Exam 31: Open-Economy Macroeconomics: Basic Concepts

From the national income accounting identity, it follows that should national savings fall short of investment the country will have a trade surplus.

What would be the motives for foreign financial interests to invest in Australia in the i) short term and ii) long term?

Explain the relationship between exchange rates and purchasing power parity.

When a United States oil company purchases oil from Saudi Arabia and the Saudi Arabian firm uses the proceeds from its sale of oil to the United States to buy US government debt, US _____ and there is a capital _____ to/from the United States.

The purchasing power parity theory is not a good explanation of nominal exchange rate determination in the short run, because many goods and services are non-traded and not all traded goods are standardised commodities.

A low rate of national saving is the primary cause of trade deficit.

If each country specialises in producing goods and services in which it has a comparative advantage, international trade:

An open economy's GDP is shown by:

If a government does not pay interest or principal on its debt when due, it is:

If net exports are negative, the country has a:

Positive net exports signal that the:

While making investment decisions, investors compare:

The real exchange rate is the:

Explain why net exports equal aggregate saving minus investment.

If the nominal exchange rate is e, the domestic price is P and the foreign price is P*, then the real exchange rate is defined as:

Which of the following is not strongly affected by international trade?

If the exchange rate changes from 100 yen per dollar to 105 yen per dollar, then the dollar has:

If the nominal exchange rate is 75 yen per dollar, and a Big Mac hamburger sells for $4 in Australia and for 200 yen in Japan, then the real exchange rate is:

If purchasing-power parity holds, and a tonne of rice costs $200 in Australia and 15 000 yen in Japan, then the nominal exchange rate is:

As the value of the Australian dollar rises, more and more people are buying goods from overseas on the internet and having them shipped to Australia.Does this mean purchasing power parity is more or less likely to hold for these goods?