Exam 18: Macroeconomics in an Open Economy

The large budget deficits of the early 1990s resulted in large current account deficits.

How is the impact of contractionary monetary policy different in an open economy than in a closed economy?

If the government finances an increase in government purchases with an increase in taxes,which of the following would you not expect to see?

Which of the following would increase the current account balance of the United States?

Which of the following would increase net exports in the United States?

Why did the dollar fall in value relative to other currencies in the first half of 2011?

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

The balance of trade is defined as

Figure 29-1 -Refer to Figure 29-1.The appreciation of the euro is represented as a movement from ________.

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy,

An increase in capital outflows from the United States will

An increase in U.S.federal government budget deficits that raises U.S.interest rates relative to the rest of the world should

Why is the balance of payments always zero?

Assuming no change in the nominal exchange rate,how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

When net capital flows are positive,

Figure 29-1 -Refer to Figure 29-1.Europe suffers a recession.Assuming all else remains constant,this would be represented as a movement from ________.

The current account balance equals the value of net exports.

Figure 29-1 -Refer to Figure 29-1.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

Hugo Chavez,Venezuela's president,proposed that the independence of the Venezuelan central bank be eliminated.Given the research on the relationship between central bank independence and inflation,we should expect this event to cause inflation to ________ and the real exchange rate to ________ between the two counties.(Assume the nominal exchange does not change,and that the United States is the domestic country).

How does an increase in the budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?