Exam 37: Exchange Rates and the Macroeconomy

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, what are net exports when GDP = 3,500?

If Japan experiences a period of deflation and the United States does not, what will happen in the United States?

If the international value of the dollar rises, the

International trade tends to lower the value of the multiplier because

The growing federal budget deficit in the 1980s was accompanied by a

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

A currency depreciation is usually inflationary.

In the spring of 2002, the United States imposed tariffs on imported steel to protect the jobs of American steel workers and protect the production of the American steel industry.Why might this policy not work to increase overall employment in the United States?

As the international value of the dollar rises, AS shifts outward and AD shifts inward.

Figure 20-5 -Which of the graphs in Figure 20-5 are consistent with an appreciation of the U.S.dollar caused by an increase in U.S.interest rates?

Because the United States is highly integrated with the international capital market, international capital flows tend to

How do the fluctuations in the exchange rate influence the domestic price level?

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to real GDP growth?

Suppose the dollar depreciates from 89 Japanese yen to 79 Japanese yen.One would expect

Appreciation of the dollar will make imported goods more expensive and shift the aggregate demand curve outward.

The sequence of events following an increase in the federal deficit would be higher interest rates, a(n)

Interest rate increases lead to currency appreciation and increases in net exports.

A closed economy is one that

If the United States increased its budget deficit, and it is at or near full employment, the most likely effect is to crowd

A depreciation of the dollar will cause an increase in the Consumer Price Index.