Exam 14: Macroeconomics in an Open Economy

Which of the following is an item in Australia's financial account?

The idea of 'twin deficits' refers to the possibility that a large federal budget deficit will lead to a:

Which of the following is a source of supply for the Australian dollar?

Australia ________ concerned with being a net borrower if Australia is using all of the borrowed funds to ________.

What are the three main sets of factors that cause the supply and demand curves in the foreign exchange market to shift? _____________________________________________________________________________________________ _____________________________________________________________________________________________

In an open economy, expansionary monetary policy will have the added effect of causing the:

A depreciation of a country's currency is likely to:

The demand for yen in exchange for dollars will increase if, ceteris paribus:

The ________ account records flows of funds into and out of a country.

If Australians increase their level of saving, explain how this is demonstrated using the saving and investment equation. _____________________________________________________________________________________________ _____________________________________________________________________________________________

The supply of dollars in exchange for yen will increase, if, ceteris paribus:

If you know that a country's net foreign investment is positive, what does that tell you about the relationship between the country's national saving and private investment? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Speculators who anticipate that the future value of the dollar relative to the yen will ________, will cause a(n)______________.

How is the impact of expansionary monetary policy different in an open economy to that in a closed economy? _____________________________________________________________________________________________ _____________________________________________________________________________________________

In an open economy, monetary policy has:

Assume that the exchange rate between the dollar and the yen is ¥100 = $1. Suppose the exchange rate changes to ¥150 = $1. What is the price in yen of a $200 iPod before and after the exchange rate change?

Suppose that the exchange rate between the Japanese yen and the Australia dollar is currently ¥60 = $1, then an individual could trade:

When compared to a closed economy, fiscal policy is more effective and monetary policy is less effective in an open economy.

Australia's net foreign debt rose from less than 5 per cent of GDP in the mid-1970s to over 50 per cent in 2013.

If CAB = current account balance, I = private sector investment, S = national saving and NX = net exports, then: