Exam 14: Macroeconomics in an Open Economy

Figure 14.4 Alt text for Figure 14.4: In figure 14.4, a graph illustrates the quantity of dollars traded against the exchange rate. Long description for Figure 14.4: The x-axis is labelled, quantity of dollars traded, and the y-axis is labelled, exchange rate, euros against dollars.2 supply curves; S1 and S2, and 2 demand curves; D1 and D2 are plotted.Supply curve S1 is a straight line which slopes up from the bottom left corner to the top right corner.It passes through points A and B.Supply curve S2 is a straight line with the same slope as curve S1, but is plotted to the right.Curve S2 passes through points D and C.Demand curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve D1 intersects curve S1 at point A, and curve S2 at point D.Demand curve D2 has the same slope as curve D1, but is plotted to the right Curve D2 intersects curve S1 at point B, and curve S2 at point C. -Refer to Figure 14.4.Europe experiences an economic boom.Assuming all else remains constant, this would be represented as a movement from

Figure 14.1 Alt text for Figure 14.1: In figure 14.1, a graph illustrates the quantity of dollars traded against the exchange rate. Long description for Figure 14.1: The x-axis is labelled, quantity of dollars traded, and the y-axis is labelled, exchange rate, euros against dollars.2 supply curves; S1 and S2, and two demand curves; D1 and D2 are plotted.Supply curve S1 is a straight line which slopes up from the bottom left corner to the top left corner, and passes through points A and B.Supply curve S2 is a straight line with the same slope as S1, but plotted above.S2 passes through points D and C.Demand curve D1 is a straight line, which slopes down from the top left corner to the bottom right corner.Curve D1 intersects curve S1 at point A, and curve S2 at point D.Demand curve D2 is a straight line with the same slope as D1, but plotted above.Curve D2 intersects curve S1 at point B, and curve S2 at point C. -Refer to Figure 14.1.Europe suffers a recession.Assuming all else remains constant, this would be represented as a movement from

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

Table 14.2 -Refer to Table 14.2.Given the following exchange rates in the above table, what are the exchange rates stated as Canadian dollars per Mexican peso and Canadian dollars per British pound respectively?

Which of the following is "crowded out" by higher interest rates that can be the result of expansionary fiscal policy?

An open economy is an economy that has

Assume Canada is the "domestic" country and Switzerland is the "foreign" country.Which of the following might decrease the real exchange rate between the Canada and Switzerland?

Which of the following is not included in the balance of the financial account of Canada?

Monetary policy has a ________ effect on aggregate demand in a(n)________ economy, and fiscal policy has a ________ effect on aggregate demand in a(n)________ economy.

The balance of trade includes trade in

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

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

The purchase of foreign stocks and bonds by a Canadian brokerage firm is an example of capital inflows to Canada.

If the current account is in deficit and the capital account is zero, then

How will an interest rate increase in Canada affect equilibrium in the market for Canadian dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per Canadian dollar.)

Suppose the majority of the shares of Bombardier stock were sold to an American firm.Assuming all else remains constant, this will

Suppose that domestic investment in Japan is 20.2% of GDP, and Japanese national savings is 24% of GDP.What is Japan's foreign investment as a percentage of GDP?

When Canada sends money to Haiti to help hurricane survivors, the transaction is recorded in

Explain how "net capital flows" are related to "net foreign investment," "net foreign direct investment," and "net foreign portfolio investment."

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