Exam 29: Open-Economy Macroeconomics: Basic Concepts

According to purchasing-power parity, what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

Which of the following people or firms would be pleased by a depreciation of the pound against the US dollar?

A country's trade balance is positive when

If the UK's money supply grows faster than Switzerland's, the value of the pound should rise relative to the value of the Swiss franc.

a) How do we find the real exchange rate from the nominal exchange rate? b) Suppose a bottle of wine costs 20 euros in France and 25 dollars in the USA. If the exchange rate is .80 euros per dollar, what is the real exchange rate?

If France saves €1,000 billion and French net capital outflow is - €200 billion, France's domestic investment is

An economy that interacts with other economies is known as

If Spain has a positive capital inflow, what does this signify?

Suppose that Brian, a resident of the UK, buys software from a company in Japan. Explain what this is and in what directions this changes UK net exports and UK net capital outflow.

Which of the following, if undertaken by a UK economic agent, would be classified as foreign direct investment?

Suppose that a US dollar buys more gold in Australia than it buys in Russia. What does purchasing-power parity imply should happen?

If the nominal exchange rate is 2 UK pounds per 1 US dollar, and if the price of a Big Mac is $2 in the USA and £6 in the UK, then the real exchange rate is 2/3 British Big Mac per American Big Mac.

How do the nominal exchange rate and the real exchange rate differ?

If savings in Germany is €300 billion and investment in Germany is €550 billion, then

Which of the following is an example of foreign direct investment?

What does purchasing-power parity imply about the real exchange rate?

A country that exports more than it imports is said to have a trade deficit.

Each of the following is a reason why international trade has expanded in recent decades except which one?

Suppose the money supply in Mexico grows more quickly than the money supply in the USA. We would expect that

Suppose a resident of the USA buys a Jaguar car from the UK, and the UK exporter uses the receipts to buy shares in Boeing. Which of the following statements is true from the perspective of the UK?