Exam 18: Macroeconomics in an Open Economy

If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,then

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?

Which of the following would you expect to increase both interest rates and exchange rates?

Assuming no change in the nominal exchange rate,how will a lower rate of inflation in the United States relative to Canada affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

If American demand for purchases of Mexican goods has increased,how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

Public saving equals taxes minus government spending minus transfer payments.

A Canadian oil company hires geological survey services from the United States.If all else remains equal,this will

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

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expresses in terms of dollars per peso?

If net foreign investment is positive,which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)

Based on the following information,what is the balance on the current account? Exports of goods and services = $12 billion Imports of goods and services= $14 billion Net income on investments = -$4 billion Net transfers = -$1 billion Increase in foreign holdings of assets in the United States = $6 billion Increase in U.S.holdings of assets in foreign countries = -$3 billion

When the United States sends money to the Philippines to help typhoon survivors,the transaction is recorded in

If national saving increases,________.(Assume that the capital account is zero and net transfers are zero.)

Suppose the Fed pursues a policy that 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 an open economy? This policy

Which of the following equations is true in an open economy?

Article Summary Over the past two years, the Indian rupee has fallen 26 percent in value against the U.S. dollar, reaching a record low of 61.80 rupees per dollar in August 2013. The decline reflects increasing capital outflows and pessimism regarding the government's attempts to reverse this trend. The Indian government was expected to announce potential measures to increase the inflow of capital, including the possibility of raising debt abroad, raising money from Indians who live abroad, easing restrictions on overseas borrowing, and raising interest rates. Critics argue that current and well-entrenched policies deter capital inflow from investors and corporations, and raising interest rates may reduce confidence in the economy, which experienced a decade-low growth rate of 5 percent in 2013. Source: Rafael Nam, "Rupee over 60: Why Indian currency weakness may be here to stay," Reuters, August 8, 2013. -Refer to the Article Summary.All else equal,a depreciation of the Indian rupee relative to a currency such as the U.S.dollar should ________ the current account balance in India and therefore ________ the financial account balance in India.

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

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to ________,increasing the exchange rate and the value of the yen.