Exam 12: Open-Economy Macroeconomics: Basic Concepts

For many questions in macroeconomics, international issues are peripheral.

Suppose the nominal exchange rate between the yen and the U.S. dollar is 195 yen per U.S. dollar, and that the nominal exchange rate between the Canadian dollar and the U.S. dollar is 1.30 Canadian dollars per U.S. dollar. How many yen would it take to buy a Canadian dollar?

If the world real interest rate exceeds the Canadian real interest rate, what would Canadian savers most likely do?

The large, positive net capital outflow in Canada from 1999 until 2009 was primarily the result of government budget surpluses.

What equation is the GDP identity in an open economy?

Between 1981 and 1988, what caused most of the change in Canadian net capital outflow as a percent of GDP?

The next table shows PPP exchange rates (the price of 1 U.S. dollar in units of the foreign currency) for several countries, determined based on the Big Mac Index. According to this data, what are the predicted exchange rates between the following countries? a. Argentina and Australia b. Brazil and Canada c. Chile and China d. China and Canada

Canada sells machinery to a South African company, which pays Canada with South African currency (the rand). What happens to Canadian net capital outflow from this transaction?

Suppose that a lobster in Nova Scotia costs $10 and the same type of lobster in New Brunswick costs $30. How could people make a profit in the situation?

In which year was net capital outflow highest as a percentage of GDP?

If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?

Starting from a trade surplus, what would create a trade deficit?

In what year did Canada have the highest amount of international trade as a percentage of GDP?

According to the theory of purchasing-power parity, what must the nominal exchange rate between two countries reflect?

According to purchasing-power parity theory, the real exchange rate should equal the nominal exchange rate.

What does the law of one price state?

What happened after the introduction of the euro as the common currency of many European countries?

-Refer to Table 12-1. What countries' goods are more expensive than Canadian goods?

A Japanese firm buys lumber from Canada and pays for it with yen. What are the effects of this transaction?

Mogans, a citizen of Denmark, sells Danish cheese and meat in Canada. Which statement best identifies the effects of these sales on net exports?