? Mankiw Chapter 6 Quiz

Mankiw Quiz 6


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Note: There are 10 multiple choice questions below. Answer each question by clicking the appropriate button. When you have answered all of the questions, click the "Check Answers" button at the bottom of the page. Your score will be calculated, and you will see a list of the questions that you answered correctly, and those that you answered incorrectly. You may retake the quiz as often as you wish. Click the "Reset" button to clear all your answers before you retake the quiz.

  1. If domestic spending exceeds output, we ______ the difference--net exports are ______.

      import; negative
      export; positive
      import; positive
      export; negative

  2. If net capital outflow is positive, then:

      a decrease in industrial production.
      exports must be negative.
      the trade balance must be positive.
      the trade balance must be negative.

  3. In a small, open economy if net exports are negative, then:

      domestic spending is greater than output.
      saving is greater than investment.
      net capital outflows are positive.
      imports are less than exports.

  4. In a small open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade ______ and ______ net capital outflow.

      surplus; negative
      deficit; positive
      surplus; positive
      deficit; negative

  5. In a small open economy, starting from a position of balanced trade, if the government increases domestic government purchases, this produces a tendency toward a trade ______ and ______ net capital outflow.

      deficit; negative
      surplus; positive
      deficit; positive
      surplus; negative

  6. Holding other factors constant, legislation to cut taxes in an open economy will:

      increase national saving and lead to a trade surplus.
      increase national saving and lead to a trade deficit.
      reduce national saving and lead to a trade surplus.
      reduce national saving and lead to a trade deficit.

  7. If the government of a small open economy wishes to reduce a trade deficit, which policy action will be successful in achieving this goal?

      increasing taxes
      increasing government spending
      increasing investment tax credits
      imposing protectionist trade policies

  8. As the U.S. budget deficit shrank in the 1990s, the increase in U.S. national saving was ______ than the expansionary shift in the U.S. investment function, resulting in a trade ______.

      stronger; deficit
      stronger; surplus
      weaker; deficit
      weaker; surplus

  9. The real exchange rate:

      measures how many Japanese yen one really gets for a U.S. dollar.
      is equal to the nominal exchange rate multiplied by the domestic price level divided by the foreign price level.
      is equal to the nominal exchange rate multiplied by the foreign price level divided by the domestic price level.
      is the price of a domestic car divided by the price of a foreign car.

  10. If the real exchange rate is high, foreign goods:

      and domestic goods are both relatively expensive.
      and domestic goods are both relatively cheap.
      are relatively expensive and domestic goods are relatively cheap.
      are relatively cheap and domestic goods are relatively expensive.

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