Exam 18: Macroeconomics in an Open Economy

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

What is the relationship among the current account,the financial account,and the balance of payments?

When a U.S.investor buys a bond issued in a foreign country,

If net exports are positive for China,it must be true that China is experiencing net outflows of capital.

What is the difference between net exports and the current account balance?

If the government finances an increase in government purchases with an increase in taxes,which of the following would you not expect to see?

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

The current account balance equals the value of net exports.

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

Figure 18-2 -Refer to Figure 18-2.Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Ceteris paribus,a decrease in the government's budget deficit will increase domestic investment and net foreign investment.

Which of the following will shift the demand for the euro to the right?

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

When exchange rates are not determined in the market but are instead set by a country's central bank,we say that the country's exchange rate is

If there is currently a shortage of dollars,which of the following would you expect to see in the foreign exchange market?

An increase in U.S.federal government budget deficits that raises U.S.interest rates relative to the rest of the world should

The price of ________ in terms of ________ is referred to as the real exchange rate.

If net exports are negative,

If the dollar depreciates against the Indian rupee,