Exam 18: Macroeconomics in an Open Economy

Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment.Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.

If we take into account transfer payments (TR)when we derive the saving and investment relationship,the saving and investment equation becomes

An expansionary monetary policy in the United States should

If the United States is a "net borrower" from abroad,

China runs a current account surplus with the United States.Which of the following must be true about China's balance of payments with the United States?

How does an increase in government purchases financed by an increase in the deficit affect exchange rates? Support your answer with graphs of the loanable funds market and the foreign exchange market.

An open economy is an economy that has

Currency traders expect the dollar to appreciate.What impact will this have on equilibrium in the foreign exchange market?

The United States is called a debtor nation because

Which of the following would you expect to increase both interest rates and exchange rates?

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

The balance of payments includes which three accounts?

Persistent current account deficits in the United States

Figure 29-1 -Refer to Figure 29-1.The French fall in love with California wines and triple their purchases of this beverage.Assuming all else remains constant,this would be represented as a movement from ________.

When the market value of the dollar rises relative to other currencies around the world,we say that

How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

Based on the following information,calculate public saving,net foreign investment,and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

The deepening of the financial crisis in the fall of 2008 and spring of 2009

Suppose the majority of the shares of Ford stock were sold to a Japanese firm.Assuming all else remains constant,this will

Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?