Exam 18: Macroeconomics in an Open Economy

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

If a country has a ________ exchange rate,its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.

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?

If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

Figure 18-1 -Refer to Figure 18-1.Italians cut back on smoking and cut their demand for American cigarettes in half.Assuming all else remains constant,this would be represented as a movement from

Assume the United States is the "domestic" country and Switzerland is the "foreign" country.Which of the following might decrease the real exchange rate between the U.S.dollar and the Swiss franc?

Figure 18-1 -Refer to Figure 18-1.Europe suffers a recession.Assuming all else remains constant,this would be represented as a movement from

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

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

The United States is called a debtor nation because

If the dollar depreciates against the Indian rupee

What impact might an increase in the budget deficit have on interest rates and exchange rates?

In an open economy,expansionary monetary policy will cause

An open economy is an economy that has

Persistent current account deficits for the United States have

The impact of crowding out

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.

Which of the following would cause the dollar to depreciate?

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

The balance of payments includes all of the following accounts except