Exam 18: Macroeconomics in an Open Economy

Based on the following information,what is the balance on the financial account? Exports of goods and services = $5 billion Imports of goods and services = $3 billion Net income on investments = -$2 billion Net transfers = -$2 billion Increase in foreign holdings of assets in the United States = $4 billion Increase in U.S.holdings of assets in foreign countries = -$1 billion

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Question 1

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Explain why economies with financial account surpluses usually have current account deficits.

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Question 2

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An economy will have a current account deficit if it is importing more than it is exporting in goods and services.This deficit must be financed by foreign investment in the economy (capital inflows)that exceeds capital outflows.As a result,the current account deficit must be accompanied by a financial account surplus.

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expresses in terms of dollars per peso?

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Question 3

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If 13.5 pesos = 1 dollar,then 1 peso = 1 / 13.5 = 0.074 dollars.

Although based in the United States,McDonald's is a global company with about ________ of its sales coming from outside of the United States.

(Multiple Choice)

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Question 4

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

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Question 5

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

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Question 6

Which of the following would increase the balance on the current account?

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Question 7

If the balance on the current account is $346 billion and the balance on the financial account is -$204 billion,what is the balance on the capital account,assuming no statistical discrepancy?

(Multiple Choice)

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Question 8

An increase in capital inflows will

(Multiple Choice)

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Question 9

If the price level in the United States is 110,the price level is 120 in Mexico,and the nominal exchange rate is 140 pesos per dollar,what is the real exchange rate from the U.S.perspective?

(Multiple Choice)

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Question 10

How might a budget deficit affect the balance of trade?

(Multiple Choice)

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Question 11

A country which incurs a current account deficit will most likely have a financial or capital account surplus.

(True/False)

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Question 12

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

(Multiple Choice)

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Question 13

What's the difference between the nominal exchange rate and the real exchange rate?

(Essay)

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Question 14

What two measures of macroeconomic activity are often referred to as the "twin deficits"?

(Multiple Choice)

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Question 15

Assume the United States is the "domestic" country and China is the "foreign" country.Which of the following might increase the real exchange rate between the United States and China?

(Multiple Choice)

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Question 16

If Californians increase their purchases of Italian wine,assuming all else remains constant,this will ________ of the United States.

(Multiple Choice)

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Question 17

Which of the following is an example of foreign direct investment in China?

(Multiple Choice)

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Question 18

The current account does not include which of the following?

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Question 19

An appreciating yen makes Japanese products

(Multiple Choice)

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Question 20

Showing 1 - 20 of 145

Explain why economies with financial account surpluses usually have current account deficits.

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expresses in terms of dollars per peso?

Although based in the United States,McDonald's is a global company with about ________ of its sales coming from outside of the United States.

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

Which of the following would increase the balance on the current account?

If the balance on the current account is $346 billion and the balance on the financial account is -$204 billion,what is the balance on the capital account,assuming no statistical discrepancy?

An increase in capital inflows will

If the price level in the United States is 110,the price level is 120 in Mexico,and the nominal exchange rate is 140 pesos per dollar,what is the real exchange rate from the U.S.perspective?

How might a budget deficit affect the balance of trade?

A country which incurs a current account deficit will most likely have a financial or capital account surplus.

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

What's the difference between the nominal exchange rate and the real exchange rate?

What two measures of macroeconomic activity are often referred to as the "twin deficits"?

Assume the United States is the "domestic" country and China is the "foreign" country.Which of the following might increase the real exchange rate between the United States and China?

If Californians increase their purchases of Italian wine,assuming all else remains constant,this will ________ of the United States.

Which of the following is an example of foreign direct investment in China?

The current account does not include which of the following?

An appreciating yen makes Japanese products

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

The International Financial System

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