Exam 18: Macroeconomics in an Open Economy

Ceteris paribus,a real depreciation of the dollar will decrease net exports in the United States.

The current account deficits incurred by the United States in the 1990s and early 2000s were caused,in the opinion of many economists,by

Why does continued foreign investment in U.S.stocks and bonds and foreign companies continuing to build factories in the United States result in a current account deficit in the United States?

Table 29-2 -Which of the following will shift the demand for the euro to the right?

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

A decrease in capital outflows from the United States will

Suppose the majority of the shares of British Airways stock were sold to a firm in the United States. Assuming all else remains constant,this will

If the exchange rate changes from $2.00 = 1 euro to $1.98 = 1 euro then

Based on the following information,what is the balance on the current account? Exports of goods and services = $12 billion Imports of goods and services= $14 billion Net income on investments = -$4 billion Net transfers = -$1 billion Increase in foreign holdings of assets in the United States = $6 billion Increase in U.S.holdings of assets in foreign countries = -$3 billion

If net foreign investment in the United States is positive,how must national saving and domestic investment be related? (Assume that the capital account is zero and net transfers are zero.)

Ceteris paribus,an increase in the government's budget deficit will increase the current account deficit.

What is the difference between net exports and the current account balance?

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar.)

Table 29-2 -Currency traders expect the dollar to depreciate.What impact will this have on equilibrium in the foreign exchange market?

In August 2011,global revenues for McDonald's ________ when measured in local currencies than it did when measured in dollars.This occurred because the value of the U.S.dollar increased relative to most other currencies.

Table 29-2 -When the market value of the dollar falls relative to other currencies around the world,we say that

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

Table 29-2 -Currency traders expect the value of the dollar to rise.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Assuming no change in the nominal exchange rate,how will a lower rate of inflation in the United States relative to Canada affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

Net foreign investment is a measure of net capital outflows,equal to capital outflows minus capital inflows in a given period of accounting.