Exam 13: Automatic Adjustments With Flexible and Fixed Exchange Rates

Business cycles tend to impact nations other than the nation in which they are occurring because of ________________.

The price elasticity of the ______________ in euros is given by the percentage change in the quantity demanded of US exports by foreigners divided by the percentage change in the price of US exports in euros.

The ratio of the change in income to the change in exports and/or investments is:

When US demand for imports is price elastic,a(n)___________ in price leads to a ___________ proportionate increase in the quantity demanded so that expenditures on the imports increase.

When demand is unitary elastic,a change in price will leave expenditures on the commodity___________.

If the US currency pass-through is 60 percent,what will occur as a result of a 15 percent depreciation in the value of the dollar?

When a(n)_____________condition is present,a disturbance from the equilibrium exchange rate pushes the exchange rate farther away from equilibrium.

If for every one dollar increase in income,savings increases by 25 cents,the marginal propensity to consume is _________ and the closed economy multiplier is ______.

The equilibrium level of national income in the economy is where _______________.

The ________________ operated from about 1880 until the outbreak of World War I in 1914.

What is the Marshall-Lerner Condition and how is it used?

In an open economy,if the marginal propensity to save s = .20 and the marginal propensity to import m = .30,then what should be the foreign trade multiplier?

For the US,the currency pass-through is about 10 percent.

Under a fixed exchange rate system,trade deficits are not corrected by automatic changes in domestic prices.

Please explain the J-Curve effect in exchange rate determination.

___________ account(s)for the impact a change in a large nation's income and trade has on the rest of the world and which the rest of the world in turn has on a nation.

The US supply curve of euros can be positively sloped,negatively sloped,or vertical,depending on the elasticity of the ____________________.

When demand is unitary elastic,then a change in price will leave expenditures on the commodity at a greater value.

Under flexible exchange rates,a trade deficit is automatically corrected by a deprecation of the deficit nation's currency.

The foreign exchange market is stable (able to correct a trade deficit by a depreciation of the nation's currency)if ____________________