominal exchange rate between the two currencies?
- 12 dollars for 1 peso
- 1 dollar for 12 pesos
- 5 pesos for 1 dollar
- 1 dollar for 60 pesos
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
14) If a firm in the United States wants to purchase 50,000 yuan worth of raw materials from a Chinese firm, how many dollars would it have to transfer to the firm? Assume that 1 dollar exchanges for 6 yuan in the foreign exchange market.
A) $6,773.21
B) $7,500
C) $8,333.33
D)
$9,663.22
Answer: C
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
15) If the United States sells airplanes to Japan, the U.S. airplane manufacturers are paid with ________.
- yen, the Japanese currency
- dollars
- international monetary credits
- euros or another third-party currency
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
16) The nominal exchange rate is the ________.
- ratio of imports to exports
- interest rate charged on international capital flows
- price of domestic currency in terms of foreign currency
D) ratio of prices of domestic goods to prices of foreign goods
Answer: C
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
17) The nominal exchange rate is a price.
Answer: TRUE
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Nominal Exchange Rates
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