Exam 29: Macroeconomics in an Open Economy

Explain and show graphically the effect of a decrease in U.S. budget deficits that decrease U.S. interest rates on the demand and supply of U.S. dollars for euros.

Figure 29-1 -Refer to Figure 29-1. The depreciation of the dollar is represented as a movement from

Saving exceeds domestic investment in Japan, which generates a financial account deficit in Japan's balance of payments.

Figure 29-1 -Refer to Figure 29-1. Italians cut back on smoking and cut their demand for American cigarettes in half. Assuming all else remains constant, this would be represented as a movement from

If American demand for purchases of Mexican goods has increased, how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

Table 29-2 -Refer to Table 29-2. Given the following exchange rates in the above table, what are the exchange rates stated as U.S. dollars per Mexican peso and U.S. dollars per British pound respectively?

Assuming the United States is the "domestic" country, if the real exchange rate between the United States and Russia decreases from 28 to 23

Ceteris paribus, a decrease in the government's budget deficit will increase domestic investment and net foreign investment.

If the United States has a net export deficit, which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift?

Monetary policy has a ________ effect on aggregate demand in a(n) ________ economy, and fiscal policy has a ________ effect on aggregate demand in a(n) ________ economy.

When exchange rates are ________, we say that the country's exchange rate is fixed.

Figure 29-1 -Refer to Figure 29-1. The appreciation of the euro is represented as a movement from

According to the saving and investment equation, if net foreign investment falls by $35 million

Suppose the Fed pursues a policy that leads to higher interest rates in the United States. How will this policy affect real GDP in the short run if the United States is an open economy? This policy

The balance of payments includes all of the following accounts except

If the United States is a "net lender" abroad, ________. (Assume that the capital account is zero and net transfers are zero.)

Which of the following would decrease net exports in the United States?

Assuming no change in the nominal exchange rate, how will a higher rate of inflation in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

The level of saving in Japan has historically been high relative to the level of domestic investment. Based on this information, we would expect that