Exam 29: Macroeconomics in an Open Economy

If the dollar appreciates against the Mexican peso,

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

The balance of payments includes which three accounts?

Contractionary monetary policy should increase foreign financial investment in the United States.

The purchase of foreign stocks and bonds by a U.S. brokerage firm is an example of capital inflows to the United States.

An increase in capital inflows will

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

If net foreign investment is negative, which of the following must be true?

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

Figure 29-1 -Refer to Figure 29-1. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented?

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

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?

A decrease in United States net foreign direct investment would occur if

An economy that has interactions in trade or finance with other economies is referred to as

An increase in the demand for American-made goods will

How might a budget deficit affect the balance of trade?

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

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?

If the balance on the current account is $346 billion and the balance on the financial account is -$204 billion, what is the balance on the capital account, assuming no statistical discrepancy?