Exam 31: Open-Economy Macroeconomics: Basic Concepts

According to the theory of purchasing-power parity, what will happen to a country's nominal exchange rate if the country has relatively high inflation?

When an Australian exporter sells software to France and uses the proceeds to buy stock in a French company, Australian exports _____ and there is a capital _____ to/from Australia.

A country's balance on merchandise trade equals:

Increased foreign investment has trickle down effects, such as local job creation.Additionally it may result in outflows of dividends and interest payments.

When the Big Mac in Egypt cost $US₂.28, which is less than it does in converted US dollars, we can say it _____.

Balanced trade is:

Which of the following items may demonstrate limitations of the purchasing-power parity?

The outcome from the GFEC has been that poorer nations have not received the capital investment required to continue their growth.