Chap 31 and 33

Other things the same, if the exchange rate changes from 115 yen per dollar to 125 yen per dollar, the dollar has

• appreciated and buys more Japanese goods.

• appreciated and buys fewer Japanese goods

• depreciated and buys more Japanese goods.

• 1. depreciated and buys fewer Japanese goods.

What is on the vertical axis of the AD model?

• Price

• Price Level

• Quantity

• Real GDP

What is on the horizontal axis of the Aggregate Demand Model?

• Price

• Price Level

• Quantity

• Real GDP

Why does the AD Curve slope DOWN?

• The Wealth Effect

• The Interest Rate Effect

• The Exchange Rate Effect

• All of these are RIGHT

Foreign-produced goods and services that are purchased domestically are called

• Imports

• Exports

• Net Imports

• Net Exports

Net exports of a country are the value of

• goods and services imported minus the value of goods and services exported

• goods and services exported minus the value of goods and services imported.

• goods exported minus the value of goods imported.

• goods imported minus the value of goods exported.

Net capital outflow is defined as the purchase of

• foreign assets by domestic residents minus the purchase of domestic assets by foreign residents.

• foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents.

• domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents.

• domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

The recessions associated with the business cycle come at regular intervals.

• True

• False

A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction

• increases U.S. exports and so increases the U.S. trade balance.

• increases U.S. exports and so decreases the U.S. trade balance.

• increases U.S. imports and so increases the U.S. trade balance.

• increases U.S. imports and so decreases the U.S. trade balance.

Which of the following is not a component of AD

• Consumption expenditure

• Gross investment

• Prices

• Net Exports