Exam 31: Open-Economy Macroeconomics: Basic Concepts

The nominal exchange rate is 4 Saudi Arabian riyals, 8 Moroccan dirham, 60 Indian rupees, or .8 euros per U.S. dollar. A fast food breakfast costs $5 in the U.S., 30 riyals in Saudi Arabia, 40 Moroccan dirham in Morocco, 250 Indian rupees in India, and 5 euros in France. According to these numbers, where is the real exchange rate between American and foreign goods the lowest?

A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports

A U.S. citizen buys bonds issued by a construction equipment manufacturer in Poland. Her expenditures are U.S.

A country recently had a trade deficit of $2.5 trillion and purchased $3 trillion of foreign assets. How many of its assets did foreigners purchase?

A country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it. This country has

A country has $45 million of domestic investment and net capital outflow of -$60 million. What is its saving?

A U.S. bakery buys wheat from Canada and pays for it with US dollars. This transaction

Last year a country purchased $1.5 trillion worth of goods and services from foreign countries, sold $2 trillion worth of goods and services to foreign countries and had national saving of $1.25 trillion. What was the value of its domestic investment? Show your work.

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

From 1980-1987, U.S. net capital outflow as a percent of GDP became a

A Swiss watchmaker opens a factory in the United States. This is an example of Swiss

If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall.

U.S- based Dell sells computers to an Irish company that pays with previously obtained U.S. currency. This exchange

A Swiss company sells chocolates to a retailer in the United States. These sales by themselves

A country has $40 billion of domestic investment and net capital outflows of -$20 billion. What is the country's saving?

If the exchange rate is 1.25 New Zealand dollars per U.S dollar, the price of apples is $2 a pound in the U.S. and 1 New Zealand dollar per pound in New Zealand, what is the real exchange rate?

U.S. exports are $300 billion, U.S. imports are $500 billion. Which of the following are consistent with the level of net exports?

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

The law of one price states that

If purchasing-power parity holds, when a country's central bank decreases the money supply, its