Exam 31: Open-Economy Macroeconomics: Basic Concepts

Use the (hypothetical) information in the following table to answer the following questions. Table 31-1 -Refer to Table 31-1.Which currency(ies)is(are)more valuable than predicted by the doctrine of purchasing-power parity?

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.

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S.goods buys)?

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S.currency must rise if the price levels in

If it took as many dollars to buy goods in the United States as it did to buy enough Romanian currency to buy the same goods in Romania,the real exchange rate would be computed as how many Romanian goods per U.S.goods?

A citizen of Saudi Arabia uses previously obtained U.S.dollars to purchase apples from the United States.This transaction

Juan lives in Ecuador and purchases a motorcycle manufactured in the United States.The motorcycle is

Bolivia buys railroad engines from a U.S.firm and pays for them with Bolivianos (Bolivian currency).By itself,this transaction

If the exchange rate is 10 pesos per U.S.dollar,it is also 1/10 U.S.dollars per peso.

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

If the real exchange rate of the U.S.dollar falls,U.S.net exports will fall.

Which of the following,other components of spending the same,would induce a trade deficit?

Other things the same,if the exchange rate changes from 115 yen per dollar to 125 yen per dollar,the dollar has

In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?

Suppose that the exchange rate is 9 Moroccan dirhams per U.S.dollar.Also suppose that you can buy a crate of oranges for 360 dirhams in the Moroccan capital of Rabat and can buy a similar crate of oranges in Miami for $35 dollars.

Perhaps the most dramatic change in the U.S.economy over the past four decades has been the increasing relative importance of international trade and finance.

You buy a new car built in Sweden.Other things the same,your purchase by itself

A firm in China sells jackets to a U.S.department store chain.Other things the same,these sales

Colonial America had little industry and so had mostly raw materials to export.At the same time,there were many opportunities to purchase capital goods and earn a high rate of return because there was little existing capital so that the marginal product of capital was relatively high.What does this suggest about net exports and net capital outflow in colonial America?

When Dee,a U.S.citizen,purchases a designer dress made in Milan,the purchase is