Exam 15: Aggregate Demand, Aggregate Supply, and Inflation

Each of the following would decrease the supply of U.S. dollars, shifting the supply curve for dollars to the left, EXCEPT:

In an open economy, the domestic real interest rate is determined by:

As the dollar exchange rate, e, decreases, the quantity of dollars supplied in the foreign exchange market ____, and the quantity of dollars demanded in the foreign exchange market ____.

The principal suppliers of U.S. dollars to the foreign exchange market are:

Purchasing power parity is the theory that nominal exchange rates are determined:

When the nominal exchange rate changes from 4 francs per dollar to 6 francs per dollar, the dollar has:

The following table provides nominal exchange rates for the U.S. dollar. Country Foreign currency/dollar Dollar/foreign currency Switzerland (franc) 1.730 .578 Brazil (real) 1.821 .549 Based on these data, the nominal exchange rate equals approximately ______ reals per Swiss franc or, equivalently, ______ Swiss francs per real.

A trade surplus occurs when:

If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it

A trade deficit occurs when:

Holding constant risk and the real returns available abroad, higher domestic real interest rates ______ capital inflows, ______ capital outflows, and ______ net capital inflows.

In an open economy with a given level of real interest rates and risk, a decrease in real interest rates abroad will ______ capital inflows and ______ the equilibrium domestic real interest rate.

Suppose the price of gold is initially 300 U.S. dollars per ounce in New York and 450 Canadian dollars per ounce in Toronto, Canada. If the law of one price holds for gold, the nominal exchange rate is ______ Canadian dollars per U.S. dollar. If Canada experiences inflation, such that the price of gold rises to 510 Canadian dollars per ounce, but the U.S. does not experience any inflation, the nominal exchange rate would be ______ Canadian dollars per U.S. dollar.

A decrease in the real exchange rate will tend to ______ exports and to ______ imports.

When the nominal exchange changes from 120 yen per dollar to 110 yen per dollar, the dollar has:

In an open economy, an increase in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment.

As U.S. real GDP falls, poorer households may decide to buy ______ foreign goods and assets, which would cause a(n) ______ of the U.S. dollar.

The U.S. dollar exchange rate, e, where e is the nominal exchange rate expressed as Japanese yen per U.S. dollar, will depreciate when:

When an American buys stock in a French company, from the perspective of the United States, this is a(n):

Holding all else constant, a decrease in the real interest rate on U.S. assets will ______ the demand for dollars in the foreign exchange market and ______ the equilibrium Mexican peso/U.S. dollar exchange rate.