Exam 29: Macroeconomics in an Open Economy

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar, how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

Persistent current account deficits for the United States have

When the United States sends money to the Philippines to help typhoon survivors, the transaction is recorded in

Which of the following is not included in the balance of the financial account of the United States?

Figure 29-2 -Refer to Figure 29-2. Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?

If the government finances an increase in government purchases with an increase in taxes, which of the following would you not expect to see?

The recession of 2007-2009 decreased the demand for imports in Japan, which caused the ________ curve for the yen to shift to the ________, increasing the exchange rate and the value of the yen.

How does an increase in the budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?

Net exports equals the balance of trade surplus.

If the United States is a "net borrower" from abroad

When net capital flows are positive

A decrease in United States net foreign direct investment would occur if

The decline in the value of the dollar in the first half of 2017 resulted in ________ dollar prices for goods imported into the United States and ________ prices in foreign currencies for U.S. goods exported to other countries.

How does a decrease in the federal budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?

The current account includes records of a country's

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