Exam 29: Macroeconomics in an Open Economy

Why does continued foreign investment in U.S. stocks and bonds and foreign companies continuing to build factories in the United States result in a current account deficit in the United States?

Table 29-3 -Refer to Table 29-3. Given the following exchange rates in the above table, what are the exchange rates stated as U.S. dollars per Danish krone and U.S. dollars per EU euro respectively?

If net foreign investment in the United States is positive, how must national saving and domestic investment be related? (Assume that the capital account is zero and net transfers are zero.)

When Americans increase their demand for Japanese goods

Although based in the United States, Amazon is a global company with about ________ of its sales outside of the United States.

Figure 29-1 -Refer to Figure 29-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

In 2016, global revenue for Amazon was ________ when measured in local currencies than it was when measured in dollars. This occurred because the value of the U.S. dollar ________ relative to most other currencies.

If the government finances an increase in government purchases with an increase in taxes, which of the following would you expect to see?

How does contractionary monetary policy affect net exports in the short run?

Which of the following would result in a trade surplus for the United States?

Currency traders expect the dollar to appreciate. What impact will this have on equilibrium in the foreign exchange market?

Which of the following would you expect to increase both interest rates and exchange rates?

What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)

How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

Figure 29-1 -Refer to Figure 29-1. Europe experiences an economic boom. Assuming all else remains constant, this would be represented as a movement from

In 2016 the value of the U.S. dollar increased relative to the currencies of most of its major trading partners. This rise in the price of the dollar against the other currencies was ________ for companies that exported to the United States and ________ for U.S. companies that exported to other countries.

According to the saving and investment equation, if net foreign investment rises by $60 million

How does an increase in the relative price of a country's goods in terms of foreign goods, or real exchange rate, affect its balance of trade?

The price of ________ in terms of ________ is referred to as the real exchange rate.

The late Hugo Chavez, Venezuela's former president, proposed that the independence of the Venezuelan central bank be eliminated. Given the research on the relationship between central bank independence and inflation, we should expect this event to cause inflation to ________ and the real exchange rate to ________ between the two counties. (Assume the nominal exchange does not change, and that the United States is the domestic country).