Exam 12: Open-Economy Macroeconomics: Basic Concepts

Suppose that a lobster in Nova Scotia costs $10 and the same type of lobster in New Brunswick costs $30. How could people make a profit in the situation?

What concept implies that the real interest rate in Canada should equal that in the rest of the world?

In 2015, Denmark had net exports of $100 billion and sold $600 billion of goods and services abroad. What were Denmark's components of net exports?

Which statement best describes Canadian net capital outflow and net exports since 1999?

When a country's central bank decreases the money supply, which statement best predicts the consequences?

When a company from Germany builds an automobile factory in Canada, the German firm has engaged in foreign direct investment.

What was of much concern about the Canadian economy in the 1960s and 1970s?

Which of the following best describes the cross-border net flow of dividends and interest payments?

The large, positive net capital outflow in Canada after 1999 is primarily the result of government budget surpluses.

-Refer to Table 12-1. What currency(ies) is(are) less valuable than predicted by the purchasing-power parity theory?

A country sells more to people overseas than it buys from them. Which statement best identifies the effects of these transactions?

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

Assuming all other things equal, what would happen to the Canadian dollar real exchange rate under each of the following circumstances? a. The Canadian nominal exchange rate depreciates. b. Canadian domestic prices increase. c. Prices in the rest of the world rise.

Which statement best describes the consequences that could occur if the Canadian real exchange rate appreciates relative to the euro?

What does the law of one price state?

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

-Refer to Table 12-1. Assume that there are no transportation costs or trade restrictions. With which country can Canadian importers make a profit?

What does purchasing-power parity imply for the exchange rate?

What does purchasing-power parity imply about the real exchange rate?

When a country's central bank increases the money supply, which statement best predicts the consequences?