Exam 18: Macroeconomics in an Open Economy

Assume the United States is the "domestic" country and China is the "foreign" country.Which of the following might increase the real exchange rate between the United States and China?

Suppose that domestic investment in Canada is 10.7% of GDP,and Canadian national savings is 13% of GDP.What is Canada's foreign investment as a percentage of GDP?

A decrease in the demand for American-made goods will

According to the saving and investment equation,if net foreign investment rises by $60 million,

Figure 18-1 -Refer to Figure 18-1.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

A federal budget deficit ________ interest rates,which ________ exchange rates (foreign currency per domestic currency),and ________ the balance of trade.

Suppose the government cuts taxes.We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets.

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

The federal budget deficit and the trade balance are often referred to as the

Expansionary fiscal policy crowds out both domestic investment and net exports.

Which of the following would increase the current account balance of the United States?

The current account deficits incurred by the United States in the 1990s and early 2000s were caused,in the opinion of many economists,by

When the market value of the dollar rises relative to other currencies around the world,we say that

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

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

If the balance on the current account is $842 billion and the balance on the financial account is -$603 billion,what is the balance on the capital account,assuming no statistical discrepancy?

What's the difference between the nominal exchange rate and the real exchange rate?

The balance of payments includes all of the following accounts except

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

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?