1) Alberto, an Italian citizen, opens and operates a motorcycle parts plant in Canada. What is this an example of?

a.

Italian foreign direct investment that decreases Italian net capital outflow

b.

Italian foreign direct investment that increases Italian net capital outflow

c.

Italian foreign portfolio investment that increases Italian net capital outflow

d.

Italian foreign portfolio investment that decreases Italian net capital outflow

If the value of a nation's imports exceeds the value of its exports, which of the following is NOT true?

1) Net exports are negative.

GDP is less than the sum of consumption, investment, and government purchases.

Domestic investment is greater than national saving.

The nation is experiencing a net outflow of capital.

3)Suppose the inflation rate over the past 20 years has been 7 percent in Great Britain, 9 percent in Japan, and 3 percent in Canada. If purchasing-power parity holds, which one of the following statements describes the most likely result? Over this period:

the value of dollar should have fallen compared to the value of the pound and the yen.

the yen should have risen in value compared to the pound and fallen compared to dollar.

the yen should have fallen in value compared to the pound and risen compared to dollar.

the pound should have risen in value compared to yen and fallen compared to dollar.

4)Suppose the nominal exchange rate between the Mexican peso and the Canadian dollar is 16 pesos per dollar. Further, suppose that a kilogram of hamburger costs $2 in Canada and 30 pesos in Mexico. Which one of the following would be the real exchange rate between Mexico and Canada?

0.6 kg of Mexican hamburger per 1 kg of Canadian hamburger

0.9 kg of Mexican hamburger per 1 kg of Canadian hamburger

1.07 kg of Mexican hamburger per 1 kg of Canadian hamburger

2.07 kg of Mexican hamburger per 1 kg of Canadian hamburger

5)An American pharmacy buys drugs from a Canadian company and pays for them with American dollars. What are the effects of this transaction?

a.

It decreases American net exports and decreases Canadian capital outflow.

b.

It increases American net exports and increases Canadian capital outflow.

c.

It increases American net exports and decreases Canadian capital outflow.

d.

It decreases American net exports and increases Canadian capital outflow.

6)If a Swiss chocolate maker opens a factory in Canada. What is this an example of?

a.

Swiss foreign direct investment

b.

Swiss exports

c.

Swiss imports

d.

Swiss foreign portfolio investment

7) If Canada saves $200 billion and Canadian net capital outflow is $35 billion, what is the value of Canadian domestic investment?

$35 billion

$35 billion

$165 billion

$235 billion