Exam 18: Macroeconomics in an Open Economy

What effect does a depreciation of the dollar have on real GDP in the United States in the short run?

The large budget deficits of the early 1990s resulted in large current account deficits.

Net exports equals the balance of trade surplus.

Figure 18-3 -Refer to Figure 18-3.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be

China runs a current account surplus with the United States.Which of the following must be true about China's balance of payments with the United States?

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

If the exchange rate changes from $2.00 = £1 to $2.01 = £1 then

Ceteris paribus,a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________.I.e.,the dollar ________ in value against the yen.

If the dollar appreciates against the Mexican peso,

If the exchange rate changes from $2.00 = 1 euro to $1.98 = 1 euro then

Figure 18-1 -Refer to Figure 18-1.Italians cut back on smoking and cut their demand for American cigarettes in half.Assuming all else remains constant,this would be represented as a movement from

Persistent current account deficits for the United States have

Since 1999,the U.S.________ account has recorded relatively minor transactions,such as migrants' transfers,and sales and purchases of nonproduced,nonfinancial assets.

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

Net foreign investment is equal to

In recent decades the United States has incurred overall balance of payments deficits.

Although based in the United States,McDonald's is a global company with more than ________ of its sales coming from outside of the United States.

If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.

Based on the following information,calculate public saving,net foreign investment,and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

Persistent current account deficits in the United States