Exam 12: Open-Economy Macroeconomics: Basic Concepts

What is the value of Chile's exports minus the value of Chile's imports called?

Assume Canada is a small open economy with perfect capital mobility. If the interest rate is 8 percent in Canada and 6 percent in China, and if the exchange rate is stable at 6 Chinese yuan for one Canadian dollar, what would happen?

If goods in Canada cost the same number of dollars as German goods cost in euros, the real exchange rate would be computed as how many German goods per Canadian goods?

In Canada, a cup of hot chocolate costs $6. In Australia, the same hot chocolate costs 6 Australian dollars. If the exchange rate is $2 Australian dollars per Canadian dollar, what is the real exchange rate?

Mogans, a citizen of Denmark, sells Danish cheese and meat in Canada. Which statement best identifies the effects of these sales on net exports?

A country has $50 million of domestic investment and net capital outflow of -$80 million. What is saving?

If citizens of a country are not saving much, which action should that country's government take?

Many economists believe that the theory of purchasing-power parity describes the forces that determine exchange rates in the long run.

When the central bank prints large quantities of money, that money loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

Suppose Canada sells goose down parkas to the United States. What are the effects of this transaction?

The theory of purchasing-power parity states that a unit of any given currency should be able to buy the same quantity of goods in all countries.

Between 1981 and 1988, what caused most of the change in Canadian net capital outflow as a percent of GDP?

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

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico. If the nominal exchange rate is 30 pesos per dollar, what is the real exchange rate?

What type of economy does Canada have?

How can one derive the identity that saving equals the sum of domestic investment and net capital outflow from the national income accounting identity?

Which of the following would be a Canadian foreign portfolio investment?

A Canadian firm opens a factory that produces climbing equipment in Austria. What are the effects of this transaction?