Exam 37: Exchange Rates and the Macroeconomy

The main input into the production of Starbuck's coffee is imported coffee beans.If the dollar depreciates, how will this affect the U.S.retail coffee market?

What important lesson did American economists learn in the 1980s and again in 2001-2003?

Figure 20-2 -Which of the following explains the movements in Figure 20-2?

International capital flows in an open economy have the effect of

The trade deficit is the mirror image of the required capital inflows.So why worry about these capital inflows?

A Japanese recession will be counteracted by an appreciation of the Japanese yen.

The expected effects of an increased budget deficit are

If the dollar rises in value compared to other currencies, what will happen in the United States?

How does a budget deficit lead to a trade deficit?

Assume that Country X and Country Y are trading partners and the exchange rates are fixed.If prices in Country Y rise, all of the following are expected to happen except

Between 1981 and 1986, as the federal budget deficit increased,

The dramatic rise in the dollar between 1981 and 1986 was the result of a(n)

Figure 20-7 -In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X - IM) for an open economy.Which of the following would cause a movement from B to A?

Explain how exchange rates affect the level of aggregate economic activity and the price level.Use appropriate AS/AD diagrams to illustrate your answer.

In an open economy, the government deficit is 400 and investment exceeds saving by 300, so in equilibrium the trade deficit (IM - X) must be

An expansionary monetary policy will

A decline in interest rates tends to expand the economy by

Table 20-2 Domestic GDP Expenditure Exports Imports Total Expenditures ++ +++(-) \ 2,500 \ 3,100 \ 650 \ 250 3,000 3,400 650 300 3,500 3,700 650 350 4,000 4,000 650 400 4,500 4,300 650 450 5,000 4,600 650 500 5,500 4,900 650 550 -In Table 20-2, assume that exports rise to $900.How large is the multiplier?

Explain how exchange rate changes affect aggregate demand.

If (X - IM) < 0, then capital inflows