Exam 12: Open-Economy Macroeconomics: Basic Concepts

Suppose the exchange rate is 5 units of Peruvian currency per dollar,and a hotel room in Lima,Peru,costs 350 units of Peruvian currency.How many dollars do you need to get a room in Lima?

According to purchasing-power parity theory,if the same fast-food hamburger costs $2.50 in Canada and 10 Tunisian dinars,what should the exchange rate be?

Tony,a Canadian citizen,uses some previously obtained Portuguese currency (escudo)to purchase a bond issued by a Portuguese company.How does this transaction affect Canadian net capital outflow?

Which of the following is an example of Canadian foreign portfolio investment?

The country of Freedonia has a GDP of $4000,consumption of $1800,and government purchases of $500.Which of the following does this situation imply?

This problem considers the effect of currency conversion fees on foreign investment.Jonathan is considering investing $1000 in Canada,where he expects an interest rate of 5 percent,or in the U.K.,where the expected interest rate would be 6 percent.The current exchange rate is £0.5/$,which could take by the end of the year any value between £0.4 and £0.6/$ with equal probability. a)Where should Jonathan invest? b)How does your answer change if there is a currency conversion fee of 3 percent? c)What have you learned from this exercise?

If the exchange rate is 175 yen = $1,what is the cost of a bottle of rice wine that costs 5250 yen?

Table 12-1 -Refer to the Table 12-1.What country's good are less expensive than Canadian goods?

Table 12-1 -Refer to the Table 12-1.What countries in the table does purchasing-power parity hold for?

As an open economy,Canadian national saving can be less than Canadian investment.

Suppose Connie,a Canadian citizen,buys bonds issued by an automobile manufacturer in Sweden.Which of the following would her expenditure be?

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S.gasoline,1 litre of U.S.gasoline costs $0.50 U.S.,and a litre of Canadian gas costs $1.30 Canadian.What is the nominal exchange rate?

According to the theory of purchasing-power parity,the real exchange rate defined as foreign goods per unit of Canadian goods will equal the domestic price level divided by the foreign price level.

If the Canadian real interest rate exceeds the world real interest rate,what would Canadian savers most likely do?

How did the real interest rates paid on long-term government debt in Canada and the United States compare with each other over the period from 1984 to 2011?

In 2012,Denmark had net exports of $10 billion and sold $60 billion of goods and services abroad.What were Denmark's components of net exports?

A country has $80 million of saving and domestic investment of $30 million.What are net exports?

Suppose that the exchange rate is 50 Bangladesh taka per Canadian dollar,and that a bushel of rice costs 200 taka in Bangladesh and $3 in Canada.Which of the following is consistent with these facts?

Suppose the price level in Canada (P)and the nominal exchange rate (e)between the Canadian dollar and the foreign currency remain the same,while the price level abroad increases from P₁* to P₂*.Let the real exchange rate be X.What is the percentage change in the real exchange rate?

Country A buys $150 of wine from country B,and B buys $30 of wool from A.Which of the following correctly indicates the two countries' net exports (in the order A,B)?