Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose that a country has $120 billion of national saving, and $80 billion of domestic investment. Is this possible? Where did the other $40 billion of national savings go?

List the factors that might influence a country's exports, imports, and trade balance.

If the value of goods and services that Spain purchases from the United Kingdom is less than the value of goods and services that the United Kingdom purchases from Spain, then the United Kingdom has

A bushel of apples costs $15.00 in the U.S. The same apples cost 1,600 yen in Japan. If the exchange rate is 80 yen per dollar, is there a possibility for arbitrage? Explain and defend your answer. As part of your defense, find the real exchange rate.

You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates relative to the peso, then the dollar buys

A country had a net capital outflow of $1.5 trillion and imports of $0.5 trillion. What was the value of its exports?

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports.

If purchases of foreign assets by U.S. residents exceed purchases of U.S. assets by foreign residents, then U.S. net capital outflow is positive.

A country recently had saving of 300 billion euros and domestic investment of 200 billion euros. What was the value of this country's net exports? Explain how you found your answer.

Other things the same, an increase in foreign prices raises the real exchange rate.

While vacationing in Turkey you see a rug you consider purchasing. The seller tells you the rug costs 1,200 Turkish lire. A. If the exchange rate is .60 lira per dollar, how many dollars does the rug cost? B. If the dollar depreciates against the lira, will it take more or fewer dollars to buy the rug? Explain.

The nominal exchange rate is the

While vacationing in Italy, you see an interesting meal on a menu. The price is 24 euros. A. If the exchange rate is .80 euros per dollar, how many dollars would you have to give up to buy the meal? B. If the dollar appreciated against the euro, but the price of the meal remained 24 euro, would the meal cost more or fewer dollars? Explain.

A rational investor will always purchase the bond that pays the highest real interest rate.

Visitors to a country hosting a world soccer tournament purchase food, souvenirs, and accommodations while attending the tournament. Which of the following should these expenditures raise?

Other things the same, an increase in domestic prices raises the real exchange rate.

Net exports of a country are the value of

A country had a net capital outflow of 300 billion euros and exports of 400 billion euros. What was the value of its imports?

Purchasing-power parity describes the forces that determine