Economics_MAC_HSB Huy Nguyen, 03/2022

Bài Quiz 4– Open Macroeconomics – BOP, ER

1. The open-economy macroeconomic model examines the determination of

a. the output growth rate and the real interest rate.
b. unemployment and the exchange rate.
c. the output growth rate and the inflation rate.
d. the trade balance and the exchange rate.

2. Foreign-produced goods and services that are purchased domestically are called
a. imports.
b. exports.
c. net imports.
d. net exports.

3. Net exports of a country are the value of

a. goods and services imported minus the value of goods and services exported.
b. goods and services exported minus the value of goods and services imported.
c. goods exported minus the value of goods imported.
d. goods imported minus the value of goods exported.

4. A country sells more goods and services to foreign countries than it buys from them. It has
a. a trade surplus and positive net exports.
b. a trade surplus and negative net exports.
c. a trade deficit and positive net exports.
d. a trade deficit and negative net exports.

5. A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars
of domestically produced goods and services to foreign countries. It has
a. exports of $3 billion and a trade surplus of $1 billion.
b. exports of $3 billion and a trade deficit of $1 billion.
c. exports of $2 billion and a trade surplus of $1 billion.
d. exports of $2 billion and a trade deficit of $1 billion.
6. Net capital outflow is defined as the purchase of
a. foreign assets by domestic residents minus the purchase of domestic assets by foreign
residents.
b. foreign assets by domestic residents minus the purchase of foreign goods and services by
domestic residents.
c. domestic assets by foreign residents minus the purchase of domestic goods and services
by foreign residents.
d. domestic assets by foreign residents minus the purchase of foreign assets by domestic
residents.

7. If Vietnamese residents purchase $60 billion worth of foreign assets and foreigners purchase $30
billion worth of Vietnamese assets,
a. Vietnam’s net capital outflow is $30 billion; capital is flowing into Vietnam.
b. Vietnam’s net capital outflow is $30 billion; capital is flowing out of Vietnam.
c. Vietnam’s net capital outflow is -$30 billion; capital is flowing into Vietnam.
d. Vietnam’s net capital outflow is -$30 billion; capital is flowing out of Vietnam.

8. The purchase of Vietnam’s government bonds by Japanese firms is an example of

a. Vietnam’s imports.
b. Vietnam’s exports.
c. foreign portfolio investment by Japanese firms.
d. foreign direct investment by Japanese firms.

9. A Swiss watchmaker opens a factory in Vietnam. This is an example of Swiss

a. exports.
b. imports.
c. foreign portfolio investment.
d. foreign direct investment.

10. A Vietnam citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures
are Vietnam’s
a. foreign direct investment that increase Vietnam’s net capital outflow.
b. foreign direct investment that decrease Vietnam’s net capital outflow.
c. foreign portfolio investment that increase Vietnam’s net capital outflow.
d. foreign portfolio investment that decrease Vietnam’s net capital outflow.

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11. When Vingroup buys shares of Audi stock (a German company) for its business, Vietnam’s net
capital outflow
a. increases because a Vietnamese company makes a portfolio investment in Germany.
b. declines because a Vietnamese company makes a portfolio investment in Germany.
c. increases because a Vietnamese company makes a direct investment in Germany.
d. declines because a Vietnamese company makes a direct investment in Germany.

12. An open economy's GDP is always given by

a. Y = C + I + G.
b. Y = C + I + G + T.
c. Y = C + I + G + S.
d. Y = C + I + G + NX.

13. Which of the following equations is always correct in an open economy?

a. NX = Y - C - G - I
b. NX = S - I
c. NX = NCO
d. All of the above are correct.

14. If saving is greater than domestic investment, then

a. there is a trade deficit and Y > C + I + G.
b. there is a trade deficit and Y < C + I + G.
c. there is a trade surplus and Y > C + I + G.
d. there is a trade surplus and Y < C + I + G.

15. If a country has a trade surplus then

a. S > I and Y > C + I + G.
b. S > I and Y < C + I + G.
c. S < I and Y > C + I + G.
d. S < I and Y < C + I + G.

16. If a country has Y > C + I + G, then it has

a. positive net capital outflow and positive net exports.
b. positive net capital outflow and negative net exports.
c. negative net capital outflow and positive net exports.
d. negative net capital outflow and negative net exports.

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17. Domestic saving must equal domestic investment in
a. both closed and open economies.
b. closed, but not open economies.
c. open, but not closed economies.
d. neither closed nor open economies.

18. If a country has negative net capital outflows, then its net exports are
a. positive and its saving is larger than its domestic investment.
b. positive and its saving is smaller than its domestic investment.
c. negative and its saving is larger than its domestic investment.
d. negative and its saving is smaller than its domestic investment.

19. Which of the following statements is incorrect for an open economy?

a. A country can have a trade deficit, trade surplus, or balanced trade.
b. A country that has a trade deficit has positive net capital outflow.
c. Net exports must equal net capital outflow.
d. National saving equals domestic investment plus net capital outflow.

20. If Vietnam’s net exports are negative, then net capital outflow is
a. positive, so foreign assets bought by the Vietnamese are greater than Vietnamese assets
bought by foreigners.
b. positive, so Vietnamese assets bought by foreigners are greater than foreign assets bought
by the Vietnamese.
c. negative, so foreign assets bought by the Vietnamese are greater than Vietnamese assets
bought by foreigners.
d. negative, so Vietnamese assets bought by foreigners are greater than foreign assets bought
by the Vietnamese.

21. A nation has a positive net capital outflow. Which of the following is correct?
a. Purchases of foreign assets by domestic residents exceed purchases of domestic assets by
foreigners
b. It has positive net exports.
c. Its savings exceeds its domestic investment (chú ý domestic savings = domestic
investment chỉ trong nền kinh tế đóng)
d. All of the above are correct.

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22. During some year a country had exports of $50 billion, imports of $70 billion, and domestic
investment of $100 billion. What was its saving during the year?
a. $80 billion
b. $100 billion
c. $120 billion
d. $150 billion

23. If citizens of a country are not saving much, it is better to

a. force citizens to save.
b. reduce investment.
c. have foreigners invest in the domestic economy than no one at all.
d. prevent opportunities for citizens to buy capital assets abroad.

24. The nominal exchange rate is the

a. nominal interest rate in one country divided by the nominal interest rate in the other
country.
b. the ratio of a foreign country’s interest rate to the domestic interest rate.
c. rate at which a person can trade the currency of one country for another.
d. the real exchange rate minus the inflation rate.

25. The VND is said to depreciate against USD (from 1 USD = 22000 VND to 1 USD = 23000
VND) if
a. the exchange rate rises. Other things the same, it will cost fewer USD to buy Vietnamese
goods (còn 0.95 USD, lấy 22000/23000).
b. the exchange rate falls. Other things the same, it will cost more USD to buy Vietnamese
goods.
c. the exchange rate falls. Other things the same, it will cost fewer USD to buy Vietnamese
goods.
d. the exchange rate rises. Other things the same, it will cost more USD to buy Vietnamese
goods.

26. If you go to the bank and notice that a Japanese yen buys less VND than it used to (from 1
Yen=210 VND to 1 Yen=180 VND), then the VND has
a. appreciated. Other things the same, the appreciation would make Vietnamese people less
likely to travel to Japan.
b. appreciated. Other things the same, the appreciation would make Vietnamese people more
likely to travel to Japan (người VN bỏ ít tiền VND hơn).
c. depreciated. Other things the same, the depreciation would make Vietnamese people less
likely to travel to Japan.

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 d. depreciated. Other things the same, the depreciation would make Vietnamese people more
likely to travel to Japan.

27. You are the CEO of a Vietnamese firm considering building a factory in China. If the VND
appreciates relative to the Chinese Yuan (from 1 Yuan=3200 VND to 1 Yuan = 3000 VND), then
other things the same
a. it takes fewer VND to build the factory. By itself building the factory increases Vietnam’s
net capital outflow.
b. it takes fewer VND to build the factory. By itself building the factory decreases Vietnam’s
net capital outflow.
c. it takes more VND to build the factory. By itself building the factory increases Vietnam’s
net capital outflow.
d. it takes more VND to build the factory. By itself building the factory decreases Vietnam’s
net capital outflow.

28. You are staying in Sydney over the summer and you have a number of USD with you. If the
USD appreciates relative to the AUD (from 1 USD = 1.29 AUD to 1 USD = 1.5 AUD), then other
things the same,
a. the USD would buy more AUD. The appreciation would discourage you from buying as
many Australian goods and services.
b. the USD would buy more AUD. The appreciation would encourage you to buy more
Australian goods and services.
c. the USD would buy fewer AUD. The appreciation would discourage you from buying as
many Australian goods and services.
d. the USD would buy fewer pounds. The appreciation would encourage you to buy more
Australian goods and services.

29. Other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese
yuan per dollar, then the dollar
a. appreciates and the US people buy more Chinese goods.
b. appreciates and the US people buy fewer Chinese goods.
c. depreciates and the US people buy more Chinese goods.
d. depreciates and the US people buy fewer Chinese goods.

30. The real exchange rate is the nominal exchange rate, defined as VND per dollar, times
a. Vietnamese prices minus foreign prices.
b. Vietnamese prices divided by foreign prices.
c. foreign prices divided by U.S. prices.

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 d. None of the above is correct.

31. If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the
foreign price is P*, then the real exchange rate is defined as
a. e(P*/P).
b. e(P/P*).
c. e + P*/P.
d. e - P/P*.

32. If Vietnam has a trade deficit and the VND depreciates, then other things the same
a. the trade deficit rises and net capital outflow rises.
b. the trade deficit rises and net capital outflow falls.
c. the trade deficit falls and net capital outflows rise.
d. the trade deficit falls and net capital outflows fall.

34. Because a government budget deficit represents

a. negative public saving, it increases national saving.
b. negative public saving, it decreases national saving.
c. positive public saving, it increases national saving.
d. positive public saving, it decreases national saving.

35. An increase in the budget deficit

a. reduces investment because the interest rate rises.
b. reduces investment because the interest rate falls.
c. raises investment because the interest rate rises.
d. raises investment because the interest rate falls.