Exam 18: Macroeconomics in an Open Economy

According to the saving and investment equation,if net foreign investment falls by $35 million,

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

Net exports equals the balance of trade surplus.

Since 1999,the U.S.________ account has recorded relatively minor transactions,such as migrants' transfers,and sales and purchases of nonproduced,nonfinancial assets.

Figure 29-2 -Refer to Figure 29-2.Consider the market for U.S.dollars against the Japanese yen shown above. An event which could have caused the changes shown in the graph would be

The current account deficits incurred by the United States in the 1980s were caused,in the opinion of many economists,by

If the balance on the current account is $842 billion and the balance on the financial account is -$603 billion,what is the balance on the capital account,assuming no statistical discrepancy?

Does the saving and investment equation imply that a country's national saving must always equal its domestic investment? Explain.

How would an increase in the U.S.federal budget deficit affect the exchange rate in the market for dollars?

Figure 29-1 -Refer to Figure 29-1. Consider the market for U.S.Dollars against the British pound shown in the graph above. From this graph we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound

Figure 29-2 -You're traveling in Japan and are thinking about buying a new kimono.You've decided you'd be willing to pay $175 for a new kimono,but kimonos in Japan are all priced in yen.If the kimono you're looking at costs 14,000 yen,under which of the following exchange rates would you be willing to purchase the kimono? (Assume no taxes or duties are associated with the purchase.)

If the dollar appreciates,how will aggregate demand in the United States be affected?

An economy that does not have interactions in trade or finance with other economies is referred to as

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

A decrease in U.S.federal government budget deficits that lowers U.S.interest rates relative to the rest of the world should

Contractionary monetary policy and expansionary fiscal policy both reduce net exports in an open economy.

Suppose the government cuts taxes. We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets.

Table 29-2 -How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then