Exam 18: Macroeconomics in an Open Economy

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

The price of domestic goods in terms of foreign goods is referred to as

In an open economy,the current account balance equals ________.(Assume that the capital account is zero and net transfers are zero.)

Ceteris paribus,an increase in the government's budget deficit will decrease the financial account surplus.

When a U.S.investor buys a bond issued in a foreign country

Suppose that Federal Reserve policy leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is a closed economy,and how will it affect real GDP in the short run if the United States is an open economy?

The balance of trade includes trade in

An HMO hires radiology services from India to cut costs.If all else remains equal,this will

If net foreign investment is negative,which of the following must be true?

Article Summary Citing excessive currency regulation under the nation's previous regime,Uzbekistan's recently elected president,Shavkat Mirziyoev,announced a 50 percent devaluation of the Central Asian nation's currency,the soum,in September 2017.The devaluation changed the official exchange rate from 4,210.35 soum per U.S.dollar to 8,100 soum per U.S.dollar,putting it in line with the black market exchange rate.Economic slowdowns and falling currency values in China,Russia,and Kazikstan,Uzbekistan's largest export markets,have hurt this nation's economy which depends on commodity exports and remittances.According to Oleg Kouzmin,an economist at Renaissance Capital in Moscow,"The decision … helps reduce extreme disparities between official and 'grey market' exchange rates that were witnessed in Uzbekistan in the previous years.Economists generally love to see devaluations -- one of the things than makes them different from politicians -- devaluation always gives the country a chance for a fresh start." Source: Ksenia Galouchko "This Currency's Sudden 50% Devaluation May Attract Bargain Hunters," bloomberg.com,September 5,2017. -Refer to the Article Summary.All else equal,a depreciation of the Uzbekistani soum relative to a currency such as the U.S.dollar should ________ foreign investment in Uzbekistan and ________ exports from Uzbekistan.

What is the relationship between the balance of trade and the current account balance?

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

An increase in net foreign investment is possible through a decrease in national saving or a decrease in domestic investment.

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

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

Which of the following will shift the demand for the euro to the right?

Which of the following would result in a trade surplus for the United States?

The late Hugo Chavez,Venezuela's former 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).

Based on the following information,calculate public saving,net foreign investment,and national income.Assume that the capital account is zero and net transfers are zero. private saving = $145 billion exports = $285 billion imports = $240 billion consumption = $600 billion private investment = $125 billion government purchases = $75 billion

Table 18-2 -Refer to Table 18-2.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?