2) If the Canadian government runs a budget deficit, then ___.

Canada's national savings will increase

Canada's national savings will decrease

Canada's public savings will increase

Canada's private savings will decrease

3)Suppose the US government runs a budget deficit. To finance this deficit spending, they issue Treasury Bills (US government bonds). This will cause bond prices to __ and short-term interest rates to __.

rise ; rise

rise ; fall

fall ; fall

4)Suppose Germany runs persistent trade surpluses as well as government budget surpluses. This would imply that Germany is amassing ___.

positive net foreign assets

negative net foreign assets

debt

5)The magnitude of a government budget imbalance will always equal the magnitude of that country's trade imbalance.

True

False

QUESTION 6

If a government runs a budget surplus, then they are

a net saver

a net borrower

a seller in bond markets

accumulating debt

QUESTION 7

The nominal exchange rate measures

a)the amount of domestic consumption that trades for one unit of foreign consumption

b)the amount of domestic GDP that trades for one unit of foreign GDP

c)the amount of domestic currency that trades for one unit of foreign currency

d)Both A and B are correct

QUESTION 8

If a currency depreciates, then it will require ___ units of that currency to buy one unit of a foreign currency.

more

fewer

the same

QUESTION 9

If the euro appreciates relative to the dollar, then the purchasing power of the euro has relatively ___.

increased

decreased

not changed

QUESTION 10

Suppose the yuan has appreciated relative to the euro. This necessarily implies that the __.

euro has appreciated relative to the yuan

euro has depreciated relative to the yuan

euro has appreciated relative to the dollar

euro has depreciated relative to the dollar