Exam 12: Open-Economy Macroeconomics: Basic Concepts

From 1970 to 1998, the Canadian dollar depreciated against the German mark and appreciated against the Italian lira because Canada experienced more inflation than Germany but less inflation than Italy.

Which of the following best defines the nominal exchange rate?

Which of the following is the formula for national saving?

What does purchasing-power parity explain?

Suppose inflation is higher in Canada over the next few months than in foreign countries, and exchange rates are given in terms of how much foreign currency a dollar buys or how many foreign goods Canadian goods buy. According to purchasing-power parity, which of the following should we expect to see?

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services. What is the value of that country's net exports?

Which of the following was an important change in Canadian economy after 1999?

Net capital outflow is the purchase of domestic assets purchased by foreign residents minus the purchase of foreign assets by domestic residents.

How do nominal exchange rates change over time?

Ivan, a Russian citizen, sells several hundred cases of Russian caviar to a restaurant chain in Canada. Which of the following correctly identifies the effects of this transaction?

A British pharmacy buys drugs from a Canadian company and pays for them with British pounds. Which of the following correctly identifies the effects of this transaction?

Other things the same, which of the following would induce a trade deficit?

Which of the following is an identity that always holds in an open economy?

A Canadian computer maker sells computers to a German firm. This company uses all of the revenues from this sale to purchase automobiles from German firms. Which of the following best describes the effects of these transactions?

According to purchasing-power parity, if prices in Canada increase by a smaller percentage than prices in Algeria, how does the exchange rate change?

For many questions in macroeconomics, international issues are peripheral.

Many economists believe that the theory of purchasing-power parity describes the forces that determine exchange rates in the long run.

Suppose Canada sells chocolate to the United States. Which of the following correctly identifies the effects of this transaction?

Which of the following does a trade deficit imply?

Table 31-1 -Refer to Table 31-1. In real terms, Canadian goods are less expensive than goods in which of the following countries?