Exam 20: Macroeconomics in an Open Economy

Refer to Figure 20.4 for the following questions. Figure 20.4 -Which of the following would cause the change depicted in Figure 20.4? Note that the figure depicts the quantity of euros traded.

Which of the following would decrease the size of the deficit in the current account of Australia?

If the Chinese yuan is pegged below the equilibrium exchange rate as expressed in US dollars per yuan,

Suppose that Australia's price level is 200,the British price level is 100,and the nominal exchange rate of pounds to the dollar is £0.40 = $1,then the real exchange rate of pounds to the dollar is ________.

If there is ________ in prices overseas relative to Australia,the demand for ________ in the foreign exchange market.

Because of the emissions testing scandal at Volkswagen,Australians develop an aversion to German cars relative to cars manufactured in Australia.This will,ceteris paribus,

The real exchange rate is the amount of an overseas currency that can be purchased with the local (domestic)currency.

A federal budget deficit can lead to a(n)

Which of the following transactions would be included in Germany's current account?

Australia currently uses which of the following exchange rate systems?

The exchange rate of the dollar in exchange for yen will rise if,ceteris paribus,

Under the Bretton Woods System,central banks were committed to selling ________ in exchange for their own currencies.

Refer to Figure 20.5 for the following questions. Figure 20.5 -Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as shown in Figure 20.5.If currency speculators think that the Thai government will soon allow the currency to float,how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?

Describe how the 'Bretton Woods System' operated. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Why is the net primary income component in Australia's current account always negative? _____________________________________________________________________________________________ _____________________________________________________________________________________________

What is a 'gold standard'? What kind of exchange rate system is it? What problem does it present during a depression? _____________________________________________________________________________________________ _____________________________________________________________________________________________

When countries agree to keep the exchange rates between their countries at an unchanging rate,the exchange rate system is called a ________.

If prices rise slower in the United States than in Australia,then

Refer to Figure 20.5 for the following questions. Figure 20.5 -Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per US dollar,as shown in Figure 20.5.If the Thai central bank pursues a contractionary monetary policy,how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?

All of the following are considered among the four most important determinants in explaining exchange rate fluctuations in the long run,except