Exam 5: The Open Economy

A trade deficit can be financed in all of the following methods except by:

Assume that a war breaks out abroad, and foreign investors choose to invest more in a large safe country, the United States. Then, the U.S. real interest rate:

In a small open economy, if the government adopts a policy that lowers imports, then that policy:

Net capital outflow is equal to the amount that:

If the real exchange rate depreciates from 1 Japanese good per U.S. good to 0.5 Japanese good per U.S. good, then U.S. exports and U.S. imports .

When exports exceed imports, all of the following are true except:

If the real exchange rate between the United States and Japan remains unchanged, and the inflation rate in the United States is 6 percent and the inflation rate in Japan is 3 percent, the:

In a small, open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will and the real exchange rate will , holding all else constant.

In a small open economy, if the government adopts a policy that lowers imports, then the quantity of exports:

Two reasons why capital may not flow to poor countries are that the poorer countries may:

Holding other factors constant, legislation to cut taxes in an open economy will: