Exam 14: Macroeconomics in an Open Economy

Ceteris paribus, an appreciation of the dollar will increase net exports in Australia.

The purchase of foreign shares and bonds by an Australian brokerage firm is an example of capital inflows to Australia.

According to the saving and investment equation, if net foreign investment rises by $35 million:

Which of the following is not included in the 'current account'?

A current account deficit must be exactly offset by a capital and financial account surplus.

During the 1980s, Australia ________ twin deficits and in the 1990s, Australia ________ twin deficits.

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

In an open economy, fiscal policy has:

If currency traders expect the value of the dollar to rise, what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

The record of a country's transactions in goods, services and assets with the rest of the world is its:

Assume that the exchange rate between the dollar and the euro is €1 = $1. Suppose the exchange rate changes to €1.25 = $1. What is the price in dollars of a €200 pair of Italian shoes before and after the exchange rate change?

Net exports in Australia are negative so Australia must be a net lender abroad.

The following are hypothetical data for a country's balance of payments. You can assume the balance on the capital account is zero. Use the data to calculate the following: a.the balance on the current account b.the balance of trade on goods and services c.the balance on the financial account d.net errors and omissions _____________________________________________________________________________________________ _____________________________________________________________________________________________

If a current account deficit increases and investment levels remain the same, national saving must increase.

Suppose that Australia's price level is 200, the British price level is 100, and the nominal exchange rate of pounds to the dollar is £0.40 = $1, then the real exchange rate of pounds to the dollar is:

The 'current account' includes records of a country's:

In an open economy, expansionary fiscal policy may lead to a currency appreciation, thereby reducing net exports.

Refer to Figure 14.2 for the following questions. Figure 14.2 -Refer to Figure 14.2. A depreciation of the euro is represented as a movement from:

An example of 'foreign direct investment' is:

Suppose that the average price of goods imported from Great Britain increased. Is it likely that the value of the Australian dollar would appreciate or depreciate versus the British pound, ceteris paribus? Is it likely that the average price in British pounds of goods exported from Australia to Great Britain would rise or fall? _____________________________________________________________________________________________ _____________________________________________________________________________________________