Exam 37: Exchange Rates and the Macroeconomy

Explain how and why economic events in the U.S.affected the economies of Thailand, South Korea, and Indonesia and vice-versa.

Assume that Country X and Country Y are trading partners and the exchange rates are fixed.If prices in Country Y rise, all of the following are expected to happen except

A Japanese recession will be counteracted by an appreciation of the Japanese yen.

International capital flows are purchases and sales of ____ across national borders.

International capital flows in an open economy have the effect of

The different effects of fiscal and monetary policy in an open economy with mobile capital hinges on their different effect on

An economic boom in the United States would cause the aggregate demand curve in other countries to shift outward.

When the dollar depreciates, the cost to Americans of foreign goods

If a country tries to stimulate the economy with fiscal policy, the effects will be exchange rate

To eliminate the trade deficits in the late 1990s would have required, in addition to the reduction of the federal budget deficit, an increase in

From 1992, America's trade performance was marked by a(n)

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

The anticipated effect of contractionary monetary policy is

Because of their effect on interest rates:

Following an expansionary monetary policy, we would expect lower interest rates, dollar

For a major country with extensive capital flows, what is the effect of an increase in interest rates?

A currency depreciation

One of the results of the strong economic growth in the United States relative to the rest of the world is a

A currency appreciation reduces aggregate demand and increases aggregate supply.

If European economies experience a strong economic recovery, U.S.net exports will